Member Info for D-Geeman

Hi Dontgive, yes, I'm waiting for a deal. It may never come in which case I probably won't buy and eve will never make that sale. We tend to be disciplined on waiting for deals in our household. We only have pizza from Tesco when there's a promo and the promos always come around (fortunately not TOO often for our health). The only time deals will end is if there's only a single seller and that's never going to happen. If eve stops doing deals then people will only buy from deal-offering competitors and eve would fail for sure. The whole science of promos and marketing revolves around manipulating the consumer (seducing them) into buying. A lot of offers are confections designed to make the customer feel better about spending their cash. Look at the one at, was it Emma?, and eve complained about it, and won. It went too far and was not a deal at all.

The manufacturer isn't always losing with deals; sometime they are winning but the customer just doesn't realise that.

‘(its not like their customer base is that valuable given its an 8-10 yr replacement cycle?)’

Just to keep the chat going, I would disagree with that. Yes, a mattress lasts 8yrs or so but numerous customer reviews on TP mention having bought one, liking it, then buying another or several more for second, third bedrooms. Once you buy a brand you like you’re not going to take a chance and buy another make imo. Then there are the pillows. I’m still waiting to buy a third pillow if I see a similar promo to the last one (which admittedly was a bargain). It would have to be the eve memory foam as the other brands are bound to be different.

(I finally logged in last night and my average is slightly lower than I’d thought, which cheered me.)

Wayfair have eve pillows for £43 (£59 at eve sleep.co.uk and £60 Argos)

https://www.wayfair.co.uk/textiles-bedding/pdp/eve-memory-foam-l60-x-w40cm-medium-support-pillow-evmt1001.html

Wyn, whatever happens with eve I'm ok if AVCT gets to £10... Tell me that the charts have a line going there!

And how can Angle not be a sure-fire winner with approval from the FDA. I really don't get it at all..

My last post was written in a bit of a rush but the ego thing. People in business do drive hard bargains but also have ambitions to grow their company to be the biggest / best. If Emma get eve that would cheese-off Simba, and vice-versa. (If someone like Boris Johnson ran Emma he'd buy it up, just to get ahead. He'd probably buy it just because he fancied CC.) Whoever gets eve gets to increase their share of the market almost instantly, much faster than growing their own company organically. And with economies of scale they may even make their existing business more profitable too.

Wyn, you don't usually 'do' the weekend!

I'm sure you make very valid points, all of them. But out of administration might lose the tax loss? We don't know that do we. I still need to ask the accountant friend but haven't crossed paths.

What you say (struggling too) may well apply to Simba and Emma but DFS DO have reserves and expect to remain profitable. But chances to buy a company such as eve don't come up often. There will be a bit of ego at play too, seeing whether Emma or simba can grow their company fastest.

What if you're Emma and Simba 'get' eve - for £4m? That's not good. Why stand at the side and potentially lose out completely. I'm sure we've all bought shares at a higher price than we should on the fear that the chance could slip away. Maybe the managers at the companies will have cooler heads / sit on their hands better than me!

Did you notice that the FSP is best mentioned to the Panel in good time? CC must have mentioned this to them a while ago so my guess is that she has done it while they still have enough cash to buy stock while the process completes. Suppliers will have read all about eve by now and will need reassurance that eve aren't down to the last 10p before they send over a lot of valuable stock. The other examples of FSP were took 3 or 4 months to process so we must be ok till late summer, at the current rate (whatever that is)

If Emma and / or Simba really are as profitable as their PR has suggested, and have banked some of the profit, they could buy eve, strip out costs, make a profit almost immediately and then claim the tax relief on the >£60m previously lost; Tax free profit for quite a long time. Why wouldn't they go for that?

Let's hope it comes back in to stock quickly, for all sorts of reasons. Things being out of stock could be a bad sign.

Argos say that the Sleep Away mattress is out of stock with them but eve still do have them. They are a big seller at Argos so should be a priority to get them back. It could just be our of stock at my own local Argos; that isn't clear.

