Pushpay Pushes Back | Activision clears EU regulators

3 March 2023

Stock in Focus: Pushpay (PPH.NZX)

Pushpay announced it has received enough proxy votes to reject the NZ$1.34 per share takeover bid.

At the time of the offer when Pushpay announced there was interest of an offer, without offering an indicative takeover price, Pushpay was trading at around $1.00 in April 2022. The takeover offer price was made public in November and took advantage of weakness in share price.

The offer was on the low end of the independent valuation of Pushpay of $1.33 to $1.53 per share, which did not please many investors and we think the recovery in markets this year have given them confidence to reject it, and with large institutional investors, lack of options in the NZX also means they would rather hold on to Pushpay for the long-term as there are limited viable tech options on the local market.

Pushpay remains in a trading halt until another announcement release, hoping for a higher bid in the mid to higher end of the independent valuation range (fingers crossed).


US Market Movers

Activision (ATVI) gained +2.63% as it looks likely the Microsoft/Activision merger is going to be given the green light by EU regulators. This is one hurdle Microsoft needed to get past – the other two are approvals by the FTC in the US and the UK’s Competition & Markets authority. We’re expecting a merger by end of year, all going well – the EU’s regulators are notoriously strict, so this is a good sign. There’s still plenty of arbitrage to be had here — Microsoft’s purchase price of ATVI is $95 per share (more room to make margin than Pushpay!) Manchester United stock also rose +3.3% as the liklihood of a takeover becomes more imminent — the sell-off, as we wrote, was due to unfounded rumors in the media. ATVI and MANU remain some of our favourite arbitrage ideas — both are slow burners, that likely will take a few months until completion. Both buy-rated.

Costco reported earnings after the bell – revenue came in at $55.27B v $55.58B (expected) Adj. EPS: $3.30 v $3.21; Same-store sales: +6.8% v +6.16%. Markets took the news to heart, perhaps expecting higher revenues — we think in reality this is a fine result given consumer’s tightening wallets — it’s a very mild sign that economic conditions for the consumer are getting worse, but still, look at those same-store sales — 6.8% YoY. Remain buy-rated.


New Zealand Market Movers 

The New Zealand market (NZX50 Index, +0.2%) edged up on another quiet day of trade. Little newsflow. Scales revealed two of its directors have bought shares at $3.40, indicating things aren’t possibly as bad as the market is anticipated – we recently upgraded Scales to a high-risk buy. Look to the medium term – post-Covid and Cylone effects.

Australia Market Movers 

The Australian market (ASX200 Index) was flat on a day that saw strong gains for the mining and energy sector offset by broad-based weakness with financials leading losses.

Major banks were weaker as it’s believed their margins have peaked, and that loan growth may struggle over the next year or two. While loan growth will be limited, we still see value in the sector even if margins were to hold flat at the current juncture, so we remain BUY rated on Westpac and ANZ as our preferred banking exposures, forecasted to pay healthy dividends in the current high interest rate environment, while strict lending criteria in recent years should limit default risks.

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