Member Info for wolfhound

Just linked up with bitpay to convert bitcoins to real currencies http://www.newswire.ca/en/story/1507773/optimal-payments-leads-the-way-with-global-bitcoin-payment-acceptance

Old mutual are underwriting approx. 12.8% of the rights issue ( currently hold more than 5% of stock) - institutional support/appetite for OPAY and well ahead of the FTSE250 entry - v positive news

IgglyBiggly hi, correct the SP will be either cum or ex rights and that switch will happen after markets close. Of course the tradable rights ( nil paid) will then have a value to make it back up to the SP of the night before - but that should be a zero sum game.

@igglybiggly - I don't think it works that way. If you sell the shares but retain the rights then you would be selling the shares below the current SP. The reason being is that the rights issue is a zero sum game and the value of the rights is reflected in the current SP. Using 999 shares 16th April - SP = £7 ( assume) .= MV of £ 6993 (A) COB 16th RI 5 for 3 = 999/3*5 = 1666 shares Cost of rights = 1666*£1.66 = £2764 Total shares post rights = 2665 Ex Rights value of shares = £6993 + £2764 = £9757 SP(ex rights) on 17th = £9757/2665 = £ 3.66 A SP of £ 7( cum rights reflects) : 1. FV price of £3.66 2. Rights disc of £2 ( £3.66-£1.66) per share on a 5 for 3 basis = £ 3.33 ( £2*5/3) So in theory if someone wanted to sell rights and SP at time was £7 - they should be able to sell for just under £3.33 per right.

@iggylybiggly - your math looks right to me. my own ready recon looks like this ( assuming my math is correct) : Cum rights SP | Ex right SP | MV £bn | MV $bn 19 March 4.20 2.61 1.24 1.8 24 March 5.70 3.13 1.48 2.2 Barclays TP 7.00 3.58 1.69 2.5 Mid Target 8.00 3.92 1.85 2.7 Numis TP 9.00 4.27 2.00 3.0 Key as you noted - SP just prior to going ex-rites. These two brokers ( and there may be more to come) think the long term enterprise value is much higher than current sp is reflecting. Why ? OPAY is somewhere between 1/7th to 1/10 of the size of Paypal in terms of number of a/c or revenues. Paypal as we know is being spun out of EBAY later this year, it is approx. 47% of EBAY revenues and estimates of valuation seem to indicate $40bn value ( see Bloomberg interviews) of EBAY current $72bn valuation is attributable to Paypal.. That would indicate there is some significant upside in the long term and if there is sustained buying before the shares go ex rites. If you believe the brokers then now would be the time to buy cum div shares as you will get the rights attached and at a discounted price of £1.66 relative to the ex rights price. So a £9 SP = $3bn MV or 7.5% of est Paypal MV. £7 SP = $2.5bn MV or 6.25% of Paypal MV Those percentages indicate a discount is being applied by Brokers as OPAY is not PAYPAL ( nor resides in "silky valley"). But what it does mean is there is logic behind the target price and shares have more upside from current £5.7 :) Hope above is useful GLA

@tecnimentalist - very useful link, many thanks for sharing I would concur that sp will be interesting ( in a good way) over the coming weeks with scope for more upside

Good piece on the acquisition http://www.fool.co.uk/investing/2015/03/23/will-optimal-payments-plc-deal-to-buy-skrill-group-hurt-monitise-plc/ a daring raid by one of the large tech firms for the enlarged group would not shock me - this market is expected to grow by 35% per annum and exceed $721bn of transaction value by 2017 - there is no growth like this growth out in the market. The 13 PE ratio looks like a steal.

1.9m shares traded - I would assume mostly via auction - so the big boys are in, I would imagine the trade volume reporting is probably struggling to keep up with demand. as a side note there were a few funds that had shorted about 2% of the stock ( FSA website) in total since around Christmas time - they will be hurting very badly and will also likely now close out short positions so this will give a further buying push in next few days I recon. What a great result so far - GLA !!

oops typo - post should have read , ...using these I get a revised value of the rights at £ 2.47 ( and not £1.67) ...the excitement is getting to me :)

GSmiley, ah, I had a calculation error in the number of shares , your number of 482.2mn looks correct, my bad and it was very gracious and diplomatic of you not to have chastised me for such a glaring error, you are a gentleman :). using these I get a revised value of the rights at £1.67 ( still needs confirmation) as follows: Total enterprise value £2bn (using your estimate below of $2.98bn) Total number of shares = 482.8mn Total value per share post rights issue = £4.14 Cost of new shares= £ 1.67 Intrinsic value of rights = £ 2.47 SP pre suspension = £4.19 SP post suspension = £ 6.66 + ( pre suspension plus intrinsic rights value) That excludes any premium on the deal or FTSE 250 move - and Numis have upped price target to £9 from £7 ( 28.5% premium). So expect we will get a fair rise tomorrow - even more so if Fund managers pile in on prerequisite of FTSE250 entry.

