A month after buying shares of Haivision to establish itself as the third largest shareholder of the streaming solutions provider, the Ontario company Evertz now wants to buy the entire Montreal company, valuing it at 130 million.
Listed on the Toronto Stock Exchange, Evertz is offering to acquire all of Haivision’s shares at $4.50 each, equivalent to a 22% premium to the $3.70 stock price. when markets close on Monday.
In response, Haivision’s stock rose 20% on Tuesday to close at $4.43 on the Toronto Stock Exchange.
The question is whether 130 million is enough in the eyes of the leaders of Haivision. In response to Evertz’s initiative, Haivision said Tuesday simply that its board is reviewing the proposal to determine what is in the best interests of the company and its stakeholders.
Bay Street watchers expect the proposal to be rejected.
“I expect Haivision to be more demanding,” commented analyst Robert Young of Canaccord in a research note sent to clients.
His colleague Nick Corcoran, at Acumen, agrees. “It’s probably an opening offer with the potential for an increase if negotiations continue,” he said in a note published on Tuesday.
Nick Corcoran calculates that even by paying $9 per share to acquire Haivision, Evertz would achieve a beneficial transaction for its shareholders.
For his part, Robert Young does not exclude the possibility that a competing proposal will emerge.
Last month, Evertz revealed that it bought shares of Haivision to hold a 10% stake. The Ontario company said it bought the shares of Haivision for investment purposes. Evertz, however, sold a small block of Haivision shares last week, dropping its stake to just under 10%. In this way, Evertz is now no longer required to report its transactions in the stock, unless it makes purchases that again raise this stake to 10% or more.
In interview with The Press a month ago, the founder and CEO of Haivision, Mirko Wicha, was adamant: Haivision is not for sale.
PHOTO MARTIN TREMBLAY, PRESS ARCHIVES
Mirko Wicha, founder and CEO of Haivision
Analyst Robert Young considers that a combination of the two companies has advantages, in particular because of the complementarity of certain activities and the gross margins generated by Haivision.
He believes, however, that Haivision can aggregate more than 34% of the shares (employees, executives and pro-management insiders), making it difficult for Evertz to achieve a supermajority with a hostile bid.
Although many shareholders could be satisfied with a premium of approximately 20%, Robert Young recalls that the initial price of the share at the IPO was $6 in December 2020.
“It’s likely that a bloc of long-term shareholders will argue for a price at or above that level,” he says.
This expert adds that Evertz has probably already paid more than $4.50 to buy shares given that the bulk of Evertz’s position in Haivision was built last July when the stock was trading between $5 and $5.75, according to purchases of marketable securities in Evertz’s quarterly information.
Since its IPO, Haivision has made two acquisitions. The company has grown and does not need money, pointed out Mirko Wicha last month. The value of the company nevertheless fell sharply with the whole of the tech sector.