I like that they admitted the error, but I also have to question their initial judgement in taking on so much with such thin resources. Clearly they were aware of the enormous opportunity ahead of them and should have focused their precious time on pursuing the expansion in Europe?

Disc. : Held

That is a fair call @thunderhead and that is the error they made. The problem was someone dangled a pretty big carrot in front of them and humans do human things. Even the good ones. If management continue to be open, honest and humble and can continue on a similar trajectory as before EOL should do well

I get what you're saying @thunderhead but like @Shapeshifter said, they had a big carrort dangled in front of them and clearly they thought that $6 per share was worth selling at.

I know how these things can be from personal experience. I've been involved in acquisittions in my work life and they consume a huge amount of time but don't always end up happening and even if they do happen, don't always end up being net positive!

The honesty from the board is appreciated, even if we don't agree that a sale of $6 per share was a good deal.

The takeover offer was a large premium to the then share price - I think the felt they had to look at it for only that reason.

It does make you think the current board, especially now that Vaughan Busby has resigned, might be more short term focused now though rather than on the long-term business opportunity though.

Exactly. While it was a big carrot, it is only big in the sense of the short-term sugar hit that we retail investors experience when one of our holdings gets such an offer. In many cases, it is a ultimately disappointment, at least once that hit wears off, as your compounding journey with the business over several years gets prematurely cut off. The only times you don't mind it is when the business under-performs severely and the prospects for an attractive return are all but extinguished, so you're happy to have it taken off your hands for as much of a premium as can be mustered (e.g. WSP, DTC etc.).

Also, given where these shares were trading prior to receiving the offer, it wasn't the kind of offer that you couldn't refuse (the ones that imply an overly generous multiple that prices in a lot of future upside), so it should have been straightforward enough for the board to knock back instead of engaging in a costly distraction for 6 months.

I would expect the insiders at the helm of the businesses I invest in to be far more steadfast in resisting these charms compared to us ordinary mom-and-poppers. They are human and it's not a "three strikes and you're out" kind of foible, but it is frustrating nonetheless, and so the rope I can afford them gets that much shorter as a result.

I finally had time to watch the AGM and came away feeling okay about the future - noting the next result is likely to be particularly bad. I think the current management feels like they were taken advantage by STG and there was a lot of hostility - combined with the cyber issue - they'll be glad the year is over. They need to refocus now.

Cutting the dividend was good - even if it was for a higher offer from STG. Sounds like they'll need a lot more capital if they wanted to enter the US - and will only do so if a client takes them there - noting there are a number of electricity markets across the different States.

After selling down through the takeover I've been topping back up recently. Not sure whether to hold some back though until after the next results in case there's a dump. I'd like to get a better understanding of the different revenues by product and how the contracts are structured though.

@Mujo in addition to the US elecricity market being made up of several ISOs (10 I think from memory) each with their own rules, there are many established providers of Energy Trading & Risk Management software systems, as well as providers of ETRM services.

Entry would almost certainly need to be by acquisition, and many of these software players are already significant business or have already been acquired into larger energy management and other enterprise software businesses.

Of course, several of these US-born businesses are also looking for growth expansion opportunities outside the US, and $EOL's Australian dominance and strong European footprint make it an interesting trade acquisition target itself (even if US domestic players tend to be wary of EU regulatory risk).

If $EOL post a soft result next due to distractions and other problems this year, they could well find themselves on the end of another bid. Everyone is alert to the global re-wiring tailwind!

Disc: I don't hold $EOL in RL or SM but have held previously and maintain a watch.

Thanks very much @mikebrisy did you know if any of the US players were listed by chance?

It does seem EOL will get acquired at some point.

@Mujo I can’t think of any standalone/pure play listed firms. To be honest, I’m not up to date with the US electricity market. I was VERY up to date in 2004-2007 as I was involved in spending $800m in asset purchases in an earlier life, and there were already a lot of software offerings then (although not SaaS in those days.)

There’s quite a lot of private equity and other ownership structures in the energy space.

Thanks again @mikebrisy insights are very helpful!

I'll have a look and see what I can dig up.