04.03.2025
I am very disappointed in the Team Internet Group (LON:TIG) statement this morning.
But then the writing was on the wall last November when the group declared its Q3 Trading Update, that was on 11th November 2024.
There was a definite suggestion of ‘insider dealing’ ahead of that previous announcement, which saw the shares fall from 139.87p on 6th November to 119p by 8th November, on the back of 1,126,407 shares traded that day.
Q3 Trading Update Writing On The Wall
The next trading day, the 11th November, saw the ghastly Q3 Update published, with some 5,218,249 shares being traded in reaction, falling to a low of 86.10p at one stage.
Within days they had fallen still further, touching 76.40p on 26th November.
There was a gradual recovery, helped by rumblings of a few Private Equity houses being interested in taking the internet services group into their folds.
The shares were up to 91p on 6th January, with some 908,561 dealt.
PE Buyers Around
By mid-morning on the 7th January, they were already moving ahead again, with the 10.18am announcement that the group had received two separate approaches – from TowerBrook Capital Partners and also from Verdane Fund Manager AB.
Each proposal was for 125p cash per Team Internet share.
Three days later, on 10th January, TowerBrook Capital Partners backed out of the ‘race’ and declared that it did not intend making an offer.
That news knocked the shares back from 120.80p to close that day at 103.40p, after dropping to 101.80p at one stage.
For the ensuing month and a half, they ranged between 111.40p to 93.20p.
After topping at 101.20p yesterday the group’s shares closed at 98.60p.
This Morning’s Shock News
Then this morning Verdane Fund Manager declared that it did not now intend making a bid for Team Internet Group.
The company also stated that it was not trading as well as previously described – it shares reacted to the pieces of bad news by collapsing to 55.50p, before steadying off at 60.90p as I write.
And now the £920,000 a year CEO Michael Riedl and the £423,000 a year CFO Billy Green are ending up with a load of ‘egg on their faces’ – especially considering that for the last couple of years the group has been borrowing shed loads of money to ‘buyback’ its own stock – some 24.72m shares, with its shares running up to 207.50p last August.
The company stated that its Board remains confident in Team Internet's fundamental prospects and business.
Declaring that Team Internet is a highly profitable and cash-generative business and, continues to explore options to increase shareholder value including optimising its capital allocation strategy, as well as a comprehensive review of its asset ownership.
The company stated that the interaction of the Board with the two recent inbound approaches was consistent with its efforts to maximise shareholder value.
It also noted that it had received repeated approaches for its Domains, Identity & Software segment, which continues to trade strongly.
Broker’s View
Analysts Bob Liao and Carl Smith, at Zeus Capital, have today slashed their revenue and profit estimates for the group.
They also noted that:
“To deliver shareholder value, the company would consider offers for its various businesses, repaying debt, paying dividends or buying back shares.”
For the 2024 year they are now looking for $803.0m revenues and just $74.2m adjusted pre-tax profits, with earnings of 21.3 cents per share, and a 2.2c dividend.
For this year they see $725.6m sales, $49.4m profits, 14.2c earnings but with an increased dividend of 2.4c per share.
My View
Oh dear, oh dear, oh dear – this has been a real ‘car crash’ – stay away from the scene of this accident!
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