Small Cap Value Report (3 Feb 2017) - NETD, ZMNO, JPR

Sunday, Feb 05 2017 by

Good evening,

I'm just catching up on one or two things from Friday.

NetDimensions Holdings (LON:NETD)

Share price: 97.5p (up 24.2% on 3 Feb 2017)
No. shares: 51.3m
Market cap: £50.0m

(at the time of writing, I hold a long position in this share)

Proposed recommended cash offer - this company has been in play since early Oct 2016, when it told the market that it had received an unsolicited takeover approach. So there has arguably been a bid premium in the share price since then.

I reported here on 23 Dec 2016 that another update from the company seemed to give a steer that the takeover approach was likely to succeed. The phrase "advanced discussions" suggested that a deal would probably happen. That seemed to me a pretty good point to go long, for the bid.

A recommended cash offer of 100p has been announced.

The bidder is Learning Technologies (LON:LTG) - so as usual I've been checking them out, to see how likely the deal is to go ahead. LTG already has 57.15% of NETD shareholders onside. Interestingly, those commitments drop away if a competing offer of 110p+ is received. It sounded as if more than one party was originally interested, so I wonder if this might be a case like Lavendon, where multiple competing offers are tabled?

On the downside, LTG needs to complete a Placing in order to raise the bulk of the funds for the takeover of NETD. So there's a chance something could go wrong there, if it's not able to raise the funds. However, I doubt it would have launched this takeover approach without being very confident of getting the Placing away. But you never know for sure, until the money's in the bank.

Timing - the deal is expected to complete in 2 months. So there's an opportunity cost of having money tied up here, which could be deployed buying something else.

My opinion - this looks a decent outcome for NETD shareholders. Personally this is only a small position for me, so I really can't decide what to do - whether to bank most of the profit now, or hold out for the full 100p per share? There's always the possibility of a higher competing offer. However there's also the downside risk that the 100p bid could fall through…

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NetDimensions (Holdings) Limited is an investment holding company. The Company is principally engaged in licensing of computer software and the provision of related services. It provides learning and performance management solutions to help companies, government agencies and other organizations manage productivity. Its segments include North America, Europe, Middle East and Africa (EMEA), Asia Pacific and Rest of the World. It offers solutions, including Enterprise Solutions, which include NetDimensions Talent Suite that offers industry solutions for mobile workforce learning and performance support; Content Solutions, which include NetDimensions Interactive business unit that offers custom e-Learning, course libraries, course conversion, consulting, gamification, mobile content/ applications and learning portals, and Professional Services, which include consulting, implementation, support and other professional services so that its clients can deploy its technology solutions. more »

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zamano plc (zamano) is an investment holding company. The Company and its subsidiaries are involved in the provision of mobile data services and technology in the United Kingdom, Ireland, Australia and Eastern Europe. The Company's segments include Republic of Ireland (ROI) and United Kingdom (UK). The Company is a provider of Web and mobile marketing campaigns to end users. The Company offers solutions, which include messaging gateway, mobile payments and mobile marketing. zamano offers cloud-based messaging solutions for businesses. Its cloud-based Short Message Service Centre enables broadcast messaging, communications and mobile publishing through its application suite. zamano enables mobile payment solutions for businesses through its partnerships with mobile network operators. Its online mobile marketing tool, Message Hero, allows users to reach customers by text message. Message Hero allows businesses to send alerts, event information, special offers and notifications. more »

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Johnston Press plc is a United Kingdom-based local and regional multimedia organization. The Company provides news and information services to local and regional communities through its portfolio of various publications and Websites. The Company operates through two segments: Publishing (in print and online) and Contract Printing. Its portfolio contains approximately 190 paid for weekly newspapers, 10 paid for daily newspapers, 30 free titles and over 10 lifestyle magazines. It also has approximately 190 news sites and over 20 other sites, including entertainment site WOW247 and Jobstoday. Its brands include BallymenaTimes, BanbridgeLeader, Belfast News, News Letter, CarrickTimes, ColeraineTimes, Mid-Ulster Mail, Derry Journal, Sunday Journal, TyroneTimes, LarneTimes, LurganMail, Isle of Man Examiner and Yorkshire Post. Its titles span Scotland, the North East, West Yorkshire, the North West and Isle of Man, South Yorkshire, the South, Midlands and Northern Ireland. more »

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  Is NetDimensions Holdings fundamentally strong or weak? Find out More »

3 Comments on this Article show/hide all

ccfragment 6th Feb 1 of 3

@ Paul - any chance you could review Adept Telecom's trading update from Friday please?

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oxford 6th Feb 2 of 3

I thought that you said a few days ago that you were reviewing 32Red; I can't see it

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peterthegreat 6th Feb 3 of 3

I also had a look at Johnston Press recently after I saw that activist investor, Crystal Amber, had taken a large stake. I came to the conclusion that perhaps Crystal Amber had uncovered something in their due diligence which was not apparent to me as, even with the ongoing assets sales, I couldn't see it as an attractive investment. It is also possible that Crystal Amber have received a positive response from the board about management changes but I couldn't justify investing myself at the moment and agree with the points made by Paul. Incidentally, I also notice that Crystal Amber has taken a very small stake in Shepherd Neame (ISDX market,). This is presumably to engage with management to see if there is any appetite for generating additional value from the pubs & brewery business perhaps through corporate activity. This is not the place to elaborate further, but this looks interesting to me.

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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