The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Stockcheque….So you think that JD should offer £2… 50% of the lower end of the valuation.
And the Bod and panel should accept an offer way below the value of the company.
As part of this debate it was mentioned the Curry’s CEO rejected a low offer from Elliot’s. What do you think the CEO of SD should say to an offer of less then 25% of valuation.
Please don’t just say I’m talking garbage. Happy to engage in a grown up debate.
Fordy, for sure if he gets backing that is deep and long enough. That's why I do believe it is a variable that needs to be in there .... is it the most probable .... time will tell shortly. But then there is no need to go so public and leak. Surely this is done to generate or pique interest from other parties .... hmmm or maybe to leverage negotiating power with him.... but deffo a successful bid will have someone like that behind it and the plan for ROI will be 5/10 year .
Is that the only horse in the JD successful race stable though?
If he asks for an extension then maybe it is likely he feels a deal can be done.
If he makes the details of an offer known by 1st maybe it will be £1.50 plus (otherwise he will have to start detailing why it's lower which will undermine confidence in SD)
If neither of the above then maybe an RNS will appear between now and the 1st saying no offer and he's stepping down.
Fingers Xd for all holding
Hi Medjed.... good question :-)
Maybe the difference is that the TO was hostile. the retailer received what it termed an “unsolicited, preliminary and conditional proposal” from Elliott. The CEO of Currys says that the bid undervalues the company and that Currys can build on their plans and push forward. i.e. get lost
In our case it is the CEO that is talking about a TO....(Hmmm didn't this used to be called a management buyout.... but that might just be the red wine talking hahah) if anyone knows the value of the business it is him. JD can't ask the board to reject his own valuation and if a counter offer comes in that values the business more than the CEO.... is it the right CEO to take that vision forward?
SOOOooo... JD makes successful bid, it's gotta be £1.50 plus.... takes it private so no board/shareholders to answer to... but he's gotta pay for the purchase, finance the existing debt, reduce costs and change distribution strategy. Possible if he gets the finance partners that are patient enough for their ROI.... not a typical PE firm.
Orrrr JD gets a counter bid.... he is now on shaky ground even if he is successful in his bid as there is history of him not having confidence in his own business if others value it more... even more orrrr ... he is outbid ... then he is out the door and is "just" a shareholder albeit a large one.
I think that is the main difference or piece of the jigsaw I'm struggling with. I see no upside for JD making an offer to take it private UNLESS he and his backers have deeeppp pockets and are playing the long game. High risk (but high reward).... but at his stage in life does he want to climb that mountain again ?
Good question Medjed :-)
Thanks SM
Again.... bouncing thoughts and not "arguing" a deramp case.
The Bod And panel cannot legally let it go for a steal so .... hopefully £1.50 ... which is still less then half price at the LOWER end of the valuation... fingers crossed for all that hold...
buttt... if the sway of directors at 15p was for CVA then his 27% was lost anyway.... hence going public to try to save it makes sense... if that wasn't the case then a unannounced sprint to capture shares at sub 20p makes more sence.... line up a number of iis and sprint.
good debate :-) thanks
SM66 that's a good post with clear and concise rationale, thank you.
Without being negative and with all good intentions ( I really really hope a RNS drops with a £1+ offer) can I pick your brains.
I cannot get my head around JDs strategy. By going public so early he has made it so only he can be the CEO therefore a TO by any other is out for him. He clearly cannot afford to take it public and also fund the growth/reforms needed. Therefore he offers at a price the BoD find acceptable or he doesn't offer. If he doesn't offer the status quo is not tenable so he would have to step down as CEO. Any other TO would have to fund the debt, the growth and the purchase price.
Soooo .... scenario 1 that I hope happens is the Offer, accepted by BOD ... job done by JD
scenario 2 - RNS - no offer . JD steps down immediatly and interim CEO is appointed and CVA/Prepack
IS this scenario 2 absolute madness not possible? Am I thinking like an idiot ?
Why would he publicly announce if he had no intention.... wel, why would he publically announce anyway. Unless he had to .... Unless the crash to 15p meant CVA was on the cards and his hand was forced to stop it. The question then becomes can he....
Please accept I am not deramping or being negative but I feel I am missing a part of the jigsaw that other posters here have.
Many thanks
Dean
Right back atcha Atrades... I gave up the day job in IT to train and walk dogs.... hence in and out but when at home on my keyboard :-)
Advacodo ...... EEEkkk ... I have a £8 target price .... with no divs it's a strange long hold butttt I believe they are playing the long game...... buuutttt that's not for this board.... Good luck Geez !!
"GL sheltie, I think it bags from here. We’ve all made our beds, what will be will be. You are either in or you are like Dean. Don’t be like dean. Great opportunity here. Choose wisely."
I hope it bags for you all .... really I do !.... I have FOMO of course .... but I don't let it drive me and I'm not bitter and twisted.
If you're in and you believe then no matter what you've made the right choice. Same as if you're out and can accept missing the multi bags....
But if you're unsure....don't bet your (future) house on it ;-)
To reply in regards to your original question Chelseaman
"If, as some suggest on here, it might be a better option for JD to let SD go into administration so that he can buy it back on the cheap, surely he would lose the supply chain that he has no doubt built up over the years (unless he can promise them something under the new regime)"
If he and/or others take SD private they would need to renegotiate leases and make cost savings through redundancies etc. This IS DOABLE but as well as the purchase price will take a lot of investment and cooperation from landlords, suppliers etc
BUT IT IS POSSIBLE AN OFFER(S) will be made
It is also possible that SD negotiate with their landlords/suppliers and get a 75% agreement on a CVA plan from them and 50% agreement from shareholders. That way they could restructure at a much lower cost.
Both a offer and a CVA are possible and looking at the business case for each can help in deciding whether to hold or fold :-)
GL
I've averaged down to 631 but am still 17% down...... However, and no laughing or shouting .... welllll laughing ok.
I view this as a tech stock and I have a target price of £8. I can hold for ever if needs be (wellll 7 years ish).
Simple
1) hahahah you are MAD no chance
2) maybe in the next year or so
3) yep...or more !
Ta
Looking for opinions please :-)
Bought in at Feb 2, 2023 973.49 and Avg down Jan 24, 2024377.13
I have no reason to sell and can hold very long .... but I do think if I cut my losses can I recoup quicker elsewhere.
soooooo.... just stop looking at it until someone buys it or cut and run ?
thoughts :-)
Ta
Chelseman
My view is that SD will have to do 6,8 and 9 in order to push the business forward so the question is what is the best way for the business to do this … I think a valid question that any TO bidder will be asking
Hope that helps