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stt1 is that your same post here?
sikhthetech10 Feb '19 - 12:58 - 10004 of 10005
0 0 0
The BoD will say anything to ensure the deal goes through...
I find it too much of a coincidence that in July 2018 in their 20-F filing they warned of material weaknesses in their internal financial controls, warned of costs and possible change in business model due to GDPR and then ONLY 3 WEEKS later they sign a NDA with TAP...
Really..
I think it's credible to think that the costs and management time required did rise significantly due to the changes in Internal Reporting and it's possible there were some skeletons due to these changes...
The impact from Industry challenges like GDPR, Apple's ITP, fee transparency, move to fewer SSPs/DSPs could be the reason for the poor deal...
Internal Control over Financial Reporting:
The company has warned:
"MATERIAL WEAKNESSES", "SIGNIFICANT" costs, "ADVERSELY AFFECT...OPERATING results..IN THE FUTURE.""
"D. Changes in Internal Control Over Financial Reporting
As a result of material weaknesses related to the ......."
https://www.sec.gov/Archives/edgar/data/1713721/000143774918014094/rhyth20180713_20f.htm
Page 43..
"SIGNIFICANT costs", SUBSTANTIAL MANAGEMENT TIME", "ADVERSELY AFFECT...OPERATING results..IN THE FUTURE."
"The combined company will incur significant costs and devote substantial management time as a result of becoming subject to reporting requirements in the United States, which may adversely affect the operating results of RhythmOne in the future. "
https://www.sec.gov/Archives/edgar/data/1713721/000119312517377843/d399085df4.htm
GDPR:
- Page 13:
"In particular, Europe’s new General Data Protection Regulation (“GDPR�) (which came into force in May 2018) extends the jurisdictional scope of European data protection law. As a result, RhythmOne IS subject to the GDPR when it provides its targeting services in Europe. The GDPR imposes stricter data protection requirements that may necessitate changes to RhythmOne’s services and business practices. Potential penalties for non-compliance with the GDPR include administrative fines of up to 4% of annual worldwide turnover. Complying with any new regulatory requirements HAS resulted in increased costs and could force RhythmOne to incur further substantial costs or require RhythmOne to change its business practices in a manner that could reduce its revenue or compromise its ability to effectively pursue its growth strategy."
"Evolving definitions of personal data within the EU, the United States and elsewhere, especially relating to the classification of IP addresses, machine or device identifiers, geo-location data and other such information, may cause RhythmOne to change RhythmOne’s business practices, diminish the quality of RhythmOne’s data and the value of RhythmOne’s solution, and hamper RhythmOne’s ability to expand its offerings into the EU or other jurisdictions outside of the United
So much waffle there Stt, I can’t actually work out what you’re trying to say. Perhaps you could summarise in one line..
The BoD will say anything to ensure the deal goes through...
I find it too much of a coincidence that in July 2018 in their 20-F filing they warned of material weaknesses in their internal financial controls, warned of costs and possible change in business model due to GDPR and then ONLY 3 WEEKS later they sign a NDA with TAP...
Really..
Internal Control over Financial Reporting:
The company has warned:
"MATERIAL WEAKNESSES", "SIGNIFICANT" costs, "ADVERSELY AFFECT...OPERATING results..IN THE FUTURE.""
"D. Changes in Internal Control Over Financial Reporting
As a result of material weaknesses related to the ......."
https://www.sec.gov/Archives/edgar/data/1713721/000143774918014094/rhyth20180713_20f.htm
Page 43..
"SIGNIFICANT costs", SUBSTANTIAL MANAGEMENT TIME", "ADVERSELY AFFECT...OPERATING results..IN THE FUTURE."