I've just checked Laura Ashley as they also sold eve through Argos but I now see that Laura Ashley.com is delivered by Next! Nothing for eve when searching LauraAshley.com Things change quickly and without customers particularly noticing.

I think that if you click 'view original' you can view again without registering. I read once and then it wanted me to register so it may not be quite the same article. https://www.lexology.com/library/detail.aspx?g=886cfad0-7f5a-4577-87e8-9136cd83b835

I will copy and paste here too. Incidentally the first buy on Friday was at 1.05p and so was the last, so down 9% seems a bit harsh given that it was against the 8am UT.

It seams that around >20% of sales are successful. More are successful outside of the process. Some fail (and companies continue to trade) and some companies go bust. The ones that have gone bust in the past seem to have debt, but that doesn't mean eve is home and dry by any means..

Here's the article:

The formal sale process (FSP) was introduced to the UK Takeover Code (the Code) to facilitate sell-side processes in a UK public M&A context and to provide a limited exemption from the new tough ‘put up or shut up’ (PUSU) regime.
Potential target companies and practitioners have been wary of starting an FSP for fear that it might be regarded as a sign of surrender or failure by the existing management and most FSPs have been associated with financially distressed companies.
However, a couple of examples of successful FSPs suggest that the FSP, which more closely resembles a US-style sell-side auction of a public company distinct from the traditional means of executing bids in the UK, might have a found place in the UK market.
The FSP was introduced into the Code as a new concept in September 2011 to facilitate a sell-side process in a UK public M&A context and to provide a limited exemption from the new PUSU regime (see below).

Many companies and practitioners are wary of starting an FSP for fear that it might be regarded as a sign of surrender or failure by the existing management, and because FSPs are currently associated with financially distressed companies. Of the 24 FSPs announced to date, at least four have ended with the insolvency of the target company and only four have resulted in a successful bid: Cove Energy, and Valiant Petroleum (see ‘Two successful bids’ below) as well as Atlantic Global and Datong where the bids valued the target companies at less than £10 million.

However, the successful FSPs raise the question of whether the FSP has arrived as a new sell-side process in UK public M&A and has found a place in the UK market. It is much closer to a US-style sell-side auction of a public company, and is quite distinct from the traditional means of executing bids in the UK.

Key features

An FSP is a process available to target companies, with the prior consent of the UK Takeover Panel (the Panel), permitting dispensations under the Code from:

the requirement to identify publicly, in the target company’s announcement commencing an offer period or any later announcement referring to the existence of a new potential bidder, all bidders that have approached the target company (Note 2 on Rule 2.6),
the requirement for all bidders to announce either a firm intention to make an offer, or a binding commitment not to make an offer, within 28 days of being publicly identified (the PUSU deadline) (Note 2 on Rule 2.6), and
the prohibition on target companies agreeing to break fees and, in exceptional circumstances, other offer-related arrangements (Note 2 on Rule 21.2).
The Code distinguishes an FSP from the announcement of a strategic review. A strategic review announcement identifies several possible outcomes that the target company is pursuing, one of which may be an offer for the company. If an offer is specified, it starts an offer period, but does not give rise to any dispensations under the Code.1

The target company must publicly announce the start of the FSP in an announcement pre-approved by the Panel, being sure to label the process as such, to allow any would-be bidder to participate in that process.

The FSP concludes, if unsuccessful, on the target company announcing it has terminated the FSP or, if successful, on the announcement of a single recommended firm intention to make an offer. So, although an FSP might look and feel like a private sell-side process, it must be conducted as a public process in accordance with the Code and will not result in a legally-binding share purchase agreement.

As such, a competing bidder can always make a higher bid and the board of the target company can always withdraw its recommendation. Competing bidders or late entrants into the FSP can also take advantage of Rule 20.2 of the Code, enabling them the same due diligence information and access to management as other participants in the FSP.

Getting started

The FSP is a relatively new process and, undoubtedly, practice will continue to develop (see ‘The future’ below). However, it will normally be available where a target company unilaterally decides to start an FSP, or where it receives one or more private approaches and decides to start an FSP before any leak occurs or any announcement starting an offer period is required.

