Submits Formal Takeover Offer for Dark Blue Sea — Photon Group

Group submits plan to takeover Fabulous’ parent firm.

Photon Group has submitted its formal share purchase statement (pdf) for its planned purchase of outstanding Dark Blue Sea shares. Dark Blue Sea is the parent firm of domain name registrar and parking firm Fabulous.

Photon owns almost 30% of the outstanding shares in the firm. In a letter to shareholders, Photon Group Executive Chairman Tim Hughes states the offer represents a premium to the average share price prior to the firm’s buyout notice. It also represents 16 times Dark Blue Sea’s FY2009 earnings ahead of interest, taxes, and impairment.

Photon gives a number of reasons for shareholders to sell out, counting:

Under current management there has been a significant deterioration in the business and future profitability is uncertain. In the last two years, there has been significant declines in the profitability and share price of DBS. In FY2009, noted net profit following tax fell by 74%. This followed a 24% decline in noted net profit
following tax in FY2008…

Notwithstanding this poor performance, the DBS Board has not provided DBS Shareholders with any clear direction or strategy for the recovery of the business. Further, DBS management has an unproven track record at executing any alternative business plans required for the recovery of the business.

The offer will close sometime in December, provided that Photon is able to purchase enough shares to own 50.1% of the firm and there are no major occurrences.

If Photon purchases a controlling stake in the firm, it plans to insert two Photon employees onto the board of the firm. It will then conduct a review of the business “for the purpose of identifying ways in which DBS can enhance its business and the underlying value of its domains.”

DBS management is asking shareholders to take no further action until it has a chance to review the offer details.