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You could almost say that today's circular puts a "for sale" sign up over Findel. In particular, the statement that: "Your Board believes that the most appropriate way for SDI to gain control of, and access to, the Company's facilities and capabilities would be to make a fair offer for the whole Company." seems to be inviting a bid from SDI. So that raises the question of who else might be interested - and indeed whether it would be worth running a formal competitive sales process. The problem for any other bidder would be SDI's stake of course, but if SDI decides it doesn't want to bid then might it be interested in selling on to someone who does - although maybe not to a direct competitor of SDI.

Don't know what to make of the lack of reaction and the very low volume. Perhaps the tone of the circular is what the market was expecting and the references to SDI interest in Express Gifts are not enough to encourage further buying given the big run-up in share price around the time that SDI bought in. We now have to wait to see how SDI play it. Will they come out with public comments to try to influence the vote? Given Findel have 38% of the vote already in the bag SDI will have to come out with something pretty convincing if they are to have any chance of winning.

The circular is on the Findel site. They've added a link at the bottom of the "Investor Centre" menu which is "General Meeting : - Dec 15".

They've nearly all disappeared though, at least the ones tracked by Morningstar (Morningstar.com site, not the UK one). Morningstar as of 23rd July 2014 was reporting 76 institutions holding 163m shares in aggregate. Today they are reporting just 18 institutions holding 27m shares in aggregate. They show only 2 institutions holding more than 1% of the company and only 6 institutions holding more than 1m shares. Morningstar doesn't track all institutions (clearly it is not tracking Toscafund and RG's blinkx holdings) and may not have complete data for some, but it gives an idea of the scale of the institutional withdrawal from the company.

Toscafund and Schroders are siding with the board. Since they were the ones who appear to have sold their shares to SDI in the first place that suggests to me that this is all being set up to encourage SDI into a bid. "The Company has received the following irrevocable undertakings to vote against the Resolution in respect of 33,025,180 Findel Shares in aggregate, representing approximately 38.2 per cent. of the issued share capital of the Company:"

An insight into SDI's negotiating tactics (also from the circular)... "Prior to 29 September 2015 the Company engaged in preliminary discussions with SDI regarding a possible commercial arrangement with the Company to market SDI's products to Express Gifts' customers. Both companies saw clear value in such an arrangement. More substantive discussions of this commercial arrangement took place after 29 September but have subsequently been suspended by the Company due to the uncertainty arising from a surprising statement from SDI that it may withdraw from the arrangement were Kitbag to be sold. "

Wow. Fascinating circular. The board have come straight out and suggested Sports Direct is interested in Express Gifts and should make an offer for the whole Company if that's what it wants. Let's see how the share price reacts to that. And then let's see how Sports Direct gets its message across - will it challenge that assertion? "Your Board believes that SDI sees real and tangible value for itself in the Company, and in particular, the customer database, credit offer and online fulfilment capability of Express Gifts. The Board believes that the most appropriate way for SDI to gain control of the Company's capabilities is to make a fair offer for the whole Company" (from shareholder circular)

I think 30p might be stretching it, but I think there is a price below 50p at which it would be voted through. I've just been through a somewhat similar scenario on Pace where there was quite a bit of negative sentiment shown on some of the bulletin boards about the deal that was being offered, but in the end there was a pretty low voting turnout (59% of shares voted) and a huge majority of that vote (99.4%) for the deal - a slightly higher rejection on the "majority in number" basis but even then only 64 (11%) out of 574 shareholders voted against. Pace is vastly different in terms of the institutional base and in its stage of development and profitability, but there was still a fair bit of comment on the bulletin boards about being bought out on the cheap and the management feathering their own nests. I hope it doesn't come to that and that Toscafund are prepared to stay in for the ride now and see if blinkx management can for once execute well on a promising project, but as I said at the start it wouldn't particularly surprise me to see a "lowball" offer in the not too distant future from Toscafund or a third party supported by Toscafund.

