The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
In any negotiation you need leverage to succeed - most recently Apollo’s leverage was that MM wanted off LSE and they were hoping that would override his desire for 51% controls. Conversely MM’s leverage was that he had the power through his GS to veto any proposal. Post September his leverage evaporates and his hand is significantly weaker.
Will MM take this to the wire and let the clock run down without getting a deal over the line before his GS expiry? That’s for every PI to make their own judgement on, I personally think it’s more probable he won’t let it come to that and secure a take private agreement beforehand.
In the meantime he has the stress of a hostile bidder building up a significant stake at this SP level which would scupper his perceived coalition of support and this increases the longer he fails to announce anything, the clock is ticking…
If nothing else came out of the Apollo approach, it generated independent assessment of the value of THG and its parts and shone a light for all potential suitors to see the current wild disconnect between this and the SP. I’m personally not surprised Apollo engaged pre GS expiry as they would’ve wanted the advantage of being first mover with a hope of taking it off the market before more competition bids post Sep.
As pitchfork sales go through the roof in Altrincham, it will be interesting to see if MM announces a take private deal before the AGM. He said c50% of large holders supported the rejection not the entire 65% which indicates the heat will start to be turned up on him from all quarters including IIs.
He has a limited control window of 16 weeks, does he sit on his hands and let the business he’s worked 20yrs to build up slip through his fingers or proactively get a deal over the line beforehand on terms he can stomach? Will be interesting to see this play out.
Any potential bidder would be wise to accumulate behind the scenes at these price levels and under the declaration threshold, in preparation for a hostile move put to all shareholders for consideration post GS expiry. MM has two main choices:
(a) Do nothing and hope that come Sep his coalition of support holds enough to vote an approach down (he will have to have the numbers and rely on large holders not being peeled away)
(b) Make a preemptive strike and secure a deal to take private before Sep whilst he still has the ability to dictate the terms agreed.
Given his desire for control I think option (b) is more probable/desirable for him.
This is the definition of a ‘concern troll’:
(Internet slang) Someone who posts to an internet forum or newsgroup, claiming to share its goals while deliberately working against those goals, typically, by claiming "concern”
Genuine holders can easily work out which poster this applies to who floods this board with the “I hope I’m not right about this negative outcome” BS
Just read his latest post. Reads like it’s written from someone who already has done a deal to leave LSE and thus now emboldened to speak out. This morning’s paid for hit piece by shorting hedge funds their last hurrah but ultimately won’t have any influence over the eventual outcome imo.
There’ll be plenty of these as with each move up on the SP they’ll want to backtest liquidity, the ‘game’ being to see how low they can push it to scare retail into selling before buy demand narrows the float and they have to reverse back up. Good for dip buyers with strong conviction.
https://news.sky.com/story/superdry-in-advanced-talks-to-fashion-16315m-cash-call-12868582
As has been pointed out, the current approach by Apollo has to be friendly as it wouldn’t get anywhere before September without Matt’s approval. As the admission they were in proposal talks was forced out by the media, these discussions could finalise at any point and they may be further along in the process than the market is currently aware. Some retail investors could decide to open a new long position closer to the 15th May deadline but in doing so run the risk of an RNS landing at any time.
To me it sounds like he’s done with LSE, totally ticked off with all the BS that comes with a listing and has a deal in the bag to take private so more at ease to speak freely. It reads like a “see you around” goodbye post. Just a matter of time now before formal announcement.
https://www.theguardian.com/business/2023/apr/11/cineworld-investors-bankruptcy-plan-debt
@hash
You could always play both sides of the scenario and scale in slowly at these prices. As others have pointed out, they used the word ‘potential’ so a raise might not actually happen and it could have been to utilised to keep the SP low before an MBO. DYOR and GL