It’s not every day that you see a listed company sell off its main operations and remain on the ASX.
But that’s exactly what Vortiv Ltd [ASX:VOR] has done today. Announcing the sale of its cybersecurity operations for a cool $25 million.
A deal that will leave Vortiv with a fair chunk of cash, but not a lot of direction.
Naturally that has put shareholders on edge as the share price was hit for six. Down by 18.92% at time of writing. Valuing the company at $20 million — less than the total proceeds of the sale.
So, was this the wrong move by Vortiv?
Seeing as this deal is a complete transaction, at the very least shareholders will be getting a return. With Vortiv promising that at least $20 million will go to investors.
But, while management say this sale has netted a 196% return of investment, shareholders have been stiffed a little. The share price is now considerably down from its recent August highs (around 30 cents).
For that reason, it may not be seen as necessarily the best outcome. And, seeing as Vortiv’s shareholders still need to approve the deal, they may not necessarily get their seal of approval.
However, the board has issued a unanimous recommendation to accept the deal.
We will simply have to wait and see if shareholders will follow suit.
Today though, the market has not looked upon Vortiv favourably.
The fact that they will remain a listed entity though, is perhaps the bigger curveball. Something that could present opportunity for shareholders, or a whole lot of headaches…
What’s next for Vortiv?
According to management, the current plan (should the sale go ahead) is to focus on its interest in TSI India. A relatively small e-transactions and payments processing company.
As Vortiv notes in today’s update:
‘Following competition of the Transaction, the Board intends Vortiv remains an ASX listed company, with its shareholding in TSI India, then forming the main undertaking.
‘The Board has identified acquisition opportunities in the Australian technology sector that can complement the Company’s exposure to ATM and associated payments technology which the Company has through its shareholding in TSI India.
‘These opportunities are currently at an early stage and may not ultimately progress to a transaction. A further update to shareholders will be provided at the appropriate time.’
So, shareholders may be in for some interesting times. Depending on how or if any of these transactions proceed.
Either way, this tiny stock’s future just got a lot murkier.
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For Money Morning