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Takeover update sends the Hansen (ASX:HSN) share price sinking

The Hansen Technologies Limited (ASX: HSN) share price has plunged 12% after a takeover update from BGH Capital.

Hansen takeover

A couple of months ago, software business Hansen Technologies received a takeover offer from private equity outfit BGH Capital at a share price of $6.50.

But BGH Capital has informed Hansen that it has decided to withdraw its proposal. Talks have ceased and the exclusivity deed has been terminated.

Hansen also said the co-operation agreement that BGH Capital and Andrew Hansen had has been terminated.

After doing due diligence into Hansen Technologies, BGH did not notify Hansen of any issue that Hansen thought was material in the context of its current operations and strategy.

BGH Capital has advised the company that it continues to see Hansen as a highly effective organisation with an outstanding management team and strong prospects.

Management comments

Hansen Chairman David Trude said:

“Hansen reported a record result for the group across all key metrics in FY21.

The Hansen business continues to go from strength to strength. We were particularly pleased with the strategic customer wins during the year including Telefonica, DISH, Western Power and Nautilus Solar. Significant new business wins, coupled with a continued focus on our aggregation strategy, reinforce our commitment to, and confidence in, our long-term revenue target of $500 million in FY25.”

Where to next for the Hansen share price?

Shareholders will be hoping the share price will go higher than today. Before today, the market appeared to think the offer wasn’t a done deal by the fact that the offer was $6.50 and Friday’s share price was $6.17.

Why didn’t BGH Capital decide to go ahead with the offer? It’s an interesting question.

The FY21 result showed good profitability growth. Whilst operating revenue only increased by 2% to $307.7 million, underlying EBITDA (EBITDA explained) increased by 40% to $120.2 million and underlying earnings per share (EPS) increased 54% to 36.7 cents.

Hansen is aiming for FY25 revenue of $500 million through a combination of organic revenue and acquisitions. The EBITDA margin is expected to be between 32% to 35% with an ongoing focus on profitability and operational leverage as it grows the business.

I’m not sure if the Hansen share price is worth pursuing at this stage.

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