Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
Private equity firm will sell the company after a few years. So cash flow is not the most important factor, if they can relist Darktrace in Nasdaq at multiple of purchase price then it is a good deal for them.
My estimate is 600-800p, so 700p is a credible target. Anyway, the offer price will be the most accurate valuation of Darktrace yet, and JPM foolishness shall be immortalised as MBA case study.
https://www.thetimes.co.uk/article/darktrace-on-the-radar-of-rival-bidders-rjnpp0w26
Cisco, Palo Alto Networks and CrowdStrike, three other American businesses, were tipped as potential candidates monitoring developments. Darktrace said in a statement on Monday that it had received “a number of preliminary and conditional proposals”, but disclosed only Thoma Bravo’s name.
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Analysts said a bidder may have to offer at least £5 a share. Needham said: “We find that Thoma Bravo tends to buy best-in-breed, No 1 market share companies and pay a solid premium.” Darktrace was listed at £2.50 a share, valuing the business at about £1.7 billion.
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Nor do analysts expect opposition from the UK government. Darktrace works for the government, but offers “just one of many potential solutions”, one analyst said.
Reynolds said: “I don’t see any reason for the government to be concerned.” Indeed, he thinks Darktrace’s position as a beacon for British technology listings has been overdone: “A takeover is not particularly relevant.”
https://www.thisismoney.co.uk/money/markets/article-11117113/Darktrace-shares-soar-private-equity-swoops.html
Analysts said an offer of £4billion or 570p would be taken seriously by shareholders.
AJ Bell analyst Danni Hewson said: ‘570p would get everybody around the table. Talks would have start seriously at that point.’
If a business is stagnant, not growing, then offer some low 10%s premium, and any sensible people would accept it. However, Darktrace is still growing and the best is yet to come, so the offer will need to be a lot higher to take into account the growth in the next few years.
One way of looking at the fair price.
Assuming 330p on IPO day was a fair price, the business grew 50% after a year, that makes current price of 500p a fair valuation. In a functioning market (which is not), if the business grow another 50%, then the SP in 1 year time would be about 750p. If Darktrace was offered 750p or below, in theory, they will only need to wait 1 year to reach that value. For that, I believe offer price will be above 750p or it should be rejected.
UK institutions did not 'lost' the ability to value tech businesses, they never had it.
500p is the would-be-price on the result day before insiders dumping shares to drag it down. I'd take it as the base for premium calculation. A premium of 50%-60% would bring the offer price to 750p-800p which I would gladly accept.
Lending,
The future for Darktrace is bleak in LSE. Look at all the bashing it takes from shortsellers and media, even as recent as today, the SP fell -6% before the last minute spike. I have been hoping that one day this will change but no, people just seem to want to make quick money and refuse to let the SP to rise and yet there are so many more shares that ML, wife and directors can sell. Yes, I'd rather Darktrace is sold for a good price now.