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If you haven't noticed the shorters have made a swift exit in the past two weeks. Look at the short tracker. Now they are gone, I expect some normality to return and a decent rise back to where we should be.
Nice bounce today; I assume that the market held off until index trackers had unwound their positions in SDL.
I have this as one of my core long term holdings now - time will tell if this proves to be a good decision but it has the potential to be a real global leader.
RWS and SDL... Scheme was sanctioned by the Court 2 Nov 2020. Scheme will become effective on 4 November 2020SDL.
SDL indicated that things were picking up in their outlook at their half year results. I was hoping that this would have also been reflected in the final quarter of RWS, but it seems not. From the fall today I guess I am not the only one expecting a bit more.
I am holding this for the long term, the revenues in auto and aero will return post covid and the combined company will be a significant world player in the translation arena with lots of scope for both synergies and growth.
Today’s Trading Update Synopsis
______Full year update revenue expected to be not less than GBP355 million,
______Adjusted profit before tax also expected to be in line with market expectations.
______Acquisitions earlier in the year of Iconic Machine Translations, Ltd (Iconic) and Webdunia.com (India) Private Limited (Webdunia), have been integrated and are performing well.
______Recommended all-share combination of RWS and SDL remains subject to the Court sanctioning the Scheme at the Court Hearing.
______Announcement of full year results on 10 December 2020.
The increase may also be in part because 'SDL on Monday said it has secured a long-term contract to support the US Navy's rationalisation, reduction and centralisation strategy.'
https://www.sdl.com/about/news/2020/sdl-wins-long-term-enterprise-agreement-with-us-navy/
Looks like my assumption was correct. Nice move up today now that the uncertainty has been removed, glad I took the opportunity to do a final top up Friday. I thought that there may be more votes against from rws holders but with only 0.25% it implies the II's see the merger in a very positive light.
SDL voted in favour , but there has been no announcement from RWS. I did email and ask, but the Director of Communications did not 'communicate ' back....
Given the price movements on the original announcement, I think that both companies should have put something out straight after the votes. As both share price ticked up this afternoon I assume that it was passed in both votes.
RNS published today is buried under several shareholding notices. _____ extracts
'
"Reached agreement on the terms of a recommended all-share combination of RWS and SDL
'
"Announce a shareholder circular (the " RWS Circular ") will be published today that contains information on the background to, and reasons for, the Combination and includes a notice convening a general meeting of the Company (the " RWS General Meeting "). The RWS General Meeting will be held at 10:00 a.m. on 9 October 2020 at Europe House, Chiltern Park, Chiltern Hill, Chalfont St Peter, Buckinghamshire, SL9 9FG. The RWS Circular is expected to be posted to RWS Shareholders shortly. A copy of the RWS Circular will be available for inspection on the Company's website at https://www.rws.com/investor-relations. "
761p TP
Press 02Sep20
'
https://www.telegraph.co.uk/investing/shares/questor-two-translation-firms-getting-together-can-speak-language/
'
EXTRACTS
Beginning
"Whenever I see a mega-merger I worry but RWS has done three or four now and made them work.”
Ends
“If I had to back anyone to pull this off it would be these guys.”
RNS late Thursday with details but few numbers awaiting circular by late October
For scale some back of Beer Mat numbers
Stockopedia give
Est Long Term Growth rate (21E)____SDL 8.3% and RWS 5.9%
Estimated Dividend Yield (21E)_____SDL 1.12% and RWS 1.56%
Using my Back of a Beer Mat numbers by adding RWS and SDL figures (with different ye) we ended up with:-
‘
Combined £m_______2017__2018__2019____TTM__2020E__2021E
Total Revenue__£m__450___629___732____728___721___774
Operating Profit____49____63____91.6___90.7
Net Profit £m_______53.1__43.1__64.7___65.6__76.4__90.3
PE Ratio forecast____________________________32.7__32.7
‘
IMHO It seems worthwhile holding on for the sales pitch with real numbers
Can understand the fall, as it looks like they paid too much for SDL short term. However, longer term it looks like a great fit, and should be earnings enhancing. To me, the fall looks overcooked.
and two acquisitions which will give good diversification. Dividend though small is also welcome in these times. If the pent up demand is unleashed the prospects are understated currently.
Such a fall for no apparent reason looks like |MMs are on the job knocking down for a big purchase.
Any thoughts
from 15 Oct
An excellent year of substantial growth across our three leading divisions
https://www.hl.co.uk/shares/shares-search-results/r/rws-holdings-plc-ordinary-1p
RWS has enjoyed another record year and the Board expects Group revenue to be not less than £355 million, an increase of 16% from £306 million in 2018. This performance has primarily been driven by strong organic growth across the Group's core businesses, an extra month of trading at Moravia which was acquired in November 2017, the acquisition of Alpha Translations Canada Inc in January 2019, and a favourable exchange rate environment.
https://www.hl.co.uk/shares/shares-search-results/r/rws-holdings-plc-ordinary-1p
up from 615p
https://uk.tradingview.com/symbols/LSE-RWS/
Looking good for an uplift to 900p imho - dyor