Genesis have come back with a bid 25% higher at $1.75. I think it's a fairly low chance they walk from here even though the bid is still indicative. So I'm happy to hold this for a bit longer and see how it plays out.

It felt like something was coming because the SP had sat between $1.40-$1.50 for months and then had a couple of flashes above $1.50 in the last week or so.

We've got a response now to the NBO.

It's like I wrote the points myself. I agree this feels undercooked and opportunistic at this price.

You can see here the issues they had with the centres that were launched during the covid years. The primary driver of the underperformance was staff absenteeism and appointment cancellations: Routine dental checks and cleans would be their bread and butter and also the first thing people would have deferred during covid.

The easy runs here for a potential acquirer are that the covid issue has resolved itself and this investment into the FY21-FY23 cohort will start paying off from FY24. There is probably $3m-$4m in annual EBITDA sitting in that cohort by FY25-FY26.

The effect of covid at the group level can be seen in the deterioration in EBITDA margin. No doubt GC will be working on the basis of those margins mean reverting.

And finally, GC already owns a bunch of dental centres, they will likely be able to rip out a lot of the corporate overhead in the PSQ business.

None of this they are paying for with this NBIO. Genesis have said they want the bid to go through via a recommended scheme of arrangement. If that is their intention they are going to need a higher bid, which I do believe will be forthcoming. If no bid eventuates, PSQ is actually pretty cheap here and I'd be happy holding on to it and would pick up more if it fell back to the pre-bid price. The offer got me to do some work on it and I can definitely see the value here. I think for a bid to work it's going to have look more like 10x EBITDA at least.

As a side note, I can see why the TDM guys were early investors in this business. It has the sort of economics they love. Small, granular investment into individual centres with a proven business model that can then be repeated...Remind you of a certain burrito chain?

Spoilt for choice at the moment with a lot of these corporate activity type set-ups.

No one is buying 18% just to walk after a first and final. ONT was done at 13.5x EBITDA back in 2021. PSQ looks to be getting itself up to speed in the last half – and this is a type of business that needs to cover its fixed costs then looks amazing. Annualising 2H23 EBITDA implies a mutliple of 7x EBITDA.

I'd be pretty surprised if they don't come back with a higher offer or this flushes out a rival bid.

Bought some IRL this morning.