The point about the Arco shareholders is that they were happy enough with the offer to accept it! BP managed to keep both shareholders and Arco executives happy enough to get what BP wanted. A scheme of arrangement needs 75% of the shares voted. Given what I presume is a high private investor base in blinkx, many of whom will have shares in nominee accounts, I would expect a large number of shares not to get voted at all. If Toscafund could get their c. 30% voted in favour of a third party bidder plus say RG's remaining shares also voted then they would be a long way towards approval. However a scheme of arrangement also needs a majority in number of those voting, and that is where a large number of disgruntled private investors might have more chance of disrupting things - but it would need an effective campaign I think. There will also be a big difference in perspective between those of us who bought in at say 50p plus and those who bought in in the 20's hoping for a quick profit. I personally would be disappointed if the company was bought out for 30p or 40p cash, but I suspect there's quite a number of more recently-arrived private shareholders who would be quite happy with that outcome.

But what reputational damage? It would be spun that he had salvaged some value for the shareholders in a rapidly changing environment in which blinkx would probably not have survived without the scale (or whatever) that came from the proposed takeover/merger/whatever. If you can get shareholders to vote for the deal (75% scheme of arrangement or 90% traditional bid) then clearly it is seen as a good deal by shareholders holding the vast majority of shares. The only reputational damage would be with those of us who bought in much higher because we thought the company would come good and/or be bought out at a much higher level.

If you can 1) demonstrate that the shareholders get a decent premium over the recent pre-announcement shareprice and 2) get enough shareholders to vote for the deal [e.g. 75% of votes cast and a majority in number of shareholders - in the case of a scheme of arrangement] then why would the takeover panel intervene? That self-evidently would be viewed as a good deal for both blinkx shareholders and blinkx senior executives. The trick is to offer the members of the board that you don't need a good enough package to persuade them to recommend the deal but not such an outrageous package that it stops sufficient shareholders voting for the deal. Can't you just imagine BM playing the Mike Bowlin role to Toscafund's (or their preferred bidder's) John Browne in that conversation below?

Or perhaps BP's takeover of Arco is a better analogy. Some extracts follow from "Oil: Money, Politics, and Power in the 21st Centure" via Google Books. In January 1999, Mike Bowlin, the chairman of Atlantic Richfield, or Arco, had telephoned Browne..."I think we should get together and see if we can combine." "Why are you interested?" Browne asked. "We're a takeover target," replied Bowlin, "but the shareholders will only agree to a sale if they're paid a premium and the employees receive generous provisions."... All of Arco's directors would be expected to resign. That condition suited Bowlin. Like his fellow directors, he was also focused on the prospect of a large payoff. Before leaving Los Angeles, he had admitted to his anxious board, "BP is the only game in town. I've got no cards to play."......To Bowlin's surprise Browne did not even question the huge severance payments for Arco's executives.

BDC - but it does work like that - if you want the board to go but need their support for the takeover then you arrange for them to have big payoffs in order to get that support. During that process of course the old board will argue for all their current benefits to be bought out. But it would be naïve on both sides to think that specific performance conditions (e.g. a 50p hurdle on an option) have to be literally met - of course they don't - you just have to provide a package ("retention payments", "consultancy", "buyout" etc) which has sufficient value to the person receiving it to compensate in that person's eyes for the loss of existing status, pay and benefits. Have a look at the BP takeover of Amoco and the packages that were given to the Amoco board of directors...

BM's options are irrelevant in my opinion. If a bidder wants him, they pay him to stay and if they don't want him they pay him to leave and not wreck things on his way out. And if you did a fair-value analysis of his options today I doubt they would be worth much anyway. If a bidder wants the "brains" rather than the "management" then they just have to identify the brains and offer them the right retention package. It could well be that the "brains" would welcome a change of ownership even if some of the senior management wouldn't. But I agree a recommended takeover is likely to be a less risky approach for any bidder.

The thing about Toscafund's stakebuilding is that they don't always follow through in the near-term with a bid. With Findel they built to 29.7% in November 2012 before falling to 25.9% in August 2013, increasing again to 29.2% in June 2015 and falling in September 2015 to 20% (although this latter fall may have been a longer-term play by letting Sports Direct in). With Aberdeen Asset Management they got to 25% in August 2008 but were down under 3% by December 2009. So I guess "the market" is sceptical that in the case of blinkx they intend to follow through with a bid in the near-term and is perhaps more concerned about where the share price will go when Toscafund reaches 29.9% and is no longer able to mop up any further sells without triggering a bid. Personally I would not be surprised to see a bid appear - either Toscafund themselves or perhaps more plausibly a third party which Toscafund would then support. If a third party could convince the board to go for an agreed takeover then Toscafund's near 30% holding would make a Scheme of Arrangement takeover with its 75% pass mark (of shares voted and excluding any shares held by the buyer) reasonably likely to get through I would have thought.

