The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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ronaldo; i agree getting their own house in order is required, although i don't see a drop further in INCES sp. Paying £10 million for a profitable company (in a sector in vogue, brokers), whilst taking £5 million in cash is a good deal. Just inclined to agree with you - it wasn't a good deal for INCE - unless they needed that cash to bolster a battered business ?
The fact that Arden's sp, despite the jump, is 10%ish below the (notional) offer price, indicates that their shareholders aren't bowled over by INCE, and are taking the jump, on their own undervalued investment to exit. Their share price suggests they, like many of us, have reservations, that INCE will ever deliver for shareholders. In such i'm not certain they have got the best side of the deal. As for the siphoning off of profits in the name of deal achievemients/growth KPIs blah blah, totally agree.
Based on the respective share prices after the announcement it’s clear who has the better deal. Really think they needed to get our house in order first… oh well the ince SP will prob sink further but we will hand Biles another 500k for getting the deal done. All very sickening
I have to admit, this sounds like an unusual purchase.
I'm not sure that I know of any other legal/accounting firms that also do equity research / investment banking. I worry if it spreads them too thinly, trying to be a jack-of-all-trades. My comments are based on not having researched it properly and maybe I'll change my mind once I understand it better. I would have preferred them to firstly recover the share price for investors rather than muddy the waters further, making it even more opaque how to Value this compared to peers.
APD - i was a little surprised (well totally surprised!) at this acquisition, in that it's not really in the same field, and broking/advisory margins aren't as high as legal margins, so at first glance a dilution of margin and outwith their current field hence initially a bit peeved.
If you read the RNS, the synergies, cost savings and cross fertiliastion of Ince's legal offering highlighted, do make sense. The fact that Arden has £5 million in cash suggests the offer price isnt really as expensive as it looks, and Arden, like Ince is undervalued and currently performing well. The RNS HIGHLIGHTING that Arden's cash would reduce Ince's debt raises an alarm for me, indicative to me that Ince isn't performing well enough that profits are sufficient to reduce the debt of their own accord. As Arden is profitable, the sceptic in me says INCE profits aren't great, and this acquisition is really a rather clever/cheaper way to raise £5 million without the concern/hassle/cost/negativity of another new share raise/placing.
In conclusion, i do actually think this is a good deal, albeit for me it adds another variable to consider; namely, shouldnt they be focused on driving synergies/margins/profits in their current partner network than adding more people/issues to juggle/manage.
Comments on previous posts with regards to managing costs/leases are well made. Sales are vanity, profit is sanity. Costs could be the difference here!
What do we think about this acquisition?
Any my message in the other thread "Outlook" about M&A earlier today was very timely.