What do you think of Propel (PRL) acquiring the U.K.'s Quidmarket and....

…”concurrent with the execution of the definitive agreement, the Company has entered into an agreement with a syndicate of underwriters (the “Underwriters”) co-led by Canaccord Genuity Corp. and Scotia Capital Inc. pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 3,640,000 subscription receipts (the “Subscription Receipts”) of the Company at a price of C$27.50 per Subscription Receipt (the “Offering Price”) for aggregate gross proceeds to the Company of approximately C$100 million (the “Offering”)” , whatever that means?

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Asked on September 27, 2024 3:16 pm

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It looks like a pretty aggressive acquisition by Propel, who is utilizing the amplified activity in the sub prime market to use cash flows to expand.

I do like the deal on the surface, but I will admit, I'm really not an expert in the sub prime market in the United Kingdom. I would need to look up the rules and regulatory conditions there.

Overall, the price seems fair, and the company seems to be in high-growth mode. Barring any crazy regulatory issues in the United Kingdom, hard to imagine this doesn't work out well for them.

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Posted by Dan Kent

Answered on October 1, 2024 12:02 pm

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The Propel share price dropped suddenly when they announced the acquisition, but I think it may have had more to do with the word-salad that I quoted in the original post. I think it means they took out a loan to make the purchase 😉. I will probably buy the dip to add to my position. Merci, Dan.

(c-ras@sympatico.ca at October 1, 2024 1:21 pm)

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Hey there. The price would have dropped because of the offer per share price. So the company is using shares priced at $27.50 per share to buy the company. In this situation, you will typically see the stock price dip towards the offering price. Does that make sense?

(Dan Kent at October 1, 2024 2:02 pm)

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Hmm, does this mean they sold shares of Propel to Canaccord & Scotia Capital at a discount to market price in order to raise the $100 million they needed to buy QuidMarket? Or did the discounted shares go to QuidMarket's shareholders (an "all stock deal") and the underwriters played some other role? (40 years later I really wish I had taken this as an elective in high school)

(c-ras@sympatico.ca at October 4, 2024 9:55 am)

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