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Elsol, your post was very well received on Redditt and caused much constructive discussion so thanks for that. I was surprised to note that comments were slightly in favour of a straight T/O. ie A clear cut price upon which we have made our profits. This debate is not over me thinks.
Any takeover is likely to be friendly; that is negotiated with the BOD to arrive at a price that both sides are happy with. The Directors will take advice from their advisers on the offer price and recommend that shareholders accept the offer. Given the size and nature of the business I can’t envisage a hostile offer.
The SP typically rises to within a small percentage of the offer price unless there is doubt about the acquiring company completing the offer. I dont envisage that this is likely given the size of potential buyer.
You can either sell in the market at the prevailing SP or wait to accept the offer and following whatever timeline has been set. Assuming the buyer reaches the percentage (from memory 90%) they can purchase all outstanding shares.
Great idea to start a new thread based on last night's discussion regarding licensing vs TOs and an excellent original post. The thread's gone on a bit of a tangent here with tax talk though so I'll bring it back a little.
As far as TOs go, I have a question and it relates to what Matt posted earlier in this thread. I've never been invested in a company that's gone on to a licensing/TOs so I'm not sure how it works or what happens on the day of the TO. But if a TO were to happen and they offered a price one morning and I accepted, then I'm assuming I'd sell based on the new price and I've made some money (no less than a ten-bag myself as well I hope). But if I didn't accept the TO price offer then what would happen, would the company SP then shoot up to the price that was offered to all investors and we continue to hold but this time from the new price?
And also, if that's the case then why would anyone accept the price that was offered in the first place?
I expect you are right Geovanni but HMRC would be using computers to gather data, so there is really very little effort on a daily basis in collecting data. Look at their current system and see what it already accesses.
https://en.wikipedia.org/wiki/Connect_(computer_system)
Then read item 1 in this 3 year old FT article to see what they can do, simply by "joining the dots"
https://www.ft.com/content/0640f6ac-5ce9-11e7-9bc8-8055f264aa8b
If they aren't already collecting data I doubt it'll be long before they can/do.
oak
sorry to be a pain withdrawl means removing money from the account say into your own bank. NOT just selling share in the Hl account and leaving profit in a HL trading account to then bed and ISA in the following TAX year which I did recently
Sorry, let me re-phrase that (and it is important) it's withdrawals the HMRC register not sales.
I think HMRC has better things to do than collect millions of PI trade data every day. That is why brokers supply HMRC with no data whatsoever. if you accountant tells you otherwise it because he/she wants you to tell the truth.
I doubt HMRC need to "ask" for anything these days. I expect by default they are sent (or have ready access to) full details of all transactions in a specific format and they probably have some very smart software which uses algorithms to decide which need looking in to. It really wouldn't be hard.
I know for fact they they are sent info by the banks about untaxed interest as they told me of two accounts where I'd earned a small amount of untaxed interest which they thought I hadn't declared. And that was 5 years ago. If they'd not been sent it how would they have known to ask?
I suspect it is still a bit hit and miss whether an individual will get "caught" on a modest transgression but more problematic can be the hassle you then have to go through if they decide to carry out the full investigation on you over the 7 years they can go back - and further if they find evidence of deliberate evasion.
So fwiw my advice would be to avoid as much tax as you can legally but accept that if you've earned enough to pay (extra) tax then just cough up - and/or organise your earnings so they attract less tax (as said above, for instance by using ISAs).
Cheers Welsh. For the board in general Hl report every sell to the HMRC. Following this you can get reports about your liabilities but come on, let's make some money first eh?
Oak: No I didn't. I expect HMRC will ask for the bottom line or a summary for each share much like your bank would at the end of every financial year. Learn something new every day. Thanks!
It's not easy @Oak. Just keep as much as you can in your ISA / SIPP. Although when you start to drawdown pension income from your SIPP, tax becomes an issue then. An ISA should be fine forever (barring a change in legislation, hence 'should').
As for CGT gains and losses and cash offers...... Well, the HMRC website give lots of information, but many clever accountants have written books and based their entire careers on working all that out.
If you do get hit, get advice is the best advice. Personally I keep all my investments in my SIPP and ISA.
Yes they do. It's nuts I know but my (chartered) accountant said yeah, you didn't know that?
