A modest 8.6% premium is being offered to investors in business telecoms company Daisy (DAY:AIM) by founder and chief executive officer (CEO) Matthew Riley to take the company private. In light of this, the risks of the buyout failing, and the slim chance of the company’s minority backers being able to extract an improved price, it might be best to get shot of the company in the market now.
Riley is putting the final touches to a 190p per share deal for the business-to-business (B2B) communication services supplier, backed by private equity firms Toscafund and Penta Capital. This level would value its equity at a little more than £500 million, or at an enterprise value (EV) of £605 million.
That's just 10.4 times consensus earnings before, interest, tax, depreciation and amortisation (EBITDA) of about £58 million for the year to end March, significantly below chief peer Alternative Networks’ (AN.) EV/EBITDA of 11.1, for the year to September 2015 and described by Panmure Gordon's Adam Lawson as a ‘bit stingy’.
But Daisy’s independent directors may have limited wriggle room in negotiations, which could mean minority investors end up being short changed. Riley personally owns more than 61.4 million Daisy shares, or 23% of the company, while Toscafund is its largest single shareholder with a 28.5% stake.
The buyout only needs 75% of votes cast to give it the green light to push the deal through, which could leave minorities who don’t agree to the bid with a difficult-to-trade private enterprise.