(Finance) – The Board of Directors of Alchemya company specialized in the evolution of the business model of large and medium-sized companies and listed on Euronext STAR Milan, has approved theintegration to the Issuer’s Press Release published on 8 August 2024, following a request from the Authority. In particular, CONSOBwith a communication dated September 4, requested the Board of Directors to publish an integration of the Issuer’s Press Release containing certain information elements with reference to the assessment of the appropriateness of the Consideration and with reference to the recent performance and prospects of the Issuer.
Considerations on the assessment of incongruity
In the Issuer’s Statement, the Board of Directors deemed the Consideration not appropriate from a financial point of view. The Consideration is included between the minimum and maximum value for two evaluation methodologies (“Target Price” and “Stock Multiples”) while it does not reach the minimum value for the other two methodologies (“OPA Premiums” and “DCF”).
With reference to the analysts’ target priceit is reported that it is Mediobanca is Intermonte act as advisors to the Offeror and that the only one of the three analysts to have expressed his opinion following the launch of the Offer was Intesa San Paolo; the note published on 6 June 2024 by Intesa Sanpaolo analysts reported that their DCF-based valuation model continued to indicate a fair value of 14.5 euros per share (approximately 21% more than the Offer price) and that, therefore, they did not believe that the Consideration was particularly attractive. In assessing the appropriateness of the Consideration, “the directors therefore paid great attention to the indication of the analysts of Intesa Sanpaolo and they believed that, as has already happened in the past, the company has all the characteristics to overcome a difficult 2024 and aim for renewed growth in the following years”, the document reads.
In assessing the appropriateness of the Consideration, the Board of Directors took into account the reasons why the valuation methodology based on Stock Market Multiples was considered to be of limited significance by the Independent Expert. The valuation methodology based on Stock Market Multiples was in fact deemed to be of limited significance since: (i) the selected listed companies are not deemed to be sufficiently comparable; (ii) the application of this methodology in relation to the 2024 financial year alone would be too penalizing since the financial year is significantly impacted by unforeseeable events; (iii) the valuation based on the 2025 and 2026 results is affected by the fact that the February 24 Business Plan was defined by the CEO and Chief Financial Officer of Alkemy as no longer representative of Alkemy’s prospective economic and financial estimates and that no detailed indications are currently available regarding the timing and financial dynamics to achieve the plan objectives or updated estimates starting from 2025.
Considerations on the “prudence” suggested by the Independent Expert
It is noted that the information framework, following the announcement of the Offer, has been enriched with new elementsshared by the CEO with the Board only starting from June 2024from which significant uncertainty emerges regarding the company’s short-term economic and financial performance.
In the board meeting urgently convened on 3 June 2024, following the announcement of the Offer, the Chief Executive Officer, in presenting his considerations on the Offer, highlighted a potential risk that, in light of the performance of the first half of 2024, the market could react with a decline in the value of the stock. This statement “has caused aheated internal council dialecticgiven that – as acknowledged by the CEO himself during the meeting – this potential short-term risk had never been clearly represented to the Board of Directors”, the document reads.
In the board meeting of 17 July 2024, the CEO declared that the BCG Business Plan – on whose strategic lines the February 24 Business Plan is also based – must be considered outdated, without providing updated estimates. On that occasion, the Chief Executive Officer also represented to the Board of Directors that it was not technically possible to develop an updated industrial plan in good time before the approval of the Issuer’s Statement.
“With the information available, taking into account the above-mentioned facts, the conflicting position of the CEO who, as is known, is participating in the Offer, the role of advisor to the Offeror of Intermonte and Mediobanca, the difficulty for Equity to fully use the DCF method due to the CEO’s statements on the overcoming of the BCG Business Plan, the directors paid great attention to the indication of the Intesa Sanpaolo analysts and considered that, as already happened in the past, the company has all the characteristics to overcome a difficult 2024 and aim for renewed growth in the following years“, it is underlined.
Indications in relation to the statements of the CEO
The Board of Directors acknowledged the information received regarding the BCG Business Plan (on whose strategic lines the February 24 Business Plan is also based) from the Chief Executive Officer and the Chief Financial Officer only on 17 July 2024 according to which, as also reported in the Fairness Opinion in relation to the discussions held by these parties with Equita, this plan – even if used only for the economic and financial assessments related to certain items of the financial statements and consolidated financial statements at 31 December 2023 (impairment test, goodwill, put options, etc.) – was defined as “outdated” (without providing updated estimates) and no longer representative of the prospective performance of the company. Furthermore, as reported in the Fairness Opinion, the Chief Executive Officer and the Chief Financial Officer of Alkemy, while declaring themselves confident in the possible achievement of the plan objectives, did not provide detailed information about the timing and financial dynamics to achieve these objectives. In this regard, the Chief Executive Officer has repeatedly represented to the Board of Directors that it was not technically possible to develop an updated industrial plan in good time before the approval of the Issuer’s Statement. In light of the above, the Board of Directors “believes that, at present, it has insufficient information to make complete assessments regarding the possible achievement of the objectives set out in the BCG Business Plan and the February 24 Business Plan. The only strategic development plan of the company currently available is the BCG Business Plan”.