The Panel is unlikely to consent to a company starting an FSP following a leak or after a bidder has been subjected to a PUSU deadline. This is because the Panel will be keen to ensure that the FSP does not become open to abuse as a way around the PUSU regime. It is not possible to announce an FSP once a firm intention to make an offer has been announced.

A company that is open to either negotiating a private deal or a bid for the whole company may combine the processes by announcing the start of a strategic review to consider all available options, including an offer, and that discussions relating to an offer will take place within the context of an FSP (as was the case with Valiant Petroleum).

Key issues

Before starting an FSP, companies should consider the following key issues:

Approaching the Panel in good time to obtain its consent. While the Panel usually responds very promptly, companies are more likely to achieve a better outcome by allowing more time to explain matters to the Panel.

deciding whether to give any inducements to encourage would-be bidders to participate in the FSP, such as an inducement fee, commitments to co-operate to achieve regulatory clearances, or the prospect of a fast-as-possible scheme of arrangement,
considering what commitments the target company expects to receive from participants in the FSP. These might include standstills prohibiting/restricting: buying shares in the target company; announcing a bid or possible bid; or participating in a consortium without the target company’s recommendation or consent, and
considering whether any concurrent asset sale process will need to be stopped, or whether the target shareholders and/or would-be bidders would be likely to consent to the sale proceeding either as an alternative to an offer or together with the offer (for the purposes of Rule 21.1 of the Code).

'Two successful examples

It is notable that the two most successful FSPs by reference to offer price were both in the oil and gas sector.

Rationale

Oil and gas companies with non-producing, exploration assets might find the prospect of raising equity or debt finance challenging in the current markets.

Such companies may seek to raise money for the next phase of their development by inviting new partners to "farm-in" (in other words, to fund the next phase of, or perform relevant work obligations for, the key development asset in exchange for a participating interest in the underlying licence/contract) or by selling non-core assets, often by means of a private sell-side auction. However, for companies with a small number of valuable assets, a would-be farm-in partner or asset purchaser might instead consider buying the whole company, meaning that the transaction then becomes a public M&A process subject to the Code. If several would-be bidders for the company emerge, an FSP may be the most desirable means to pursue that process.

Break fee

As is permitted under an FSP, both Cove Energy and Valiant Petroleum agreed to pay break fees to the “winner” of the FSP. As the board of Cove Energy subsequently switched its recommendation from Shell to PTTEP, Cove Energy was required to pay Shell a break fee; this was the first instance of a break fee being paid since the September 2011 changes to the Code were introduced and one of only two to date.

The future

In the Panel’s anniversary review in November 2012 of the changes to the Code introduced in September 2011, it noted that the number of FSPs that had been announced at that time indicated that, in the view of the Panel, the FSP represents a valuable addition to the options available to target companies. The Panel considered it too early to fully assess the FSP, but suggested that it would continue to review it, and that additional provisions may be introduced in the future.

Whatever one thinks about the attractions or otherwise of the FSP, it does represent a new process that can be used to maximise value for the target company's shareholders in certain circumstances, and which companies and practitioners should not too easily dismiss.

This article first appeared in the June 2013 issue of PLC Magazine.

To view all formatting for this article (eg, tables, footnotes), please access the original here.
Herbert Smith Freehills LLP - Mark Bardell'

https://www.pinsentmasons.com/out-law/analysis/formal-sale-processes-now-key-uk-public-ma

"Maximising shareholder value" is often accompanied by an explanation from the target company that it is undertaking the FSP for "strategic reasons”.

'Although an FSP is a distinct process under the Code, a strategic review announcement issued by a target company may also include an announcement of an FSP under Rule 2.6.

The outlook in terms of the success of the FSP has been mixed, with 21% of FSPs announced to date having been successfully completed. A number of companies subsequently completed sales of substantial assets outside the ambit of the FSP. A small number of companies that launched an FSP subsequently became insolvent, such as Utilitywise Group plc, which announced the commencement of its process in January 2019.