Just shot above its 200 EMA of £10.82, onwards and upwards - GLA

just as I posted I notice Numis have reviewed the deal as extremely positive and have updated target sp to £9 !!! SP is going to be on Steroids - hold onto your hats !!!

some very rough calculations on value of rights ( based only on what I have digested from posts- needs verification once full details are available) : New shares issues for a consideration of £461m at discount of 60% = 163m new shares = therefore doubling size of current 163mn shares in issue to 326mn shares. Assume OPAY value of £800 pre -acquisition but updated for latest results ( £683 @sp of 4.19 plus £117 premium for results17%)=sp of £ 4.91 ( still below all time high). This is arbitrary on my part but reasonable assumption. Acquisition deal £ 800mn ( $1.1bn), and assumed to be EPS accreting from 1st full yr ( so no reduction in EPS assumed). Revised total fair value of enlarged group of £1.6bn. £1.6bn divided by 326m shares = sp = £ 4.90 per share for enlarged group. Cost of right ( 60% discount to sp of £4.19) = £1.68 Intrinsic value of rights = £ 3.20 ( £4.90 - £1.68) This would of course need to be discounted for time value of money - but current shares should attract a significant premium once suspension is lifted and the value will reflect the price of the rights attached. Interestingly that is very close approximation to the broker forecasted sp pre deal announcement of between £6 and £7. GLA

That does sound like a very good deal for those already in - I expect shareprice will reflect that once suspension is lifted. The move to FTSE 250 will also have a very positive impact on SP. :)

there is an investor conference call at 9 am so more details are likely to be forthcoming then, including size of the rights issue and terms GLA - this may just be the day when the SP finally lives up to its potential !!

Why would you be worried - this was exactly the right thing for the company to do - they are funding the acquisition through a rights issue - so it makes sense to publish the terms of the rights issue. This prevents any wild and silly gyrations in price until the information has been absorbed. My guess is that shares will rise significantly on end of suspension. DYOR. I think this acquisition is really positive news combined with the move to FTSE 250. On line payments is a red hot area due to the growth and profits potential and there will be major demand for shares - few growth opportunities exist offering the kind of growth OPAY has shown in on-line payments market. This deal definitely puts Optimal right at the top of the pack in my view. Key - They have not diluted existing shareholders by issuing shares to Schrill shareholders - they are offering a rights issue instead ( which is apparently already fully underwritten). There is also a large cash pile so it may well be that the rights issue is for even less than the full acquisition cost. It is sensible to suspend until they publish the rights issue document bear in mind with this acquisition , sales line have just about doubled automatically and a whole addition cross sell customer base has been acquired- combine that with OPAY ability to integrate based off previous track record - all good.

I should add that a quick scan of accounts indicates that £100m+ of debt has been added recently and that there is a big surplus cash position so I am assuming that the rights issue will be well south of the actual agreed acquisition price as a significant proportion can be funded out of existing cash pile.

They need to publish the rights issue document in relation to the acquisition ( already fully underwritten) , that doc also needs to be shared with analysts etc..... this is to give time for them to then crunch the numbers and absorb all of this news - there is also a planned move to the FTSE 250 which will open up a whole new set of buyers for a company with an enlarged market capitalisation.

@ technimentalist Using the 200 EMA rather than SMA - EMA at 397.9 - Google finance charts I have invested primarily on fundamentals - that said I think the technicals look to be nicely aligning what do you think of the candlestick pattern forming - if I am not mistaken it reads like a bullish harami with confirmation at the 400 buy level - should argue well for the RSI moving into overbought territory ?

Now trading above the 200 day average of 397 and has broken the 400 resistance level for the first time in months. It has done so with normal volumes, very encouraging ahead of results on Monday. GLA