I have written about Tungsten Network, the UK e-invoicing network, quite a bit.  (See here, here, and here for example.)   I’ve been intrigued by Tungsten Network for several reasons:

  • The company processes £220 billion worth of invoices for F500 companies, especially in Europe, but struggled to fully monetize these flows.  (The company has only about £36 million in revenue.)
  • Tungsten Network is a public company.  It was fascinating to watch its roller-coaster stock over the years.
  • The market cap has recently been as low as about $40 million.

In short, it looked ripe for acquisition.

The Hedge Funds Started It

I last wrote about Tungsten Network in early December 2021.  I noted that despite a correction in procure-to-pay public stocks, Tungsten Network’s stock was holding up due to a flurry of recent hedge fund activity.  Just a few days after that post, Tungsten Network announced that Kofax, a document management company owned by Thoma Bravo, was bidding 40p for the company.  This offer represented about a 33% premium over the price prior to the announcement.  At the same time, Tungsten Network announced Accel-KKR and Jaggaer were showing some interest, though they dropped out quickly.

A Timeline

chart showing Tungsten stock price over time and bidsThe company’s stock eventually sagged back down to where it was before the Kofax offer, until late March 2022, when Pagero a public, Swedish e-invoicing network made a 45p bid.  Pagero upped its bid a few weeks ago to 48p and ten days ago Kofax upped its bid to 55p.  Can you say “bidding war”?  The premium is now about 90% above where Tungsten Network’s stock was before all of this mishegas began.  (Some bonus Yiddish for you.)  Perhaps this is the end of the battle, but who knows?

We may see this pattern play out again in public procure-to-pay micro-cap stocks which are quite beaten up.  Hedge funds, followed by large PE firms, followed by strategics.

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