Embattled speculative software company Getswift Ltd (ASX: GSW) is still suspended following its latest responses to the ASX.
In the latest exchange between the stock exchange and the company – and after dodging this question previously – Getswift stated it does have a deal with Commonwealth Bank of Australia (ASX: CBA) and also that it published its December 2017 announcement without Commbank’s approval.
Getswift also stated that its Fruit Box deal (a contract that it lost and did not notify the market about) was not material, which would exempt Getswift from being required to report the loss to the market.
Notably, despite these comments, Getswift could not confirm that it is compliant with ASX listing rule 3.1, which is the rule that requires continuous disclosure to the market.
This means that the Fruit Box contract or other contracts could well be material, despite management’s comments. Getswift will not be in a position to confirm its compliance until PriceWaterhouseCoopers (PWC) completes its review, no later than 19 February.
Third, and despite rumours that were released to the Wall Street Journal recently, Getswift has not received any takeover offers, although it has appointed a US legal advisor and is in the process of appointing an investment bank to evaluate any potential proposals. Getswift admitted that it has not received any formal proposals to date.
I have been largely ambivalent on Getswift to date, but this last part makes the company look really questionable, in my opinion. The magical ‘takeover bid’ comes straight out of the Quintis Ltd (ASX: QIN) and Surfstitch Group Ltd (ASX: SRF) playbooks – these being two companies that blew up under questionable circumstances, followed immediately by rumours of takeovers.
The ‘takeover bid while the company is suspended’ has all the hallmarks of a struggling business and it is bizarre to think that Getswift management would be keen to sell this supposedly successful company just when things seem to be going right – reporting deals (albeit of unknown value) with Amazon, and so on.
It looks to me as though Getswift is trying too hard to create the image that it is a successful US software company like Atlassian. There are a few warning signs going up and I would be inclined to steer clear of Getswift when it returns to trade.
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Motley Fool contributor Sean O'Neill has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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