Former market darling Bravura Solutions has rejected a takeover approach from an unnamed suitor, saying it significantly undervalues the wealth management software provider.
Bravura, which placed 11th on last year’s Smart50 with revenue of $136 million, was hit hard by the GFC and has had a difficult few years.
The company’s share price, which was as high as $2.10 back in 2007, dipped below 10c earlier this year. In mid-August, the company posted a $13.2 million loss for 2009-10, compared with a $1.6 million profit in the previous corresponding period.
Bravura said it “received and rejected an incomplete, indicative and non-binding proposal” to take over the company through a scheme of arrangement that would have valued Bravura at 17.5-20c per share.
The company’s shares closed yesterday at 14c, but Bravura said in a statement that the bid was simply too low.
“The Bravura board continues to believe that the proposal undervalues Bravura based on factors including the company’s significant improvement in EBITDA and operating cashflow, which together with… the improving strength in Bravura’s core markets, and imminent product releases supports the view that the underlying value of Bravura is not truly reflected in the current share price.”
The board’s move was endorsed this morning by brokers JP Morgan, which has placed a price target of 21c on the company and is upbeat about its prospects to grow in a recovering global financial sector.
Bravura has not named the spurned suitor, although a report in the Australian Financial Review has claimed British private equity firm Duke Street was behind the move.
Whether other companies are interested in acquiring Bravura also remains to be seen.
Bravura chief executive Simon Woodfull told SmartCompany the group was not actively looking for a buyer.
“I think as is natural, with the share price the way we are, there are always going to be approaches to try and execute on some sort of bargain,” he says.
“But on many different levels – price being one – we thought this was an inappropriate offer.
“We are not actively out there talking to anyone, we are not out there soliciting officers”.
Any buyer would have to win the approval of Bravura’s major shareholder, private equity firm Ironbridge Capital.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
