In Australian stocks news, shares of Iress Limited (AU:IRE) have been volatile lately on rumours of a takeover bid by American private equity (PE) firm Thoma Bravo. IRE shares spiked over 15% yesterday to cross AU$9 when speculations started doing the rounds. Trading of IRE shares was halted temporarily following the frenzy and resumed only this morning. However, IRE shares closed down 6% today, in the absence of a formal bid from Thoma Bravo.
More on Iress and Thoma Bravo
Iress is a technology software company based in Australia. It provides services to financial companies across Asia-Pacific, North America, Africa, UK, and Europe. Commenting on the takeover speculation, Iress CEO Marcus Price denied knowing anything about a potential proposal. The company also denied any active discussion about a takeover.
Meanwhile, San Francisco-based Thoma Bravo is known to acquire and turnaround software centric businesses. The PE firm is said to have $134 billion in assets under management (AUM) as of date. Last year, Thoma Bravo completed a $1 billion acquisition of Australian aerial technology group Nearmap.
Reports suggest that Thoma Bravo has roped in the services of investment advisory group Jarden’s Aidan Allen to advice the firm on Iress’ takeover. Even so, the company has not yet put forth a formal proposal for the acquisition.
Here’s Why Iress is a Potential Takeover Candidate
Iress is undergoing a strategic streamlining process under which it is divesting non-core businesses. Importantly, Iress will continue focussing on its wealth, trading and market data, and superannuation business offerings. Iress recently divested the OneVue Platform Business to Praemium and its Managed Funds Administration (MDA) business to S&C Technologies. It is in the process of offloading its mortgage business in the UK.
Price took over the helm of Iress in 2022 to undertake a turnaround of the struggling company. In Fiscal 2023, Iress slipped to a loss of AU$137.5 million from a profit of AU$52.7 million recorded in the prior year, while revenues grew by a modest 2%. The company even paused dividend payments in 2023, as it seeks to de-leverage its balance sheet before resuming payouts. In its full year Fiscal 2023 results, Iress noted that it is on track to complete its transformation plan by the end of 2024.
Is Iress Stock a Buy, Sell, or Hold?
On TipRanks, IRE stock has a Moderate Buy consensus rating based on two Buys versus three Hold ratings. The Iress Limited share price target of AU$8.61 implies 3.2% upside potential from current levels.
