IndigoVision Takeover Battle

By John Honovich, Published Jan 10, 2012, 07:00pm EST

Less than a month ago, IndigoVision's CEO 'resigned'. Since then, the situation has devolved into a very public takeover battle with the CEO saying he was forced out and now leading a new effort to take back his former company. In this note, we examine what is going on and what this means for IndigoVision's competitiveness.

[UPDATE: Jan 30, 2012: Takeover Talks Terminated.]

Let's start with a statement provided to us by the new CEO of IndigoVision recaping the action and his outlook for the future:

"There were offers in November, from [the former CEO] / [Scottish Equity Partners (SEP)], to take the Company private however they we not close to a level that merited serious consideration by the Board and were unequivocally rejected.  Also the requisition for a General Meeting to replace two directors was withdrawn on 28 December.  A trading update was issued on 25 November stating that operating performance in the financial year to that date was significantly higher  than the corresponding period in the previous year and materially ahead of the same period in any earlier year.

The position currently is that stock exchange takeover panel have given SEP till 20th January to clarify intentions. That means that anyone with one per cent or over has to declare their holding. It does not mean there is an offer. Nor does it mean that there will be an offer. It is a process to make holders declare holdings, and to force SEP to put up or shut up."

These events have been similarly covered in offical statements from IndigoVision (e.g., Scottish Equity Partner's statement [link no longer available] and local newspaper coverage). One element that might be unclear is the reference to a Takeover Panel which is a UK regulatory body (see wiki entry) that oversees mergers/acquisitions.

Takeover?

We have no idea how likely a takeover will be. However, numerous sources indicate that the former CEO had been and is likely still working on a plan / offering to retake IndigoVision. As he stated to the Herald Scotland last month: "The direction in which the chairman is taking the board and the company is not wise. I look forward to getting back into the business and bringing on board some new directors with a fresh perspective on how to take the company to the next stage of its development."

Impact on IndigoVision

Takeover battles, especially in such a public, divisive form are risky and potentially quite damaging to the company involved. Typically, these events are bad for employee productivity as they are highly distracting. Plus, the can be disconcerning to partners and end users who do not know what is going to happen. Indeed, if you are an IndigoVision customer, prospect or partner, this is something that must be tracked carefully and weighed appropriately in one's decision making, especially given how many strong and robustly growing competitors there are in IndigoVision's space.

Ultimately, we still believe the company has a lot of work to do (as noted in the analysis of the CEO resignation). While IndigoVision has a strong technology foundation and has made efforts recently to open up, smaller competitors have developed more aggressively than IndigoVision over the last few years, increasing IndigoVision's challenges in defining a clear competitive position.

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