Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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If you fancy some light relief from Ozark, and the markets.....Modern Family is hilarious.
M&A - mergers and acquisitions.
Cracking series Ozark...
6pots
Thank you for insightful post, it's really useful to have someone who has knowledge of the industry (btw, what's M&A?)
I found your comment about synergies particularly interesting, when I tried to look at competitors for TRX (out of sheer nosiness I might add), I found it difficult because theirs is a niche product, so it's good to know that companies like S&N et al are keeping their eyes peeled for more opportunities.
HBomb - Just goes to show how many shares can be bought for a relatively smaller amount. Billions of shares for millions of pounds to me demonstrates the potential that TRX has to offer. I still keep fantasising about what the share price would need to be in order for me to be a millionaire - 1.6million shares with a 0.52 average would mean it's light years ahead and that's with no top slicing, so I'll have to settle for paying the mortgage off early instead, as that's far more achievable!
I've been watching Ozark recently, and as stressful as this Share is at the moment, at least it's all legal and above board!
GLA
Hi 6pots
Welcome and thank you for your thoughts.
Its good to have someone with M&A experience on the board and once the first phase of the San Antonio manufacturing facility is in full production we should begin to see a dramatic rise in turnover and move towards an operating profit. As you know TRX has a range of products that could dominate those niche spaces and will definitely attract attention from the sitting tenants.
Chester.
First time poster. TRX holder since 2019.
Interesting post. Former sector employee with M&A experience. Fully agree with your link to S&N, they will no doubt have an eye on them already, synergies across product sectors, distribution, UK and US locations. They will be a likely suitor, but others will circle as the business develops, including Medtronic, Stryker.
Mid to LTH I think. GLA
or between 9p and 12p share price...... Wowza.
between $450M-$800M would be my assumption based on the estimates you provided
Hi Cadburyhill
I totally agree that TRX now have the potential to become a very serious business and I mean MCap exceeding £500m in four to five years time.
As you know Extremities is a division of Integra LifeSciences, Turnover 2019 $90 current first six months $37.7m.
They have been sold for $240m which is not to shabby due to the fact that even at $90m t/o they were still losing money.
The pandemic means they will not reach breakeven until end 2022 or end 2023.
From the proceeds of the sale Integra has to pay $41.5m to the Consortium of Focused Orthopaedists who help develop the range of products sold by Extremities.
Bottom line is Integra would not see a return from that division for a long time to come and it fits perfectly with S&N's future focus.
TRX should be in a much more stable position by next Summer and when they reach £90m ( 2023 full year ) turnover that should be producing around £30m profit if they are able to maintain a 40% margin. If added to that TRX are still growing fast then the MCap would already be heading towards £180 to £200m so what price would someone have to pay?
All good given that the current management keep fully focused on the growth of the business but not at the expense of the margin. The old saying "Turnover is Vanity - Profit is Sanity"...
Chester.
Agreed, Chester. It's very encouraging on a couple of fronts...
a. it's good to know that the big guys are happy to bid for something that is not ebitda +ve because that helps to put a bid under us now that we're solvent/a going concern. In most sectors, no-one bothers with pre-profit M&A and it's a reminder of just how M&A obsessed the medtech space always has been. M&A is the ultimate end-game for TRX, as we all know.
And, b. it's encouraging to see 2.5x sales as the multiple because, as your excellent contributions have shown, TRX is going to be showing substantial profits soon off the expanded production base and the take-out multiple - a key way institutional investors will value TRX - will axiomatically have to be a lot higher than this.
In my mind, I've always thought 4/5x sales on a profitable, fast growing business is a very conservative assumption. If two of the big guys were fighting over an asset, they'd go a lot higher.
A 4/5x sales multiple on your sales numbers for next year starts to build the implied market cap of this business into something that is going to move the dial for most of us in share price appreciation terms. And we haven't even factored in potential mesh sales with our mystery global top name.
Hi cadburyhill,
Always appreciate your posts and thank you for posting this info on Smith and Nephew, I will do some reading on Extremities to see how it reflects on TRX.
I think when TRX hits £90m turnover they will be making a substantial profit if they are still maintaining a 40% ish profit margin. Extremities must have either very high costs or woefully low margins to be sold for so little.
As I say I will have a read up and come back more enlightened.
Chester.
Note S&N buying 'Extremities' today for $240mn...This is a $90mn a year revenue business, not yet at break-even. So, this is a pre-profit acquisition at 2.5x sales. Useful benchmark for TRX....Extremities are also based in Texas by coincidence...