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Well that was a sudden turnaround? Maybe the news is that the bid will fail? Could get interesting now!
The numbers The Consortium offer is $3.7bn including newest acqn MCPS for $470mn - so for the combined Skrill and PAYS business $3.2 bn. not to mention FANS and Access Income which have also been acquired since then. Optimal payed CVC $1.2bn for SKrill in 2015 ( remember CVC had only bought Skrill 2 yrs earlier for $400m) - At the time of the acquisition the combined business had a turnover of $697 - that is now closer to $ 1.2bn for 2017 ( assuming on 8th we continue with previous year growth trajectory) - we will know on the 8th how we are doing mid- year but I suspect we won't be far off that. Profitability and cashflow in the last two years have also grown exponentially and we are almost debt free. So on that basis - lets do a sum of the parts two years on - firstly combined business is now almost twice as large and growing strongly - plus all of the integration work is done and development spend for future proofing the business ( so a multiple of at least 2.5 times where we were pre Skrill acqn). After all we are in a consolidating market and size and scale of PAYS is key !! * Skrill = $1.2bn x 2.5 times - $3bn * MCPS is worth the purchase price +premium - $0.5bn * Optimal = $1.2bn x 2.5 times more - $3bn So a FV for the business to capture the combined entity, improvements in sales and margin, execution of merging of the two business and re-positioning it is $6.5bn (£5bn) per share that is something in the region of £10.30 Board should point out the above basic math to the folks over at CVC - after all they would just be rehashing their model to them !!
amen to that Tincup - 590 is just the opening salvo - PAYS wallet will be bought for much more ....already we have seen Barclays and Canacord are saying this is a low ball offer - I suspect we will get their revised target prices in the next fortnight - possibly after H1 update on the 8th but certainly pretty soon thereafter. A joint bid from Wirecard and Alipay is highly probable IMHO - the PAYS wallet is just too valuable to their global ambitions - who knows with a hotly contested bidding war we might even get £10+
Dont think of anything before this is the share price..full stop..
so PAYS sells Asia gateway to the proposed buyer already lined up lets say for 9 times EV, fills the void left with the US acqn just announced (perhaps one or two more for good measure) but with less debt due to sale of Asian gateway and hey presto we are re-rated to 20x EV same as peers - so Mar Cap virtually doubles seems simple - I suspect others will also look at it in that regard and table new bids - Blackstone and CVC will be happy to take a 40%+ uplift in whatever shares they have acquired - activist investing at its most sublime !!
Barclays update In the last weeks we have experienced rapid consolidation of digital payment assets. Paysafe has always been an undervalued asset, partly as the Asian gateway acted as a poison pill. If this business would be sold we would expect its valuation would anyway normalise, which is not reflected in the PE bid. Wirecard is currently trading at 13x FY19 EBITDA and Bambora was acquired yesterday at 15x FY19 EBITDA including €30m synergies and 21x if excluded. We therefore see the current bid as opportunistic and advise investors to adjust the price for Paysafe for the accretion of the deal (we calculate 12-18%) and valuation paid for other digital assets. The company is currently trading at 9.2x EV/EBITDA and 13x PE and we reiterate our Overweight and 610p target which doesn’t include the 12-18% accretion for the proposed M&A.
Canaccord. We have argued in previous research that Paysafe should dispose of the Asia Gateway business and this would lead to the company being a more attractive target for consolidation. With this morning's approach it appears that whatever the outcome it is likely the Asia Gateway business will be sold. We believe that as a standalone entity this should provide a re-rating. If we assume that Asia Gateway represents 20% of earnings and the business rerates from 15x earnings to 20x earnings, this provides c. 7% potential upside to the stock from yesterday's close of 542p i.e. c580p excluding the proceeds from Asia Gateway which, based on 8x earnings, could be worth 55p per share.
I'm not selling. If it drops then I'm going to buy more. It's only going to go one way now I think. DYOR.
