The Idion Technology Holdings share continued its upward climb on the JSE this morning as investors digested the board`s rejection of Canadian group DataMirror`s takeover bid.
Idion posted a circular to shareholders yesterday in which it urged them to reject the DataMirror offer of 65c per Idion share, describing the bid as tentative and not serious.
DataMirror and its advisor, BOE Merchant Bank, say they have received the circular and will study it before deciding how to respond.
An analyst says Idion`s rejection was expected, adding that it appears DataMirror`s offer, which values Idion at R73 million, was based only on Idion`s R54 million cash holdings and ignored the value of the business and its technology.
"The offer can hardly be said to be fair. The only people who could possibly benefit are DataMirror themselves, not the shareholders and not Idion."
Idion`s independent advisor, PricewaterhouseCoopers, says the real value of Idion is based on the current business activities of US subsidiary Vision Solutions, the current business activities of South African arm Idion Solutions, and the future value of the Orion project, a beta-stage cross-platform solution Idion believes will revolutionise the managed availability industry.
The shareholders` circular provides a quarterly update which shows that Vision Solutions increased first quarter new licence sales by 26% in dollar terms compared with the first quarter of 2001.
Maintenance revenue grew 33% and $9.7 million deferred revenue at 31 March was 53% up on the $6.3 million at 31 March 2001.
The update also shows that the group continued to generate cash from operations, resulting in R54 million cash on hand at 31 March.
"Given the difficult trading conditions following the events of 11 September 2001, the board is satisfied with the progress made in the first quarter of 2002 in terms of revenue growth and the cost realignment of the two business units, and continues to be comfortable with the 2002 outlook previously provided to shareholders," the circular notes.
The analyst says indications are that the group is succeeding in turning Vision around, making the deal sweeter for DataMirror, which he believes is looking for a cheap way to take out the competition.
The Idion share was trading at 100c on the JSE this morning, 10c or 11.11% up from yesterday`s close.
The DataMirror share closed at $6.84 on Nasdaq yesterday, 4c or 0.59% up on the previous close.
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