IndigoVision Takeover Talks Terminated

By John Honovich, Published Jan 30, 2012, 12:00am EST

A wild two month period for IndigoVision may be at an end. Recently, we reported that IndigoVision's CEO 'resigned' and then led an effort to take back the company. Now, as the parties have announced those talks have terminated [link no longer available], we look at the aftermath and their recent financial results.

Let's start with an update on the most recent events:

  • IndigoVision's stock price has gyrated wildly, dropping about 70% from February to October of 2011 (down to 165p per share) before doubling over the next three months since the acquisition negotiations started. Overall the stock is still down over 20% from its peak in the beginning of 2011 - now at 330p per share.
  • The Financial Times reports that the former CEO's initial bid a few months back was up to 265p while the Scotsman claims that the most recent bid was 'close to 400p' per share (this claim is unsubstainted and unconfirmed).
  • IndigoVision's stock price is now ~$40 Million USD compared to annual revenue of ~$45 Million USD. That puts them at a price to sales ratio of slightly less than 1, a ratio in line with the low growth company that IndigoVision has recently been.
  • The company disclosed it spent ~$500,000 USD direct costs [link no longer available] on the 'battle' which is about 1% of annual revenue. Obviously, this does not reflect the overall disruption and negative publicity such an event caused.

The company also provided guidance on its last 6 months financial performance [link no longer available] with revenue growth flat but appreciable gross and net margin growth (e.g., "sales are expected to be a little below the record levels achieved in the corresponding period last year" and "Operating profits ... are expected to exceed £1.5m, before exceptional items, comfortably ahead of last year's first half").

Where Now?

The good news is that the stock price has rebonded significantly and that the hostilities are over for now. The bad news is that revenue is still flat to down year over year. Things to watch:

  • If the stock price drops again, will this motivate the former CEO to try again to takeover the company?
  • Can IndigoVision get revenue growing to match the 25-35% rate of its main competitors?
  • What new products or approach will IndigoVision introduce to reinvigorate growth?

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