March 31, the last day of the first quarter and I woke up to an offer for Fortnox!
Fortnox is a good company that is growing like a mushroom. An expensive stock, but it has always delivered great results and according to my estimates, the company should make over SEK 3 in profit by 2027. That gives a reasonable valuation in two years at a PE of 22. It is extremely attractive. No wonder there are buyers. At 7 o’clock in the morning, the news was: The private equity firm EQT and First Kraft will submit a recommended offer to the shareholders of the enterprise systems company Fortnox on Monday worth SEK 90 in cash per share. The price will not be increased and corresponds to a premium of approximately 38 percent compared to the closing price of SEK 65.1 on Friday.
The board of directors of Fortnox unanimously recommends that Fortnox shareholders accept the offer. The recommendation is supported by a so-called fairness opinion from Ernst & Young. We received a cash offer of SEK 90. With this year’s expected profit (according to my estimates) of around SEK 1.75, this gives a PE ratio of 51. It is a very good offer. If we look 3 years ahead, Fortnox should have a PE ratio of 30 (if the price is SEK 90), which is still a good offer. In my opinion, the offer corresponds to about 4 years of return in the future. If you sell now, you get the return immediately. If you wait, you have to wait 4-5 years until the share goes up to SEK 90.
The acceptance period for the offer is expected to begin around May 14 and end around June 18. The offer is conditional on Omega II becoming the owner of more than 90 percent of the shares in Fortnox. This is not the first time that there has been a bid for Fortnox. In the spring of 2016, Visma made a bid to buy Fortnox for SEK 1.4 billion. Olof Hallrup opposed the bid, which was considered too low. After the Swedish Competition Authority initiated an investigation into the deal, Visma withdrew the bid a few months later, causing the share to fall back significantly. However, this was only short-term and the share has since experienced a huge rise and on Friday the market value was close to SEK 40 billion.
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