A few surprises there for me: o Express Gifts performing worse than expected o Findel Education performance being turned round o Kitbag sale stalled on buyer finance rather than on Sports Direct interference So good to see the positive spin on Findel Education but the news on Express Gifts revenue slowdown is a bit of a concern. Kitbag maybe not too worrying since I presume Sports Direct would be prepared to step into the shoes of the buyer if the financing becomes an insuperable problem.

I had a quick look at last year's accounts. As I read them, Findel Education still has £16m of goodwill (after last year's £20m impairment) and £20m of carrying value for "indefinite lived brand names" associated with it. When I combine that with last year's statement that "any adverse movement in a key assumption would lead to a further impairment" (see longer extract from note 13 to the accounts below) and the 30th July 2015 TU statement "Findel Education has seen its year to date sales decline by 4.6% in difficult market conditions", I would not be surprised to see a further impairment in tomorrow's results. But then I hope neither would the market. I would hope that underlying performance in Express Gifts and news on Kitbag disposal would carry more weight than news of further impairments in Findel Education. "The carrying amount of the Findel Education CGU was determined to be higher than the recoverable amount and an impairment loss of £19,900,000 was recognised. The impairment loss was fully allocated to goodwill and is included in exceptional items. Following the impairment loss recognised, the recoverable amount is equal to the carrying amount. Therefore, any adverse movement in a key assumption would lead to a further impairment. Sensitivity analysis is included below."

or just irrelevant now given these ComScore numbers are "desktop only" and blinkx itself at the AGM guided us to Quantcast stats? I would rather see the Quantcast numbers climbing out of their current dive but a bounce in ComScore is something I suppose. ComScore history since rebadging to "RhythmOne": Apr 158m uniques / 68.6% reach May 159m / 68.8% Jun 157m / 67.6% Jul 157m / 67.7% Aug 148m / 63.4% Sep 145m / 62.4% Oct 149m / 64.2% These are "ComScore AdFocus Rankings (Desktop Only) - Total U.S. Home and Work Locations". Available from the ComScore site (Insights section).

I had a look at the Companies Act section (303) which was referred to in the recent RNS. Under section 304, it looks as though Findel have 21 days to call the meeting and it then needs to be held within 28 days of the notice calling it. I don't know when Sports Direct served their requisition but the Findel RNS had 8th November at the top of it. So that would suggest 29th November is the latest they can give the notice of meeting - so practically that would be the end of next week I presume. So maybe they'll issue a single RNS calling the meeting and giving the results. It seems to me if the results are good, they will want to have them available for shareholders to consider when voting on the Sports Direct resolution (assuming the Board want to advise voting against the resolution). On the other hand if the results are bad, they might want to delay reporting them until after the vote - but then they risk Sports Direct challenging them on why they haven't issued the results at the "normal" time. If the board decide that a Sports Direct director would be a good thing (or they decide Sports Direct are likely to win a vote and the board don't want to risk advising against) then it doesn't really matter I suppose. Just as speculation, I would have thought the very fact that SD had to requisition the general meeting means that the Findel board are unlikely to be supportive of the SD proposal. And that further suggests to me that Findel might want to present the upcoming interims in the most favourable light they can. Lots of speculation I know, but there's really not much information out there to comment on at the moment.

Interesting, if perhaps not completely unexpected. Interesting because it suggests that Sports Direct and Findel have not managed to resolve any differences that exist over the fate of Kitbag. So to me that implies that Findel have indeed been pressing ahead to try to finalise a sale to a third party. Not completely unexpected I think because Sports Direct is not known for being "hands off" is it? So if it couldn't persuade Findel management to abandon the sale or indeed re-open it and allow Sports Direct to bid, then I think Sports Direct seeking director representation is a fairly obvious card for them to play. I suppose an alternative interpretation is that SD want to put a director on the board because they are interested in more than just Kitbag (the distribution operation for example), but if that were really the case and they planned to play a constructive role in the development of large parts of the company, then I would have thought they could have reached agreement with Findel on putting an SD-nominated director on the board rather than have to requisition a general meeting.