The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
getafgrip, no, I'm only interpreting what I read, of course you will have your own interpretation. How do you explain Darktrace only initiated the acquisition procedure with TB? In fact, they didnt even name the other potential bidders in the official announcement. Signing an NDA doesn't mean TB would gain full access to Darktrace account (otherwise HP won't be suing ML now), my guess is that they will just have to wait for full earnings like everybody else.
These 3 are publicly traded companies, apart from Cisco, I don't think the other two have enough cash to buy up Darktrace, therefore they must have offered combination of cash + shares. Given the Nasdaq is still i downtrend, of course Thoma Bravo's all cash offer is more attractive and Darktrace decided to explore that option first.
From Darktrace's announcement
"The Board of Darktrace notes the recent media speculation and confirms that, following receipt of a number of
preliminary and conditional proposals, it is in the early stages of discussions with Thoma Bravo, L.P. (“Thoma Bravo”)
regarding a possible cash offer for the entire issued and to be issued share capital of the Company. "
That means Cisco, Palo Alto Networks and CrowdStrike had been in touch but Darktrace decided to only continue talking to Thoma Bravo. The others are now backup only in case of no offer.
Stocks, if TB was buying some shares, then yes they can 'undercut' by buying before result day. But we're talking about making an offer to buy the company which won't happen instantly but in which the offer is to be considered by the board. Therefore, making the offer earlier doesn't help them in getting a cheaper deal. They already got some idea on the numbers from the last trading update before they even initiated the acquisition talk. Now they want the audited account and latest outlook forecast to finalise the offer price. There won't be any news before Thursday.
Surely TB has some equations to work out the buying price. They are waiting for some numbers from full year result in order to calculate the offer price. Hence, they will not offer the bid before Thursday. It is likely to be Thursday or Friday.
Analysts will be watching the full-year results of Darktrace, the Cambridge-based cybersecurity company, to see if there is any commentary about a potential bid from the US private equity firm Thoma Bravo which was revealed last month. It has until September 12 to confirm an offer. In its full-year results, Darktrace is forecast to report revenues of £417 million and show a pre-tax loss of £9 million.
https://www.thetimes.co.uk/article/the-week-ahead-lhpmvf7vs
It is unlikely to have another bidder. The other named potential bidders are public companies, their shareholders won't be happy if they splash, say $7B in high inflationary time when they are expected to be frugal. In contrast,
TB doesn't have that constraint, as it is their job to buy and now is a good time to buy when dollar is strong and market is weak.
This is not a family business, and the true founder Mike Lynch has alreadt left the management, so there is no sentimental feeling to keep the company ownership. Furthermore, many big shareholders with board seats are investment companies. For the right amount of money, the board will agree to sell.
There is no reason and hence no possibility of hostile takeover, it is really not that complicated.
NewKOTB, there is single share trade everyday, obviously these traders do not need to pay processing fee.
Many new UK tech stocks reached all time low today, including Deliveroo, THG, Trustpilot and Moonpig. By comparison, Darktrace -1.45% today or 29% YTD is fantastic. We should all be glad that we are in green. Across the pond, Nasdaq fell sharply but it picks up before market closed, so FTSE should open green tomorrow. SentinelOne fell -12% after earning release, before picking up to close at -5.9%. The revenue double but the lose also widen, the investors do not like debt in high interest rate era. Similar case for Crowdstrike with increased revenue but SP still fell. This shows that cybersecurity is a growing market. Darktrace has done a lot better than US counterpart in cost control with smaller loss and seemingly accelerate path to profitability. If it achieves net profit in the earning report, that means it won't need cash injection from the new owner (if sold), and therefore should command a higher price tag. I suppose there won't be any news on offer until the earning report day next week. I personally don't really mind the SP slipping as long as it is above 400p where I breakeven, I'm willing to risk it all and bet it on a high offer price.
Can't figure out exactly what TB is doing, perhaps to try to drive the price down, anyway, trading Darktrace share suggests they are still interested. I don't understand these 8.3, 8.5 forms but it gives a glimpse that these big players do trade small amount frequently despite holding large amount of shares in long term.
to the result day. Feel the clock is ticking slowly in the last 2 weeks. Although the result may have already priced in but I still see an upside of 15% if it achieves positive profit. Good result will also provide stronger support in case of no offer.
The price has been sliding which is kind of expected and it doesnt bother me too much as it will jump instantly to the offer price, if and when it happens. For the pessimistic people who think Darktrace doesnt worth more than it is now, then now may be time to sell. I challenge all the bearish people to sell all their stakes now. Darktrace will worth at least 800p in 3 years time and any bidder should see the growth potential and have that factored in.
I believe Thoma Bravo will make an offer but the bid price doesn't concern me and those who are already holding. It should only matters to those who are thinking to buy i.e. to weigh the potential jump against potential fall in case there is no bid.
I think the norm is the company only make announcement after an offer has been received/accepted/rejected. Pre-announcing that TB might be offering a bid seems a bit out of norm. It is possible that Darktrace may have already received bids from others. We don't know. For those who already owning the shares, the best strategy is to hold. For those who haven't, the risk is not a lot different than buying other stock which may fall as well as rise. However, if I had to choose a stock to buy now, I would still pick Darktrace over others.
For those without subscription, it merely days ShadowFall is out again advising their 40 clients. However there is no mention of details e.g. shorting, SP. I seriously doubt how many will listen to them.
Charles, sheltie wasn't really talking about Darktrace, he and us just want you to shut up.