Q: If SABR is a company CSU is looking to buy/takeover, would it not make sense for retail investors to also buy SABR? Perhaps not even for the takeover premium, but doesn't this mean CSU believes that SABR is undervalued?
5i Research Answer:
Certainly it implies CSU sees value and perhaps could turn it around. But there is no guarantee anything will happen: takeovers in the tech space can be difficult. The main asset is people, and hostile deals typically do not work. SABR has put in a poison pill rights issue but says it is still willing to discuss things with CSU. SABR shares are up 46% YTD but note they are down 52% in one year with the general software scare. Debt is very high. The stock is down 86% in five years. This is not a slam dunk and if CSU 'walks' investors will be left with a struggling, debt-laden company.