Yesterday, after the market closed, there was an announcement that Cinven are considering an offer for Ideagen (IDEA). They note the recent speculation but say there is no certainty an offer will be made and no approach has been made to the directors.
I first purchased shares in this company in 2012 and they are still a significant proportion of my portfolios so this potential offer is worthy of some comment. The share price at closing on Thursday was 253p which according to Stockopedia means that the prospective normalised p/e is 35. The market cap is 11 times sales revenue.
Even if the share price has fallen from a peak of 325p in the last year as with many technology stocks, this does not make it outstandingly cheap in my view that would warrant a very high bid premium.
But there are many good qualities in this company such as high recurring revenue although the financial picture is clouded by numerous acquisitions and disposals resulting in a lot of adjustments in the accounts. A bidder might find it attractive though simply because it operates in the high growth market sector of audit, risk and compliance software so anyone wanting to move into that sector might be willing to pay a high premium for a well managed company.
I will await the outcome but if there is a sharp jump in the share price next week I might hedge my bets and sell a few shares.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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