In this briefing:
1. Eclipx (ECX AU): Worth a Punt that McMillan Merger Goes Through
On 29 January 2019, Eclipx (ECX AU) issued an unexpected trading update citing a soft 1H19 performance and that FY19 NPATA will be more second-half weighted than in the past. In response to Eclipx’s trading update, Mcmillan Shakespeare (MMS AU) said it needs to do further work resulting in the rescheduling of the first court hearing of 1 February 2019.
Before the trading update, Eclipx shares were trading in line with the implied value of MMS’s proposal. Post the trading update, Eclipx shares trade at an 11% discount to the implied value of MMS’s proposal due to increasing concerns that MMS would seek to walk away from the merger. We believe at the current Eclipx share price, the risk-reward is attractive.
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