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Sheltie - if you read the announcement correctly, Jefferies did not advise the BoD to accept the offer, they advised that the finances of the offer were “ fair and reasonable”. That is not the same thing as “approving” it as they have no right whatsoever to do so. Also the BoD did not “approve” the offer - they cannot do that either - they took the decision to unanimously recommend the offer to the SHs which has quite a different meaning. One of the few occasions where SHs, as the owners, are the only ones that can “approve” the deal with a 75% majority of those voting.

Mike, to answer your second question:

‘HMRC already had the power to ask platforms for information. From 1 January 2024, however, the platforms will have to submit an annual report. To do so, the platforms will collect additional information, such as the sales volume and the income that sellers generate. The first reports are due at HMRC by 31 January 2025.”

To answer your first question, it depends on how long you have held your shares and if you participated in the share purchase scheme involving A shares being bought from the dividends of B shares. In this case the calculation is extremely complex. It took me a long time to figure it out.

In all others cases you have to add the cost of the auto dividend reinvestment to the costs of your original investment.(s) On sale you subtract this accumulated cost figure from your net sales proceeds to give your capital gain. Some platforms work out these costs for you.

sorry - capitalised version

perhaps time for a post-mortem. comparing the communications from berkshire hathaway (buffett) and dt’s bod is like chalk and cheese. what buffett reports to shs is clear and relevant, some of what dt focuses on is irrelevant from sh perspective and perhaps somewhat devious imho.

in all its communications dt, focuses on adjusted earnings before interest, tax, depreciation & amortisation (ebitda). as this metric does not take account of it and capital requirements, munger (buffett’s late business partner), succinctly recommended that whenever you see ebitda in a financial statement you should replace it with the words “bull**** earnings”. to build on this analogy, and for reasons given below, may i humbly suggest that adjusting ebitda by removing ongoing costs like share based compensation (sbc) is akin to the bull having a serious bout of diarrhoea.

sbc is a major cost to the owners as it dilutes their share of the ownership of the company, and, more importantly, their share of the company’s future earnings -,real and more impactful on sh returns than the actual equivalent cost of the shares.

having read all of the buffett’s. annual sh letters, i think buffett would have written to sh.s. something like this:

dear sh. as owners of xxx i am pleased to report on what we are doing on your behalf to maximise your returns on your investment. the company goes from strength to strength with a high revenue growth rate and even higher commensurate growth in profit and the ensuing free cash flows. this, together with the financial strength of the company, means we are in a position to maximise your wealth creation buy buying back and cancelling shares - particularly beneficial now as the sp is being undervalued by the market.

we therefore propose to do this and will seek your approval. this will have the advantage of compounding your fractional ownership each year, on top of the anticipated rise in the free cash flow. with exponential growth on exponential growth you may expect exceptional returns when the market wakes up to the true value of your company. but the later this happens, the better your returns will be.

at the same time, we realise that our approach to share based compensation is working against the your interests as owners, reducing your fractional ownership rather than increasing it. and, unfortunately, the lower the sp the greater the dilution becomes. we therefore propose paying bonuses/incentives in cash in the future, which will be of no consequence to the profitability of the company, nor will it reduce the bonuses and incentives of the execs, but will make the accounts more transparent and understandable and allow you to get higher returns. however, we will still require management to buy shares in the market using their bonuses to achieve a certain percentage ownership. …………. yours sincerely, chairman, bod

i wish - and anyway it is too late.

perhaps time for a post-mortem. comparing the communications from berkshire hathaway (buffett) and dt’s bod is like chalk and cheese. what buffett reports to shs is clear and relevant, some of what dt focuses on is irrelevant from sh perspective and perhaps somewhat devious imho.

in all its communications dt, focuses on adjusted earnings before interest, tax, depreciation & amortisation (ebitda). as this metric does not take account of it and capital requirements, munger (buffett’s late business partner), succinctly recommended that whenever you see ebitda in a financial statement you should replace it with the words “bull**** earnings”. to build on this analogy, and for reasons given below, may i humbly suggest that adjusting ebitda by removing ongoing costs like share based compensation (sbc) is akin to the bull having a serious bout of diarrhoea.

sbc is a major cost to the owners as it dilutes their share of the ownership of the company, and, more importantly, their share of the company’s future earnings - real and more impactful on sh returns than the actual equivalent cost of the shares.

