Just the inclusion of AI and investments in it have sunk like extra sand in the Sahara, and when you consider the company’s multiples combined with its business performance over recent years, it was the end of my long-term ownership.
The purchase price is absolutely absurd. The company to be acquired is like a patchwork quilt, and I am very skeptical about synergies. At last year’s annual general meeting, someone asked, “Don’t you follow the share price at all, so that if you bought something, you would maintain/grow in market cap and funds would be forced to buy…” (not an exact quote). Well, the management or the board replied that they wouldn’t just buy something for the sake of buying. And yet, that’s what they did now.
I myself was already very skeptical about the operative management, regarding Toijala. Revenio has not been the same company in recent years, and the investments seem to have disappeared with their benefits, as per the opening paragraph. Margins and growth are just a memory. Not to mention after the acquisition. Revenio is buying a company larger than itself, at an insane price on top of everything else, so it was difficult to justify this to myself anymore. When CFO Pulkkinen’s departure announcement came recently, it was a cold sweat on my forehead. More than the stock price slump. I definitely don’t see Pulkkinen’s kind of match in this acquisition, and a Centervue-like match is pretty far off, more like a horny and wet daydream now.
At some point, the focus got out of hand, the multiples came down with it, and now finally completely. So I don’t fully buy management’s explanations about the market situation.
All in all. Very difficult to understand the justifications for this deal regarding price and culture.