The Iress Ltd (ASX: IRE) share price is in focus as it reportedly receives potential takeover attention.
At the pre-open price, it has increased by more than 26% over the last month thanks to that speculation.
Ireess is a software business that provides products for the financial services industry. Its software is used by 9,000 businesses and 500,000 users across the world. Iress provides software and services for trading and market data, financial advice, investment management, mortgages, superannuation, life and pensions and data intelligence.
What’s been going on?
On 10 June 2021, the AFR reported that investment bank Barrenjoey was looking to buy up to 10% of Iress on behalf of a prospective buyer.
That same day, Iress noted that takeover speculation and said that the company confirmed it had no received any direct approach.
On 11 June 2021, the business released an update saying that it has been implementing measures to accelerate growth and returns.
It said that it has been going through a board-level review of business acceleration and enhanced target returns which commenced in February, and is well advanced.
Iress is focused on accelerating growth in profit / earnings per share (EPS), improving return on invested capital (ROIC) and optimising its capital structure.
The company also said that there’s a potential divestment of its UK mortgage sales and originations business (MSO).
Leadership comments
Iress Chair Roger Sharp commented on the review: “The review has made good progress, reinforcing the quality of Iress’ recurring revenue, the strength of its targeted growth strategies and its significant addressable markets and revenue pathways. The review has also identified a number of measures to accelerate financial performance and deliver improved returns to shareholders.”
Guidance reaffirmed
At the time of that update, Iress also reaffirmed its 2021 segment profit guidance of 7% to 10% growth on the prior year in constant currency, having increased net profit guidance by $14 million in April.
Iress said it would provide another update to investors on 29 July 2021.
Anything else?
In another AFR article, the newspaper referenced some manager opinions about the business. One point was that there hasn’t been much EPS growth. That’s why Iress is so focused on growing EPS for shareholders.
It will be interesting to follow this potential takeover story and see if a concrete offer comes in.