having read all of the buffett’s. annual sh letters, i think buffett would have written to sh.s. something like this:

dear sh. as owners of xxx i am pleased to report on what we are doing on your behalf to maximise your returns on your investment. the company goes from strength to strength with a high revenue growth rate and even higher commensurate growth in profit and the ensuing free cash flows. this, together with the financial strength of the company, means we are in a position to maximise your wealth creation buy buying back and cancelling shares - particularly beneficial now as the sp is being undervalued by the market.

we therefore propose to do this and will seek your approval. this will have the advantage of compounding your fractional ownership each year, on top of the anticipated rise in the free cash flow. with exponential growth on exponential growth you may expect exceptional returns when the market wakes up to the true value of your company. but the later this happens, the better your returns will be.

at the same time, we realise that our approach to share based compensation is working against the your interests as owners, reducing your fractional ownership rather than increasing it. and, unfortunately, the lower the sp the greater the dilution becomes. we therefore propose paying bonuses/incentives in cash in the future, which will be of no consequence to the profitability of the company, nor will it reduce the bonuses and incentives of the execs, but will make the accounts more transparent and understandable and allow you to get higher returns. however, we will still require management to buy shares in the market using their bonuses to achieve a certain percentage ownership. …………. yours sincerely, chairman, bod

some musings and i wish - but with this bod it would never happen

Sheltie I’m curious. On what basis do you say “ as it's just not worth any more”. How do you determine this? Have you calculated it intrinsic value based on revenue growth projections, earnings margins and cash conversion metrics. Or is it based upon your gut feeling or TA?

Since China started becoming aggressive in the Spratley Islands, and similarly towards Taiwan and has lent support for Russia, I try not to buy any Chinese goods(difficult to do) and have divested all my holdings in their stocks. Somewhere, in my view, one needs to take a moral stand. They spell trouble ahead.

This site gives a time-line for the take-over process by a SoA.

https://resourcehub.bakermckenzie.com/pl-pl/resources/global-public-ma-guide/europe-middle-east-and-africa/united-kingdom/topics/timeline

I received an Announcement Letter today, so I assume we are at “A” in the process. The time-line gives an indicative date for the latest possible counter offer - about 30days from the Announcement (“A”) or now.

Just as with any share, punters will have different, and often diametrically opposed , views. So if you think the offer will fail, you may want to sell, and re-buy later. If you think a higher offer is on the cards then you may want to buy. The numbers of buyers always matches the number of sellers so the price will range in value reflecting the balance between the price those wanting to buy are willing to pay and the price wanting to sell are willing to sell for. Or they may wish to hold, for various reasons depending on their own circumstances and views.

I now agree Sheltie - Alea iacta est (Julius Caesar). The die is cast. I wanted to hang on just to say “no”. Stupid!

It has been - well all emotions involved for some. Best wishes to all contributors in your future investing. Signing out.

And a UK perspective from an extract in the Times:

“Sometimes you can’t keep a good story down. Take Darktrace selling up to Thoma Bravo for £4.3 billion cash. Here, apparently, is the latest proof of London’s sinking stock exchange, unable to value anything, least of all tech companies. “A hammer blow for the UK market,” was how Peel Hunt’s research chief Charles Hall put it.

Really? Whatever its wider problems, hasn’t the market worked pretty well in Darktrace’s case? It takes two views to make a market. And here’s the view on the Bravo deal of the ex-head of a different stockbroker: “A get out of jail free card for London.” Indeed, since 2021’s float at 250p a share, where the cybersecurity outfit raised £165 million, it’s yo-yo’d between such opposing opinions. Yet three years on Darktrace is still being acquired at 620p. If the UK market routinely delivered that sort of result, investors would be queuing up.

Of course, the Darktrace board, chaired by Gordon Hurst, did its bit to play up to the narrative, arguing that its “operating and financial achievements have not been reflected” in the shares, what with them “trading at a significant discount to its global peer group”. But what exactly did it expect? However powerful Darktrace’s AI algorithms, they’re yet to find a way to neutralise Mike Lynch: its founder investor on trial for fraud in America after 2011’s $11.7 billion sale of Autonomy to Hewlett-Packard.”

They also mention that the current price is not signalling a competitive bid is on the cards.

HG

‘Any person who is interested in 1% or more of any class of relevant securities of an offeree or offeror company must disclose any dealings and positions in any relevant securities of the offeree or offeror company, even if their interest in the relevant securities of the company dealt in is less than 1%.”

