Faced with the deemed depreciated value of its stock on the stock market, Coveo is offering its shareholders to buy back up to $40 million of their shares through a Dutch auction procedure and intends to subsequently launch a share buyback program in the normal course of its activities.
The Quebec company specializing in artificial intelligence applied to e-commerce indicated at the end of the day Tuesday that it intends to conduct its takeover bid by modified Dutch auction in a price range ranging from $7 to $8.50. $ per share.
Shareholders depositing their shares will set the redemption price. The redemption price will be the lowest price in the range to allow shares to be redeemed up to the maximum amount available for the transaction.
Coveo’s stock closed Tuesday’s session at $6.54 on the Toronto Stock Exchange.
Coveo’s Board of Directors believes that its tender offer is in the best interests of the company and its shareholders, taking into account, among other things, its level of liquidity, expectations regarding the achievement of positive operating cash flow, and the current share price, which the board believes does not reflect the fundamental value of the business.
Coveo, which will complete its issuer bid with available cash, expects to achieve positive cash flow from operations in its fiscal year 2025.
Coveo indicates that the Solidarity Fund for Quebec Workers, which controls nearly 14% of the shares, has expressed its intention to deposit subordinate voting shares.
Following the completion of the Dutch auction, Coveo intends to launch a normal course issuer bid.
Performance above expectations
Coveo also presented its year-end performance on Tuesday. Revenues for the first three months of the year increased by 15% to 29.1 million US while the adjusted operating loss decreased to 4.3 million US. In both cases, the results are above analysts’ expectations.
For its 2024 fiscal year that started last month, management expects revenue to be in the range of $127 million to $129 million, and expects to post an adjusted operating loss of between $13 million and $15 million.
Coveo went public two years ago. The operation had allowed the company to collect a quarter of a billion to help it pursue its growth strategy.
After being pegged at $15 for its stock market debut in the fall of 2021, Coveo’s stock has been rocked with the entire tech sector. Since its low reached in the fall, the action has rebounded but is still far from its peak.