Tesserent is Australia's largest listed cybersecurity company (ASX:TNT) providing a full suite of cybersecurity solutions and services to medium and enterprise level organisations across all industries and all levels of government
Days Held110 days
Gross Return4%
Event TypeTakeoverTesserent, takeover, ad profit in 4 months
TNT, a beaten-down cyber security tech firm, announced a binding deal with UK-based Thales at $0.13. While our view was that there could be competing interest, the return on offer for what was at worst a low-risk parking spot was well above cash in the bank. Ultimately, members returned a gross profit of 4% in roughly three and a half months.
Events timeline:
Current Advice: Closed
Latest Recommendation 22 September 2023, 04:00 pm
TNT announced this morning that it has now received FIRB approval, so today’s Federal Court hearing will go ahead without any outstanding conditions and should be approved. The stock will then cease trading on Monday, with payment due on 4 October. In summary, TNT will generate a return of 4% for a holding time of roughly 3.5 months, representing an annualised return of roughly 14%. Considering the volatile performance of the broader market of late, the return is solid if not spectacular.
Update: 19th September 2023, 04:00 pm
TNT held its scheme meeting yesterday and, not surprisingly, the deal with Thales for $0.13 per share was supported by over 95% of the votes cast. The date for the Federal Court hearing is this Friday, with shares set to cease trading on Monday and payment due on 4 October.
Surprisingly, the scheme remains conditional on FIRB approval which has yet to come, but the company has stated that it has no reason to think that FIRB approval will not come this week. Additionally, we have discussed Thales’ existing presence in Australia already, so it seems highly unlikely there is anything sinister in the delay. For the sake of keeping members informed, we will provide a further update once a decision from the FIRB has been released.
Update: 12th September 2023, 11:00 am
With the scheme meeting set for 18 September and the deadline to submit votes fast approaching, it is now time for members to get in our voting preferences for the proposed $0.13 per share acquisition by Thales. While we had hoped to see bidding tension emerge for TNT – we only recently discovered that Telstra (TLS) was the underbidder for TNT – it looks like we will have to settle for a solid parking spot, with an annualized return of roughly 14% at our entry of $0.125 (and 28% for those fortunate enough to buy the stock at $0.12).
To vote, members can visit https://www.investorvote.com.au/Login. The details to access one’s holding can be found on the proxy forms which accompanied the scheme booklet sent out last month. If you do not have a copy of your proxy form, you can contact the registry at 1300 850 505.
Once you have logged into the portal and accessed the section to vote, we recommend members vote ‘FOR’ all proposed resolutions. While we anticipate the vote to overwhelmingly support the proposal, we suggest members vote for the sake of caution. Assuming everything goes to plan (and Federal Court approval is received on 22 September), members will be paid on 4 October, bringing to the conclusion an investment holding period of three and a half months.
Update: 24th August 2023, 11:00 am
TNT investors should by now have received their scheme booklets providing information on the upcoming scheme meeting. The date for the scheme meeting is 18 September, so we still have a few weeks before we need to act. Members should keep a watch out for further updates closer to the scheme meeting date. The stock remains a buy up to $0.125.
Latest Recommendation: 15th June 2023, 12:20 pm
TNT announced earlier this week that it had signed a binding scheme implementation agreement with cybersecurity giant Thales, which will see TNT shareholders paid $0.13 per share. The offer is a significant premium of 165% to the pre-bid closing price of $0.049 per share, but the premium is a little misleading. Like many pre-profit tech businesses, TNT has endured an atrocious eighteen months. TNT last traded at $0.13 at the beginning of the year and as high as $0.44 in late 2020. For a company as big as Thales that can wear the short-term cash drain (and likely extract some cost savings from the overheads), the timing is opportunistic, and competing bids can’t be ruled out, especially as there were no leaks about this deal and there was no formal sales process. TNT isn’t the only company exposed to defense spending, with Austal (ASB) apparently the target of interest from several trade and private equity buyers.
We have been biding our time, hoping to get set at $0.12, but have decided to pull the trigger at $0.125. At $0.125, members stand to return 4% in roughly three to four months (an annualised return above 12%), which is worthwhile, and as mentioned above, competing bids can’t be ruled out either. The larger-than-usual downside, if the deal falls over, needs to be considered when contemplating our portfolio weighting. Therefore, we advise members to allocate a ‘high-risk’ weighting even though the deal looks highly likely to complete in the absence of competing bids. Conditions are pretty standard, and there are no real concerns, but one must always consider the unexpected, hence the ‘high-risk’ designation.
In summary, members are advised to buy TNT at no higher than $0.125 for a short-term, high-risk Event Portfolio investment.