I think this is to prevent undisclosed stake building. It is not a vote on the proposal to the best of my understanding.

I can’t recall just how many of the companies I have had shares in that gave been taken over, but it runs into dozens. This is what I have observed.

If Mr Market considers counter offer will be made the SP rises above the offer price , the price reflecting the probability of that happening.

Mr Market considers the takeover may not eventuate, the SP will fall reflecting, the price reflecting the probability of that happening.

A small fall we are experiences suggests none of the above. The difference between the current SP and offer price will be the view Mr Market takes on the £/$ FX and the opportunity cost of any proceed from any sale now. Currently the discount is about 3% which is about what you would expect if you sold now and invested rhe money in a deposit account.

Sheltie- your comment:

“+ but TB will get this company growing even faster, but with much larger profits, with its huge financial (and geographic) reach and commercial muscle. It's a great fit for DT and it's very easy to see why it will be voted for "unanimously"

But, what would you say the primary purpose of the BoD is - to to ensure the company’s future growth prospects in the hands of a new owner or to ensure a profitable future for the company for the present owners given the primary purpose of ang BoD is to look after the interests of all its present owners?

I think the latter. If they can’t match TB the BOD is basically incompetent and should have been changed, a view I have held for some time.

And if TB is so much better in extracting value, the BOD should have negotiated a much bigger slice of that cake for the present owners.

A friend of mine had a large garden, the end of which gave access to a field developers wanted to develop. He was able to negotiate a price 10 times the going rate of residential land representing a good chunk of the developer’s profit. Both parties won and were happy.

In the current deal there is only one clear winner. The BoD voted unanimously because they are either incompetent and/or there were inducements for them. Or there is more to the ML affair we don’t know about.

Berylfu I am pleased for you and if I remember your average, you come out with a small profit. Take care.

The trouble with NWT and PYC is that they are tiny. At least one of our fellow forum members could approx, buy out 50% of PYC and a 10% of NWT with his proceeds from DT. (and become a board member perhaps).

Sure there is a premium on the SP but not on DT’s own brokers intrinsic valuation. The latter is calculated from the profits made from a reasoned estimates of the future profits (or free cash flows) of the company discounted to the present time. Buffet, for one, values his publicity share holdings both using the SPs and his determination of the intrinsic value on which he places most emphasis. He generally ignores the SP as that is what mad Mr Market thinks they are worth, he prefers his own assessment.

The present value of a bond is calculated in exactly the same way.

You can tell it is raining.

Fair value for the SHs, the BoD claim, when their own broker, who advised them on this takeover, recently said the intrinsic value was much higher. You sell when above intrinsic value and buy below intrinsic value. The BoD selling “low” is a travesty, and demonstrates my long term view that the BoD is, and always was, negligent in looking after the interests of all of its shareholders. An appalling negotiation and done rapidly according to the Sunday Times.

‘“Andrew Almeida, a strait-laced partner of the firm based in Miami with a focus on cybersecurity investments, approached Darktrace’s board — led by chairman Gordon Hurst, a former chief financial officer at the outsourcing company Capita — again in mid-March. This was shortly after Lynch, facing trial, and his wife had significantly sold down their stakes in the business. It took until Friday morning last week for Almeida and Hurst to agree on the final deal.”

What a pathetic negotiator our Chairman is.

Sheltie you could be right, but there is nothing certain about the future except death and taxes (Benjamin Franklin).

Talking of odds of the takeover succeding:

‘Schemes of arrangement provide a more certain path to success. Consistent with 2020, we saw schemes of arrangement deliver much higher success rates as compared to takeovers in 2021 (90% vs 55%).15 Mar 2022”

Given the holdings of the original investors, EBT, and employees set to get £440m (Sunday Times), maybe the odds are more likely to be 99% plus.

HKK - I like your reasoning, and I’m sure you are right regarding 1. Rereading the RNS it seems to me that DT was leading the aagenda and KKR and Summir were at te forefront.

The whole tone of the RNS too, is on how DT will prosper better under TB than our own BoD. If that is not an admission of inc ompetence by our BoD what is it?

Appendix 7 of the takeover code gives some indication of the timings in a Scheme of Arrangement for takeovers but is heavy reading. I came across a flow diagram based on Australian regulation which is usually similar. For ASIC rear Takeover panel. May be of interest to some. About 107days from start to finish.

https://content.allens.com.au/the-allens-handbook-on-takeovers-in-australia/schemes-of-arrangement/