It would appear that Trakm8's potential bid approach for Belgravium Technologies is now dead in the water. Should investors in either company be disappointed (I hold both incidentally)? Not in my opinion. Although I have no knowledge of the initial negotiations, I strongly suspect that given talks have been terminated in less than five days, it's a case of there having being little common ground on price. Clearly, the two proposed valuations were poles apart.
Trakm8 recently acquired Box Telematics for £4.25m where Box produced revenues of £8.4 million and profit before tax of £850,000, given that Belgravium produced almost identical revenues to Box with a profit before tax of £125,000, it seems unlikely that they would wish to pay much more than that for Belgravium. At yesterday's close Belgravium was valued at about £4.9m.
As a shareholder in both companies, I am comforted that Trakm8 like acquiring good businesses at bargain basement prices, and Belgravium believe that their company is considerably undervalued.
In both cases one or more Directors have a substantial shareholding in their respective companies which ensures that their interests are aligned with the interests of their shareholder base.
Both companies continue to be a long term hold for me.
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