"The combined company will incur significant costs and devote substantial management time as a result of becoming subject to reporting requirements in the United States, which may adversely affect the operating results of RhythmOne in the future. "
https://www.sec.gov/Archives/edgar/data/1713721/000119312517377843/d399085df4.htm
GDPR:
- Page 13:
"In particular, Europe’s new General Data Protection Regulation (“GDPR�) (which came into force in May 2018) extends the jurisdictional scope of European data protection law. As a result, RhythmOne IS subject to the GDPR when it provides its targeting services in Europe. The GDPR imposes stricter data protection requirements that may necessitate changes to RhythmOne’s services and business practices. Potential penalties for non-compliance with the GDPR include administrative fines of up to 4% of annual worldwide turnover. Complying with any new regulatory requirements HAS resulted in increased costs and could force RhythmOne to incur further substantial costs or require RhythmOne to change its business practices in a manner that could reduce its revenue or compromise its ability to effectively pursue its growth strategy."
"Evolving definitions of personal data within the EU, the United States and elsewhere, especially relating to the classification of IP addresses, machine or device identifiers, geo-location data and other such information, may cause RhythmOne to change RhythmOne’s business practices, diminish the quality of RhythmOne’s data and the value of RhythmOne’s solution, and hamper RhythmOne’s ability to expand its offerings into the EU or other jurisdictions outside of the United States. RhythmOne’s failure to comply with evolving interpretations of applicable laws and regulations, or to adequately protect personal data, could result in enforcement action against RhythmOne or reputational harm, which could have a material adverse impact on RhythmOne’s business, financial condition and results of operations."
https://www.sec.gov/Archives/edgar/data/1713721/000143774918014094/rhyth20180713_20f.htm
And perhaps they could even argue that they have habitually guided after 1Q and 3Q so they should be allowed to treat a 3Q TU as an ordinary course profit forecast - in which case they may just be getting Taptica and Takeover panel approval to release a 3Q TU.
Like I said, I find rule 28 quite difficult to interpret.
rusty - but that is because "normally" there is an "ordinary course profit forecast" that they can update, or an "ordinary course profit forecast" becomes due during the offer period. i.e. If a company has given guidance for the year (e.g. with 1H results) before the "offer period" begins, then it is expected to update that during the offer - or confirm that it is still valid; and if the company normally publishes guidance at a certain time of year then, with prior takeover panel approval, it is allowed to publish such guidance at that time of year during an offer period, without getting accountants and financial advisors to sign off on it.
R1 conspicuously did not provide any quantified guidance with the 1H results, which merely reported on the completed 1H period. Therefore (I believe) there is no existing ordinary course profit forecast for them to report on.
And with the move from regular post-quarter-end metric/cash guidance to pre-half-end revenue and adj ebitda guidance, I'm not sure R1 can argue that either one meets the requirements of an ordinary course profit forecast, which is defined as:
"A profit forecast published by the offeree company or a securities exchange offeror in accordance with its established practice and as part of the ordinary course of its communications with its shareholders and the market."
In my view, R1 would find it difficult to say its established practice is to publish quarterly post-quarter-end TUs (because it didn't for 2Q); but equally it has only once (I think) recently published pre-half-end guidance, so that isn't an established practice either.
Maybe R1 will argue that its established practice is to publish guidance around the end of a reporting period and it has simply moved from guiding just after period end to guiding just before period end. If that is the case then maybe it will be able to provide some guidance towards the end of March before the R1 General Meeting. But on balance, I would be surprised if they do.
As I read rule 28, if they were to produce any guidance for the full-year or even an estimate for 3Q, now that they are in an offer period they would have to get it signed off by both their "reporting accountants" and their "financial advisor", unless they can convince the takeover panel that it is an "ordinary course profit forecast" as defined above.
Thanks
The only way I can see that Singer benefits from this deal is if the SP of the combined company rises more than RTHM would have alone. He must think this is the case to press ahead.
