On Tuesday evening, USU Software published an ad-hoc stating the intention to delist the company from the stock exchange. Here is what you need to know:

Supported by the supervisory board, the management board of USU aims to delist the company. In order to do so, management consulted majority shareholder AUSUM (51% of voting rights), the investment vehicle of founder Udo Strehl, whether it would be prepared to make a delisting offer, which is the prerequisite for delisting a company that is listed in the prime standard.

On Tuesday, AUSUM informed the management that it is seeking an agreement to finance such an offer and that the respective negotiations are in an advanced stage. Moreover, AUSUM informed the company that the offer price should be expected to be largely in line with the equivalent to the statutory minimum price, e.g. the volume-weighted average price of the past six months, in accordance with section 39 of the German Stock Exchange Act. According to our calculations this should result in an offer price of c. € 17.00 per share (€ 16.97 according to Bloomberg).

During yesterday’s conference call, CEO Oberschmidt stated that the main reason for the decision was the “sustained undervaluation” of USU by the stock market, which among others would make it difficult to use the shares as M&A currency in a value accretive manner. In our view, this argument is at least questionable as shares only dropped to current levels following the company’s profit warning in August. Moreover, management stated that it is seeking substantial investments in order to considerably expand its product business following the delisting. To finance this, management aims to carve out the product business and get an external partner on board. However, management did not provide any details on the exact nature of such a partnership, stating that the process is in a “very early stage”.

Our view: We agree with management regarding the undervaluation of the shares and reiterate our intrinsic fair value of € 30 per share. However, we advise investors who have no intention of being invested in a highly illiquid asset to tender their shares once the delisting offer has been made. For the time being, we change our recommendation to HOLD and reduce our PT to € 17.