It is hard to believe that anyone other than Sonae would carry out a redemption. Apparently, however, they do not seem to have a major need to delist Musti, even though it certainly hinders the execution of the growth strategy to some extent. It is worth noting, though, that they seem to have a clear strategy, and having followed them in other matters, their approach seems mainly smart. They appear to think very long-term and, despite their traditionalism, quite freshly. By this, I am mainly referring to the owner family, its representatives, and the chosen leadership in general. Most Finnish listed companies lack a long-term, “faced” owner like Sonae’s owner family. If a retail investor believes that their interests in Musti align, then in that sense, an exceptional ownership base would be available.
It should also be noted that when the original tender offer was made, the management was (immorally) involved in making the bid. The company’s insiders and Sonae, which operates globally in the retail sector, have thus seen an attractive opportunity in the company at 26 euros per share. Additionally, Finnish pension companies found the price interesting at 19–26 euros, and while one can have many opinions about pension companies’ investing, some kind of thought process and valuation rumba has certainly been conducted in Ruoholahti as well. These things tend to be forgotten when the stock price wallows in low volume and the company’s business struggles with weak consumer demand.
Even though bottom-line profitability has been weak since COVID-19, the company has still been able to grow. The performance may be surprisingly good relative to the operating environment. Furthermore, the business cash flow margin has remained at a fairly reasonable level. If you look at profitability through the gross margin, it has been successfully maintained at a good level, so the softness in profitability is explained more by the lower lines of the P&L. This is logical in itself as growth investments have begun under the leadership of the new owner. They don’t just want to conquer the Nordics; the target is surely more or less all of Europe, and this certainly requires a larger organization in many ways. In my opinion, the CEO has communicated this quite consistently in the interim reports.
Summa summarum, Musti is indeed interesting in that it is, to some extent, a very exceptional case among listed companies. Especially when we are talking about a retail player. It is probably true that with current information, an attractive price moves somewhere in the 14–18e per share range, and in that sense, the low-volume stock market price looks quite correct, as stated above. I would still leave a small option that, viewed from the inside, the situation looks significantly better. It will be really interesting to see what the next 5–10 years bring. Musti no longer lives in a quarterly economy, even though it still reports on it.