Synchronica lists myriad reasons to reject Swiss bid

Mobile phone messaging technology group Synchronica has been talking up the prospects of its turnaround plan as it fights off the unwelcome attentions of Swiss mobile devices software firm Myriad.

The group said that its cost cutting programme, which it embarked upon late in 2011, will have some effect on its 2011 figures but the bulk of the benefit will be seen in 2012. The directors continue to believe that the company will become cash generation positive in the current year.

The company, which is retrenching after an acquisition spree which included buying the messaging business of Nokia, the waning Finnish mobile phone giant, said the first repayment to Nokia for deferred consideration on the deal will be paid this month. the board believes that Synchronica will be able to continue to service this debt in the future.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

"Synchronica's customers are building their user numbers and increasing the quality of Synchronica's earnings from recurring revenue. In addition Synchronica continues to add new customers," the company statement said.

Synchronica's board remains confident that it will successfully complete this transition to the benefit of its shareholders, provided, of course, that the shareholders do not accept the all share offer from Myriad, which values each Synchronica share at 13p and the whole of the company at £20.63m.

The management noted that Canadian technology developer Intertainment Media has committed to a joint venture with Syncrhonica which will see it buy up to C$10m worth of Synchronica shares at a minimum price of 16p (C$0.25) each, a price which gives an implied value of £25.4m for Synchronica before the Canadian cash injection and £31.7m after it.

Warming to its theme, the Synchronica board also noted that the all-share offer from Myriad, if successful, would leave shareholders with Swiss denominated shares, traded on the SIX Swiss Exchange, and that this would expose them to a currency risk; the pound only bought 1.17 Swiss francs in August 2011 but now buys 1.44, the company noted, without explaining why it chose those dates for its comparison.

The board's recommendation remains that shareholders take no action in respect of Myriad's offer.

jh