Infomedia calls time on all outstanding takeover offers

Like a jilted lover waiting at the window for their paramour to return, Infomedia (ASX: IFM) has turned the screws on its recent suitors by forcing an ultimatum on any pending union.

Infomedia has given its courters until the end of the month after which time the mid-cap software company will take its bat and ball and go home.

The market clearly didn’t like Infomedia’s ultimatum this morning with the share price down -6.62% at noon to $1.27, well below previous indicative non-binding bids.

After previously missing multiple bid dates, former suitors are understood to have requested more information, and more time beyond the most recent deadline 9 September.

But in the absence of a binding offer, access to Infomedia's books will end 30 September.

FY22 result disappointed

The company’s full year FY22 result clearly didn’t do anything to curry extra favour with potential acquirers, with net profit ($8.2m) at half last year’s number, despite enjoying a 23% increase in revenue in the year to June 30 to $120.1m.

But despite the profit hit, which included $14m of non-cash depreciation, amortisation and other non-operating items such as expensing of acquisition earn outs, Infomedia’s sales climbed across all geographies.

Sales were up 59% in the Americas, 15% in the Asia Pacific and 5% in Europe, Middle East and Africa.

Infomedia had no debt and $69m cash on hand, and full-year dividends were 5.6¢, up 26%.

The company has guided to revenue in the range of $131m to $139m in FY23.

Who bid what?

Having done due diligence on Infomedia, the full year result should have come as no surprise to previous bidders.

Early May, Infomedia received a conditional non-binding indicative proposal of $1.70 a share offer from a consortium comprising Boston-based TA Associates and Perth-based funds manager Viburnum.

By mid-May Infomedia’s share price had closed 28.9% higher.

BY the end of the month Infomedia’s share price rallied another 5% after American tech-focused private equity firmBattery Ventures offered a non-binding $1.75 a share bid.

While Battery Ventures has backed out due to unknown reasons, the TA Associates-led offer was matched by Texas-based Solera in June.

Given that all bids are well under the $2.10 Infomedia was trading at early November 2019, it’s hardly surprising that the board wasn’t urging shareholders take up either offer.

What brokers think

Infomedia’s share price is down around -24% over 12 months.

Consensus on Infomedia is Moderate Buy.

Based on Morningstar’s fair value of $1.61 the stock appears to be undervalued.

While revenue guidance is achievable, UBS believes momentum could take a while to re-accelerate, given the recurring revenue nature of the business.

The broker retains a Buy rating, with the target price falling to $1.95.

Infomedia share price over one year.