Tern Plc is an AIM-quoted investment company focussed on the fast changing IT sector. It aims to get value from proven IT businesses in order to maximise shareholder value.
Value enhancing acquisition
Published: 21st April 2016
We are pleased to make available a note from Peterhouse Research on Tern Plc:
Tern is an investment company. It identifies technology companies with strong, innovative products focused on the mobile and cloud sectors, and invests expertise and finance to help them capitalise upon identified commercial and competitive advantages in fast-changing growth markets.
Today's acquisition by Cryptosoft, Tern's largest investment, of Californian security software specialist, Device Authority Inc, crystallises the value inherent in this maturing business, which has not up to this point been reflected in Tern's balance sheet.
Furthermore, the acquisition should materially enhance Cryptosoft's competitive advantages. It combines two complementary portfolios of proven data security solutions suitable for Internet of Things (IoT) and Machine-to-Machine (M2M) communications. It adds scale, a broader development engineering team, improved geographical spread and new authentication technologies backed by nine granted patents, with more pending.
Our view of current NAV at 11p/share is adjusted for the acquisition with other stakes held at cost/last investment round. However, Tern's valuation and prospects will pivot on this increased potential, and management's ability to devise and implement strategies for each of its portfolio companies to help them expand, build value and ultimately achieve exit at a multiple of current book value.
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