1GW, Normally in these situations they give an indication of current trading. I hope we get a lot more clarity. The only area I will ever agree with stt1, is there have been a number of acquisitions, these have been very, very costly, and don't seem to have enhanced our standing. It has all been jam tomorrow. Brian talked years about the " full stack". I thought we had the full stack. But the RNS alludes to the new company getting the full stack. I only hope, and it is a hope, that Singer has engineered this along with Tosca to have a company large enough and strong enough to compete with google and facebook. Sadly, I have heard the same thing after every acquisition. I am sceptical to say the least. Hope I am wrong. In my opinion, Singer, has managed to engineer a number of puppets to achieve his objectives. I just hope the are aligned with ours as he does control a sizeable stake.
1GW
Thanks for posting. To simplify matters.
One near-term date I meant to add to my previous post was:
13th Feb - deadline for opening position declarations
This is 10 business days after the start of the "offer period" (7am on 30th Jan). So by the end of Wednesday we should know all the 1%+ positions in R1 and Tap.
Another date we have is 4th March I think, which is 28 days after the publication of the 4th Feb Recommended Offer rns. The irrevocable undertakings lapse if the Scheme Document (the document containing the formal offer on which R1 shareholders will be asked to vote) isn't published by that date (unless the takeover panel allows to extend the period for publication of the Scheme Document).
So I think we have:
4th March - Deadline for publication of Scheme Document
aa March - R1 & Taptica notices of General Meeting
26 March - Taptica full-year figures and 2018 performance review
cc March - Taptica General Meeting to approve resolutions required for merger
dd March - R1 General Meeting to vote on scheme
29 March - Court Hearing to approve Scheme
03 April - Scheme effective date (i.e. completion)
I would hope the R1 GM is after Taptica publishes its 2018 results, but that then leaves very little time before the Court Hearing, so it may be planned before then.
A proper indicative timetable is promised in the Scheme Document when it is published.
I would imagine they would want to get the Scheme Document out in February if they can, but I don't know what is critical path.
I find Rule 28 of the Takeover Code fairly difficult to interpret, but it leaves me with the impression that R1 will not be giving any "profit forecast" (FY19), "profit estimate" (3Q TU) or estimate of "quantified financial benefits" of the merger to help shareholders make up their minds.
Does anyone have a different view or can anyone fill in any gaps? Are there any key regulatory approvals needed which will constrain the timetable?
The SP will get a serious boost from the buyback. That’s my prediction anyway.
"What's the point in taking a year or two out to prove that they can grow R1-YuMe organically and profitably"
I think it's more jam tomorrow just when the industry challenges like GDPR, Apple's ITP move to fewer SSPs/DSPs, move to fee transparency are resulting in the NEED for more consolidation.. .
They have been doing the same with other acquisitions...
How about Perk, Rad1... They were bought 1-2 yrs ago...
Are they growing?
What a plonker stt1 is.
F.F.S Put a new record on. What a plonker. !!!!
1GW,
Good of you to share your thoughts.
I think you are right. At the AGM, Eric did say that he has a lot invested here and is hoping to make a lot of money.
This is probably the quickest way for him to get to his goal.If it works out, then all the longterm PI holders will see their money back!
jr
So this is perhaps about ambition. It's not about growing R1-YuMe organically to see if they can find a niche to survive below the radar of the giants. It's about acquiring scale quickly, on reasonable terms, to see how far they can ride the wave and whether maybe they can progress towards really meaningful scale themselves - either as an end in itself, or to position for an ultimate buyout (and the shareholder returns that would likely bring) by one of the giants.
"He who hesitates is lost" could perhaps be their motto. What's the point in taking a year or two out to prove that they can grow R1-YuMe organically and profitably, if in the meantime the industry has consolidated and they have forever lost the opportunity to be one of the big players?
"The RhythmOne Directors also note the rapid rate of change in the advertising technology sector and the competitive environment, which includes much larger companies. They believe that consolidation will continue in the sector and that there are benefits in scale, as well as in retaining a listing, which will, in the opinion of the RhythmOne Directors, provide access to capital and the ability to use equity towards further acquisitions. In this regard, they note that the historic growth of both Taptica and RhythmOne has largely resulted from successful acquisitions.