Of the 15 FSPs announced in 2020, three have resulted in a formal offer announcement. Volga Gas launched an FSP on 7 April 2020, having previously explored this option in 2014. GEM Capital Holdings (CY) Ltd launched its offer for Volga Gas on 16 November 2020. Collagen Solutions plc announced the commencement of an FSP on 16 April 2020, with Rosen's Diversified Inc. announcing a recommended cash offer for the company on 27 August 2020. ADVANZ Pharma Corp Ltd launched an FSP on 23 October 2020 and Cidron Aida Bidco Limited announced a recommended cash offer for the company on 27 January 2021.

The very public nature of a formal sale process means that a company is seen as being ‘in play', as such, boards of directors may not wish to give this impression. One should not, however, discount the possibility in the coming months of opportunistic bidders seeking to take advantage of the commencement of a formal sale process to launch an offer which the target company may consider to undervalue it fundamentally.'

Thanks dontgive. Looks extremely interesting. I will read properly later but I notice this (which explains the mention of the (failed) US investor in the RNS imo):
'where a target company unilaterally decides to start an FSP, or where it receives one or more private approaches and decides to start an FSP before any leak occurs or any announcement starting an offer period is required.'

Yes don'tgive, definitely.. Only thing is that GP7 doesn't respect us anyway, just here to ramp. Here's a comment he made to the Telegram group some time ago which I did pick him up on. And he'd completely misunderstood what we were talking about anyway, it was regarding the share buy-back you proposed and which wyn thought could lead to eve going private if it happened:

'Nice to see lse getting totally confused between taking the company private and private equity… there is no way this can get taken private without it being taken over. some of the ideas they have on that board'

'I think DG is very keen that the last message left on the board be a negative one!'

For two hours the last message was a broadly positive one from Dontgive. Also you don't think I have shares.

Seems when you say 'I think' you actually don't think very much at all before you type.

The sooner this gets sorted, the better.

Even though DFS and Argos and Next etc don't give 10 year guarantees they are legally responsible for 12 months and can't get out of that. If eve disappear then they'd have to give cash refunds and wouldn't want to do that out of their own pockets. They need to have confidence in eve to carry on selling eve products to their own customers.

They are all just regurgitating the RNS points so not saying anything that CC hasn't told them. They are just reporting the salient points of the RNS to people who missed it. If there was some guru writing a piece that said something different, a new perspective could be good (or bad if they only saw gloom).

'EVE say revenue down 15 % compared ( to their best ever year last year)' – last year was their *least bad* year rather than their best year. Whichever year you compare to, independent eve is going to run out of cash shortly.

Dontgive, I'm afraid you never convinced me that a share buy-back would be a good idea and I'm afraid I have the same feeling now, that you won't convince me that things aren't dire here. Sorry, but what we need is news of someone offering to buy us out rather than eve go to the wall and we lose all.

I'm also afraid that a press statement to customers to reassure them would be like 'Don't panic, don't panic' in Dad's Army. At the moment I doubt customers are particularly aware of the problems. What would it say anyway? "We are going to be here in 10 years to honour your warranty"? They can't say that; they can't promise 10 months...

Ci, the deal that nearly happened with Simba was announced 12 Aug 2019 and called off on 20 Sept 2019. So I imagine we could have around the same wait before any good news, though less wait for bad news which I think they said they'd announce immediately if talks ever fail. Of course things are different now (though we don't know how different, worse, better? And Simba have changed too since 2019) so, who really knows?

The last £10m lasted quite a while so that sounds a reasonable amount, but that's much more than wee are currently worth.

Would eve have got into any talks with other people before the RNS this Monday? Wouldn't they keep talks strictly private with the US people rather than risk a leak and drop the SP (and weaken the position with the US investor?). The Simba talks leaked over the weekend and the eve shares were then suspended before opening on the Monday.

'or if EVE is even in trouble '

They are definitely in deep, deep, trouble. The only positives are; at least there is a chance of things turning out well if they are taken over, and we shouldn't be *surprised* if there's a fall to zero if no one comes forward to save eve.

The RNS said they won't tell us anything unless and talks fail; that's my memory from reading it again last night. Obviously they will tell us if there's a deal we have to vote on. They won't give a running commentary in the meantime and warm words without real info are not helpful and could be misleading.