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It can definitely go lower.
Bad management destroys shareholder value. See Loopup for example on that.
Also you can't just look at cash - market cap... You need to subtract all liabilities from the company.
And it's more realistic to add a big discount to the liquidation price of the intangible assets as in a fire sale these will be worth very little.
Their Net-current asset value is £0.57 a share and their Net-net working capital is £0.39 a share.
You can see here at the bottom for the ratios: https://www.gurufocus.com/stock/LSE:BAR/financials
> Due to the BAR drop in price again today i think the deal is now worth 36p (29p shares plus 7p cash). BAR shares are at an all time low, but there is reason for that.
This only holds true if BAR is actually worth it's market price though. And who knows with bad management that destroy shareholder value.
If BAR becomes a net-net, i.e <= 45p a share I might think of buying a small amount simply cause it's less than it's liquidation price.
The fall is due to the poor results of BAR I think, not the merger of IDP.
Dropping margins due to shipping makes sense but Revenue of -20% with a poor excuse is a red flag imo.
I agree.
Also if you think about it why would they have not merged with Creightons last year as that would have cut costs down the same and Creightons is a FAR better business than BAR.
I think IDP has no choice due to running out of cash.
I dumped my entire stake in IDP for -25% loss, cost basis was 41p. Next time before investing in turnarounds I will wait on the sidelines to see proof it's turning around. Nice learning lesson.
I didn't want to hold BAR stock for any price. Management has not proved themselves, they have had 2 years to turn it around and yet in the latest RNS you see excuses on the huge -19% revenue drop. I'll keep track of it but on the sidelines this time until I have proof they are turning BAR around.
Also, as soon as the merger happens BAR stock will probably drop again as the people who were holding out for a higher price at the BAR stock sell their shares.
Yes I agree,
which is why I think shandy is right that IDP was forced to merge, especially because BAR has a ton of cash, why would they not just pay 100% in cash?
Because they either think their share price is overvalued or are opportunistic and know IDP is gonna run out of cash.
Either way BAR management does not look good imo.
What are your thoughts on BAR group shandy? Personally I don't like it. They seem to be going in the wrong direction after 2 years of a supposed turnaround.
My bad,
You are correct on the cash burn, seems like IDP were forced to merge.
To be honest BAR doesn't look very good either as a company. Bizarre excuses for the revenue drop in their most recent filing. Probably why the stock is dropping
> Revenues for the period of £7.4m, a decline of 19% on the prior year (£9.0m) as a result of delays to brand relaunches landing in store and planned product range rationalisation.
Why would delaying a launch of re-branding cause revenues to drop 19%?
Sounds like excuses. There were no lockdowns in this period. Terrible revenue drop.
> All the talk is synergies but I think BAR just wants to get their hands on ST. Weird scenario where the 35p capital raise gets 7p back + upside. So short term a win/derisk but reckon they’re losing a lot of upside from the deal.
We are not better off going for growth imo. That's what the previous management had all wrong.
If you do a Discounted Cash Flow analysis on IDP you will see that the value generation comes from improving margins i n the long term as this company isn't a high growing stock so it makes no sense to try and grow rapidly over improving margins. I think management has done the right thing.
Merging with BAR improves margins.
Maybe, I would want to see H2 results to see if they had no choice.
Checking past financials, IDP H1 results always had negative free cash flow due to it being a seasonable business where the money is made in H2.
They burned £1m cash this Half Year which is less than previous half years as well.
Per this statement:
> The Board remains optimistic that the transformation plan enacted this year, as well as underlying improved consumer consumption and retail momentum versus last year will enable the business to continue its improvement trajectory over the second half year with a return to profitability this year remaining the Board's intention.
So presumably this means they are expecting to have positive net income this financial year (i.e H2 would make up for H1 losses to make them a profitable company) but obviously who knows if they would actually achieve this.
Also, IDP results were good imo.
I don't see anything wrong with management...
In terms of BAR share price dropping -25% on this news it seems very bizarre as this is definitely a good thing for both companies given the similarities and costs.
Usually merges and public acquisitions are not good because of the premium paid is usually overpriced. However in this case IDP was definitely worth >=47p. My estimates had it at around 60p.
However the merger agreement doesn't seem to have any collar agreement in it (https://www.investopedia.com/terms/c/collar-agreement.asp)
So not sure if the merger will go through if BAR share price keeps dropping?
Bar also has a net-net working capital of 40p per share.
I see, that would make more sense then.
Thanks
- On 3 December 2021, InnovaDerma plc signed a deed of release forgiving in full debt totalling £805,310 owed by the Ergon Medical Limited to InnovaDerma plc and its subsidiaries. It is this debt forgiveness that gives rise to the loss on disposal of investment in the period.
So if I read this correctly then IDP loaned the joint venture Prolong £800k and then just wrote it off? So essentially as IDP only has 50% of Prolong we just lost £400k by doing this while Mark Ward gained £400k essentially.
BAR share price is 90p now. Not 106p. And you have to like BAR company to want to do this.
Merger could also get rejected.
I think the merger makes sense. Huge cost savings on Headcount and LSE listing which makes a difference for a tiny company.
You have to be stupid to sell crl at this price.
Bought more cheap shares. Thanks sellers!
https://wizzair.com/en-gb/information-and-services/about-us/news/2021/10/13/wizz-air-announces-major-expansion-of-its-operations-in-ukraine#:~:text=This%20large%2Dscale%20expansion%20of,direct%20seats%20from%20the%20Ukraine.
Actually it seems they have 13%~ of routes from Ukraine now due to their bad timed expansion
5% of routes according to their 2021 report where from Ukraine, with little being to Russia it seems.
So for a -35%+ drop in recent days this is completely stupid.
This is a strong buy again.
That doesn't make sense because they don't have high value customers.
They have retail gamblers mainly.
Why is their AUAC in Q4 so much higher than Q4 2019?While for FY2021 it was lower than FY2019..