Is anyone else concerned with the "scheme" that's been proposed for MEA? Market cap at offer price is around $95m. There is over $20m in the bank (mostly likely $25). It produced $4.8M EBITDA for the half (although that is underlying) which puts the offer price at 7 times (no debt) not very high, but not outrageous. But it also has investments in a mortgage broking business and importantly an insurance business. Coincidentally, the insurance business (Honey) just raised one of the biggest Series A rounds from a US VC (about $100m) - announced last week. MEA had a convertible note in Honey at 31/12/24 which was extended 2 months then converted to equity, just before the scheme was announced (carried at $8m) - scant data on the Insurance business, other than noting it grew 300% last year. Seems to me there's a lot more value here than's being offered, particularly given its really unclear how much of Honey MEA holds and what it's worth - we'll wait for scheme docs/IE report, but is anyone else concerned about this scenario?

Held IRL & SM...

Not sure on MEA’s acquisition announcement today. My assessment:

Pluses

• entrenches what looks like a long standing Multisite franchise into the group
• known asset to the group so risk “should be lower”
• Projected to be EPS accretive first year (we’ll see)
• Earnout provides good incentive to hit marks
• share issues will be escrowed for two years
• the earnout is attached to the sales business only - that seems smart as rental managment is not a high benchmark and MEA are protected if the property market tanks

Minuses

• the beauty of the franchise model is that it is capital light - investing in one of your franchisees works against that
• the big one - why, oh why did you issue stock??? MEA is so undervalued seems such a waste to issue stock - particularly strange when we have a buyback going on at the same time!

Rich

disc - hold MEA IRL and on SM

I think MEA is an interesting value situation - after you consider cash in the bank and ignoring other investments - it’s a low single digit PE. Exposed to the property market, yes but if you look through short to medium term market problems it looks good value - add potential upside in the investments and the smart buy back and you have a stock with limited (but not no) downside and good upside potential. I think John McGrath coming back into the role will be interesting - learnt some lessons from his previous stint no doubt.

Own this IRL and on SM.