Surely not ALL your trades, just the bottom line or a summary.
OAK
Do HL really report trades direct to HMRC?
Thanks
Welsh, I get really confused by all this. I get ISA and SIPPS of course but I don't understand the difference between the different tax losses that can be incurred if not savvy. I know HL reports my trades directly to the HMRC
Just as a heads up, on a cash offer (all or in part), don't forget that any cash element will be subject to Capital Gains Tax. Obviously this doesn't apply within a SIPP or ISA.
With no basis, just a personal thought, I can well imagine that there could well be more than one company interested in us when the time comes. Our product seems to have no real downside so as long as it fulfils the potential already seen it is a very strong product.
If so, it could develop into an interesting scenario, as different suitors may well make different approaches. I don't know at what stage any negotiations have to be published but as the shareholders we clearly have to be given full knowledge of what alternatives there may be.
All wishful thinking but it is the weekend after all :-)
The question would be if a TO offer were to come along in the near future, what would be a fair value?
Note to self - proof read before posting! Twerp.
Licensing would normally indicate the best, long term, value for shareholders and would be my preference. But.....
If a take over does pop up, I would need to see the deal. A straight cash offer would likely be a no from me. Basically is another company can put a cash value on us, then they see a ROI large enough to gain acceptance from their own shareholders. Therefore, in my mind, an all cash offer will, by definition, be an undervaluation.
A paper or paper/cash offer, now that could be interesting. If from the right buyer (big pharma with other promising drugs in the pipeline along with the expertise and reach to make best use of SNG001) then I would be very interested and would take a careful look. Even if it is at a lower than a cash only equivalent, the opportunity to segue into their dividend stream, growth and dividend stream may well be too compelling.
It would depend on the who, what and why. A properly structured paper/cash offer may well be the best long term result for my pension fund!
Thanks Elsol, I will try and report back views and anything researched as a result, it's the least you deserve for such a well thought out synopsis.
Oakleaf yes that's fine re: reddit
Moving to phase 3 this month of Activ2 and whether that comes with an application for EUA and orders will be a major catalyst for Synairgen and it could then move quickly in either direction.
Great post Elsol and worthy of it's own discussion. Would you mind if I posted this on Redditt? Many will see it anyway but some simply never come here. My views change on this subject change all the time (most likely based on what the news is telling me) but this answer may get decided by outside forces such as Activ-2 and that's just for starters. One thing we can be certain of is that it's clear one or the other is coming.
Just been reading the excellent CCO thread and the important secondary comments on potential licensing deal or takeout M&A which deserve their own thread.
Ghia and others mentioned the very likely outcome as an out licensing transaction. I believe this is the most likely value crystallisation event for SNG rather than a full take out transaction but not a given obviously.
Why? Its to do with the highly uncertain future commercial revenues / profit flows and emerging (unknown) technology lifetime and / or future line extension possibilities for SNG from its "one product - but potentially very lucrative single asset company" profile.
Although there are ways to flexibly engineer a full acquisition headline consideration with the likes of short term earn-out structures or payments, M&A buyers may struggle to possibly maximise the legacy SNG shareholder returns that could be generated over time via alternative piecemeal segmentation of each market application (e.g. covid, Copd, asthma other viral infections, or indeed targeting genetic defects of interferon metabolism seperately etc. ), and of course global geographies.
From a buyer perspective, it would be very difficult to arrive at one single point estimate of value for the whole company right now as an emerging technology, which means if they get it materially wrong and over- pay, that means some very heavy future write downs or accounting impairments in the allocated Intangible asset values of the target business and accounting goodwill writeoff in the acquirer books. So any buyer may under-cook its price offer to avoid such a situation or future risk. Also the lead M&A corporate finance director of the acquiring firm could be under massive scrutiny internally if they screw up the pricing in an over payment context.
On SNG's side it's far easier to "sell" pieces of your market opportunity discretely as you characterise and clearly evaluate their attractiveness and economics over time and find best suited counter parties to each transaction or to do some sort of customised licensing transaction leaving wholly owned earlier stage emerging or unknown opportunities" in SNG for future exploitation.
This generally would yield better alignment of value of the business assets to what you flog them for over time. However, if a very full M&A offer comes along the Company should take it.
That's my view anyway but either way by year end we should know.