Axis-Shield is not for turning. At least not yet. Last week, the medical diagnostics company, which makes machines to test for conditions such as diabetes, published details of why it had said no to an offer from its American rival Alere Inc.
The saga dates back to July, when Alere made an indicative approach pegged at 460p a share, valuing Axis, which has its headquarters in Dundee, at about £230m. The response was swift. Shortly after news of the offer emerged, Axis said the unsolicited and preliminary proposal fundamentally undervalued its business.
Unperturbed, Alere came back in early August, this time with a formal, all-cash offer of 460p per Axis share. Cue another response from the target, which reiterated its view that the money just wasn't good enough in light of the business and its prospects. Alere, however, went ahead and posted an offer document on 11 August, giving shareholders until this Thursday to send in their acceptances.
Axis, unsurprisingly, remains against the idea and, last week, it told everyone exactly why it was opposed to the bid, recommending that "shareholders do not accept the offer and should take no action". The company said 460p a share was not enough to pay for the benefits it was now seeing from its investment in its Afinion testing machine, or from the promise held by the global lipid/cholesterol market – estimated to be worth about $500m by 2013 – that it planned to enter with Afinion's European launch later this year.
Moreover, it said, there were numerous opportunities for growth in the diabetes market in Asia and other emerging markets, where it had placed more than 21,000 of its NycoCard diabetes testing systems. "Alere has identified Axis-Shield's strengths and growth potential but wants to buy your company cheaply," the company's chairman, Dr John Brown, said in a letter to shareholders.
If the stock price is any guide, then the market certainly appears to agree with him, with Axis's shares closing at 480.25p on Friday – more than the 460p Alere is offering. This isn't surprising given past speculation regarding the possibility of another offer emerging from a company such as Abbott, Roche or even Siemens. Similarly, analysts appear unconvinced, with Numis questioning comparisons with the likes of Consort Medical. Its analyst Charles Weston said: "Recent comments from Alere reported in the press ... justifying the valuation by comparing Axis-Shield to Consort Medical strain the bounds of credulity, in our view, given the widely differing performance, growth prospects and markets between the two companies."
The Axis-watchers at DnB NOR Markets are equally adamant that 460p is just not enough, particularly given the chance that another suitor may yet emerge. "If an industrial player like Abbott, Roche or Johnson & Johnson were to acquire Axis-Shield, Alere would face much tougher competition in the lipid [cholesterol] market," it said. "The risk of this scenario supports our view that Alere would be willing to raise its offer. This would also be in line with how Alere has acted in previous acquisitions."
So, in the event Alere does ultimately relent and raise its bid, what could shareholders expect? Well, if DnB NOR's base-case scenario is any guide, it may raise its bid by 10 to 20 per cent, while Investec reckons that "a fairer price would be between 530p and 570p".
Whatever happens, this is certainly a company to watch over the coming days and weeks.
MoneySwap hedges bets on Macau casino tie-up
Another week, another listing on the Alternative Investment Market (Aim). This time it is the Hong Kong-based MoneySwap, which is preparing for its admission this Wednesday. The online money-exchange platform, which allows businesses and individuals to use the Swift banking system to transfer funds across different regions, is raising just over £3m with the listing, which is expected to value the firm at about £20m.
The money swap, so to speak, takes place through Swift – an established network that allows banks to exchange messages with each other – and boasts low fees and no minimum quantity. Once the transfer is completed, funds can be withdrawn via a recipient's bank account, or loaded on to one of the pre-paid MoneySwap MasterCards that are issued by partner banks.
The firm company currently has its sights set on the small businesses active in imports and exports in the Asia-Pacific region. Alongside this, Money-Swap said it is also targeting the many millions of remittances made by migrant labourers throughout Asia, and also at the lucrative gaming sector.
For the latter, it is working with the operators of the Melco Crown and Genting casino in Macau – China's answer to Las Vegas. The idea is to adapt the MoneySwap platform to allow visitors to deposit funds and receive payouts "in their place of departure and currency of choice", rather than at the casino in Macau.
This year is also set to bring a product launch, with Money-Swap gearing up to unveil its QuickPayIT solution in the third quarter. This will allow individuals to pay merchants for goods and services without either one having to enter or receive banking information, according to the company.
"We are delighted to be bringing MoneySwap on to the London Stock Exchange's Aim market," said Richard Proksa, the chief executive of MoneySwap. "The LSE has an exceptional standing in the minds of Asia-Pacific businesses and we see great competitive local advantage in being able to demonstrate that our company, processes and management team have all met the stringent requirements set by the LSE."
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