Just minutes after speaking at Toronto's CIX public investor day as the CEO of one of CIX's Top 20 public tech companies in Canada, Slyce (TSXV:SLC, Forum) CEO Cameron Chell learned that his company would be subject to a hostile takeover by private equity company Quest Ventures.
The news was surprisingly released eight minutes before trading close, leading to a million share volume surge and a 65% share price increase.
With the stock languishing at $0.17, the $0.85 per share bid was well received by many shareholders, though the announcement made clear that Slyce board had been stonewalling Quest's advances for some time, even coming at a 485.17% premium.
"Slyce's website highlights that it is currently working with over 6 of the top 20 leading retailers in N. America (10 announced contracts)," said an analyst from Euro Pacific Capital.
"And this news is very encouraging to us, as the current market capitalization of the company does not reflect the true value of the company, the goal is to grow the Slyce, Inc. valuation as a private company and to invest $35M for R&D developing new and exciting commercial and defense based applications for the revolutionary visual search technology," said James Beals CEO of Quest Ventures.
The document copied an earlier letter to the board of Slyce that was all business:
“After many unsuccessful attempts to contact Mark Elfenbein on November 18, we are left to assume that the Board is not interested in further engaging with us regarding a strategic go private transaction involving Slyce, Inc. We are confident that we are well-positioned to swiftly consummate a transaction that will be in the best interests of Slyce, Inc. stockholders. We strongly believe a transaction involving our companies has a compelling strategic advantage and we demonstrate our firm commitment to bringing our two companies together. Outlined below is an updated proposal for the Board's consideration.”
It continued, “Our strong preference would have been to work with you on a confidential and cooperative basis. However, we have been unable to develop any meaningful dialogue with you for many days now and were disappointed by your unwillingness to open discussions with us following our many attempts to contact you. Furthermore, in light of the decrease in the Slyce, Inc. share price during the days that followed our November 17 letter to the Board expressing an interest in discussions, and further decreases following our November 18 attempts to contact you with an acquisition proposal, we determined it was advisable to publicly release the text of this letter concurrent with its delivery to the Board to ensure that your stockholders are fully apprised of the significant value afforded by our proposed transaction.”
Slyce has a proprietary technology that allows users to perform a 'visual search' of an image, for example a toilet part or a handbag, and have the Slyce app search for the product in the image, identifying it, showing where it can be purchased, or even found physically in a partner store.
The company has done deals with many large retailers who have incorporated the technology in their own apps and websites.
The company was prominently featured at the recent President's Club investor's conference in the Bahamas.
Quest is based out of Toronto.
ADDENDUM: Slyce has released a statement to the effect that they don't know Quest, have had no contact with Quest, and would consider any actual offer on its merits.
From the news release: "If an actual offer is made by Quest, the Board of Directors of Slyce (the "Board") will consider alternatives and make a recommendation consistent with its fiduciary duties and in consultation with its legal and financial advisors. In the interim, the Board advises shareholders not to take any action with respect to Quest's proposal until further information is conveyed from the Board."
Bullboard regulars on the Slyce boards are furiously digging to try to learn whether the actual offer exists, with suspicion abounding due to the weird pre-market close nature of the announcement, the exhorbitant premium, and the lack of verification options available.
Traders of Slyce stock should confirm the validity of any proposal before trading on the announcement, as fake news releases have been posted through wire services previously as part of pump and dump schemes in the US.
-Chris Parry