Or rather, that the bid came just days before the disappointing results were announced?
Indigo has had a rough year, no question. And it’s hard to separate regular business-related and management problems and national and global economy issues from the sustained cyberattacks the company has faced from ransomware criminals.
Indigo CEO Heather Reisman herself used the word “disappointing” to summarise sales down 12.3% and income down 70.5%, as reported over at PW. Check out that post for more on Indigo’s numbers.
The Indigo press release has Reisman saying the results “in no way reflect the opportunity we have with our customers. We are deeply and effectively engaged in a turnaround.”
Where it gets interesting is that just days before these results were announced, an investment company called Trilogy (Trilogy Retail Holdings Inc. and Trilogy Investments L.P) offered to “buy all company stock its joint actors do not currently own, for C$2.25 in cash per common share.”
“Disappointing” results make the bid all the more appealing
Which is wonderful news, right? Here is a company in serious financial trouble, and another newly formed company has offered to buy it out, just days before “disappointing” results are announced, which of course will make the bid all the more appealing.
This time last year the shares were worth C$ 2.37. As this post is written the shares are valued at just C$ 2.00, in light of the latest results.
So what do we know about Trilogy?
Well, Trilogy Retail Holdings Inc. (TRHI) and Trilogy Investments L.P. (TILP) are “personal holding companies of Mr. Gerald W. Schwartz, a director of Indigo and, indirectly, the controlling shareholder of Indigo,” per the official press release.
As noted in the PR, privatising the company will mean Indigo will no longer have to disclose its affairs publicly as it does now under Toronto Stock Exchange rules.
The timing is designed to encourage the other shareholder to take the money and run
Why would Trilogy want to buy a struggling company like Indigo?
Founded in 1996 by Heather Reisman, Indigo has been a high-flyer in the Canadian book retail market, buying its largest competitor, Chapters (inc. Coles) in 2001. In 2018 Indigo hit revenue of C$ 1 billion, but it’s been largely downhill since.
A family affair
It’s important to understand the new bid to acquire Indigo does not reflect new market interest and confidence in the company, and is in fact a bid to put the company back in private hands, under the control of the founding family, namely CEO Heather Weisman and her husband, Gerald Schwartz.
Reisman owns the holding company HRON Canadian Investments Ltd. that is a major shareholder in Indigo, and the other major shareholder is Reisman’s husband, Canadian billionaire Gerald Schwartz, owner of Trilogy.
Clearly the timing of the bid and the results are no coincidence, and are designed to encourage the other shareholder to take the money and run.
Given that Reisman and Schwartz had effective control of the company anyway, and therefore in the way the company has been managed, it’s not clear what they hope to achieve by buying out the handful of loose shares, other than to remove Indigo finances and business decisions from public scrutiny.
That’s probably (and hopefully) a good thing, if it will allow Reisman to focus on putting Indigo back on track without having to worry every day about what the financial press will be saying.