The RhythmOne Directors note that its commercial progress has not been reflected in share price progression over the past 18 months. They believe that the Offer will deliver an executive management team that is capable of delivering value to shareholders, and of interacting with the London-based shareholders more effectively than has been possible to date. The Enlarged Group will have a strong balance sheet and the RhythmOne Directors note that Taptica reported a net cash balance of $54.4 million as at 31 December 2018. "
That's pretty clear isn't it? Scale counts, a listing counts, they want to get bigger while the opportunity is there. If the deal completes they expect the merged company to do more acquisitions/mergers using both cash and new paper. R1 directors have concluded that Taptica management has better credentials to take the combined company forward.
I think you could reasonably view R1 directors as having ambition for their company, but who are smart enough, having positioned for a merger of equals, to see that shareholders in R1 will be better served by having the combined company run by Taptica management. R1 management has been (perhaps) excellent in cutting costs and positioning R1-YuMe for the future. They've cleared out the old senior management, brought in a specialist turnaround/integration CEO who has got R1/YuMe in shape in time to conclude a deal on "merger of equal" terms with Tap while the opportunity presents itself.
These boards... price goes up talk is positive, price goes down and the usual negative drivel begins. Everything seems to be speculated with no solid evidence to back up claims. I wish good luck to all genuine investors. Looks like a deal is going through let’s hope it works out.
Can anyone clarify the deal timeline?
Yes very sick , some would say as sick as a parrot.
He is the complete heid the baw.
As long as the moderators of this board continue to turn a blind eye, it will continue.
It looks like rather like a case of two smallish companies cutting their market losses and combining forces in order to present a unified presence in the face of general weakness in the ad-tech sector.
It makes you wonder how this will change their appetite for further acquisitions.
I believe that in life you absolutely have to look forward to positive opportunities and never backward - that way is obstinately beloved by some, and with no names mentioned, but it is entirely fruitless.
The fact that Stt is still trying to trash RTHM even though the TAP merger is looking like a done deal, says to me that the he is not just content with talking the price down for financial gain, he is seriously sick.
Feel free to discuss...
rthm have been running a full stack for years...
Unlike Telaria who sold TremorDSP to TAP...
Tremor reasons for selling their DSP.. perceived conflict of interest
"Clients were also uneasy with Tremor servicing both the buy- and sell-sides."
"There's always been a little bit of friction because we were selling agencies and advertisers different products while we were representing publishers," Zagorski said. "And the people who plug into that sell-side platform would always be somewhat hesitant to commit to it in a huge way because we had that perceived conflict."
https://adexchanger.com/digital-tv/tremor-video-sells-demand-side-business-taptica-50m/
The Trade Desk:
The Trade Desk (TTD) previously quoted as saying that their one sided approach was the key to its success...
"Many companies that tried to run ad tech businesses on both sides later have sold one side off: Rubicon shut down buy-side platform Chango, with then-CEO Frank Addante admitting the acquisition was a failure. Tremor Video just sold off its buy-side business to focus on the supply side. Amobee sold its sell-side business to focus only on the buy side. The Trade Desk, which has seen its stock skyrocket post-IPO, consistently cites its single-side, agency-focused approach as a key to its success."
https://adexchanger.com/platforms/appnexus-buy-side-falls-wayside/
What % of both rthm & TAP have Tosca got so far. It also looks like they're still buying... Is the sp shooting up?.
I'm sure if rthm had waited another 2 months, announced their 'exceptional' fy results, 'fantastic' outlook and published the growing $1m per week cash pile, they could have negotiated a far superior 'sell' (deal) for the PIs ... but they didn't, did they? Why's that?
Using the deal terms, if TAP were at £3, what would RTHM have been at?
TAP at £3 hardly makes rthm at 500p, does it?, which is where the rthm sp was pre-Yume deal?.