CVC Capital Partners and Blackstone first approached (PAYSAFE) the company in May but their initial offer was rejected. Paysafe’s board has had four indicative offers since then. The announcement came within minutes of the Financial Times reporting that Permira, the London-based private equity group, had bought a 10 per cent stake in Klarna, a Swedish online payment company. It also followed French payments specialist Ingenico Group’s acquisition of Swedish rival Bambora for an enterprise value of €1.5bn.The sale of Bambora itself only came weeks after Vantiv, the credit card processor, agreed to acquire rival Worldpay for £7.7bn. Separately, Worldline, a French payments company, agreed to buy Digital River World Payments, a Swedish rival.consortium. This frantic activity has been triggered partly by the belief that the online payments sector is set to see radical transformation and robust growth as consumers increasingly ditch cash and cards, and move to mobile payments for goods and services. “If you go back five years, the online payments sector was like the plumbing of the banking world,” said a banker who has worked in such transactions. “Nobody cared about it.” However, the adviser added, now “strategic players and financial sponsors are wanting to get into the online payments sector because they think there is a lot of growth still to go”.
I think you may be jumping out a bit too quick as this is a "line-in-the-sand" bid and I would be surprised to see a retreat should the bid be rejected by the BOD. However, everyone is entitled to their own opinion and good luck to you. Me? I'm with Wolfhound as I think the company is worth closer to 800p than 600p.
****right ...aaarrrrgh autocorrect :)
Cheers UJ - even a broken clock is write twice a day - so that puts my achievement into perspective :) agreed this is too low - I suspect we will see higher offers being flushed out with this bid - especially as folks know the Asian gateway business has a buyer lined up - so that removes a possible issue that might have been stopping other bidders. I would suspect an offer closer to 800p might be where this ends up but this offer at least puts us in the shop window. Clearly 590p is not doing it for investors with volumes today being less than 1% of issued share capital - so even pi's not blown away and sitting on hands. PA have been called in over the weekend apparently - so if they pass OLG before the deadline of the 18th Aug for the consortium bid then even 800p will look conservative. Watch this space IMHO
I've so me exactly the same for the same reasons. Only difference here is I bought in yesterday at 540p so more than happy with the rise in less than 24 hours!!! Rarely happens to me that so I'm a happy bunny for once. Great looking share this so a little sad to be out of it so quickly but took a good price this morning. GLA
Like BB this has been a wonderful share for me. There may be an improved bid, but the risk of the bid being fought off and the sp falling is too great for me not to take the money. For the first time since its initial float, I now have no holding here at all. On to the next one.... GLA GS
Well, at last Wolfhound is correct!, the bid is too low. It is irrelevant that it is a 34% premium to the average over the last six months. It is barely 10% above yesterdays price.The business continues o grow strongly. Yes a sale of the asian business may be a good idea, but any main stream bidder can divest itself of the bits it doesn't want anyway. The price ought to be in excess of £7 a share. This should accelerate a counter offer. The funds are looking to get Paysafe on the cheap!
Selling the Asian business would seem to be the best option for PAYS now. This would help encourage a main stream player to make a counter bid.
This bid seems a bit low to me, especially as PAYS has also announced today having acquired for $470m the US-based Merchants' Choice Payment Solutions. It is disconcerting that 10% shareholder Old Mutual is supporting the offer, but I'd expect Joel Leonoff to be fighting his corner for an improved offer.
Well at least the shorter who is still in at .58% will have a little more pain. £5.90 is a little low but perhaps more players will emerge.
Of course, it could prompt a higher bid from elsewhere. It'll be an interesting one to watch after WPG.
It does feel cheap, the acquisition by paysafe should have sent the sp beyond £6 considering derisking and increased revenues, with the takeover price being much higher still. Can see sch bouncing off the back of this
It would be a shame to see this go - and so cheaply. Over the years this has to be my best ever performing share for trading. In and out I've made large 5 figure profits and so easily. Suppose we'll have to find another like it. SCH must be bid for soon surely?
Bullish technical indication. A break of 541 could move it up to 631+. http://uk.stoxline.com/q_uk.php?s=pays
Where's the bloody shorters when you want them? I've got another 10k to top up on a dip! Typical!
Slowly but surely going up. So much to like here
Do Paypal have a card like Skrill? Answer is no - their card is issued to "invited users" only. I've had a Paypal account for 5-years linked to my blog, and about £5000+ of sales has gone thru' it in that time, but no invitation to have a card. The Skrill prepaid card is what PAYS should be promoting big-style; especially now that card sales in the UK are greater than cash sales (announced in todays news).