Docebo (DCBO) Tender Offer Thoughts
If you opted to buy into my latest pick, Docebo (DCBO), you should be up about 15% on your position by now. You also should have received a notice from your broker that there is an outstanding tender offer to buy your shares at 55. You have to say if you want to make your shares available by December 27 at 7:00 p.m. ET.
I wrote about this tender offer in my original writeup. The deal is that Docebo has put out an offer to buy up to $100 million of its own stock at 55. The motivation is to beat a 2% Canada Tax on buybacks that starts in 2024. These purchases will reduce float and increase FCF, EPS, etc. With roughly 22% of shares outstanding available the float here is already pretty small.
The question is whether or not to take the $55 tender offer. This is a personal decision and, to be clear, it’s not guaranteed that your shares will be purchased. You’re just saying that yes, you’d like to make them available.
On the one hand, if you take the offer you get 55 bucks and a return of roughly 22% in less than a month. Not bad.
On the other hand, if you take the offer you no longer have any upside potential should DCBO run higher over time, which I think it will.
The decision totally comes down to what you want to do and what you think DCBO’s longer-term potential is.
This isn’t an all-or-nothing decision. You have the option to make a portion of your shares available for the tender (assuming you own more than 100 shares).
Personally, I am not accepting the tender offer and will continue to track our position in Cabot Small-Cap Confidential as a “full” position. That said, I wouldn’t fault anybody that wants to book a return of 22%+- in less than a month on all, or part, of their position.
I’m expecting DCBO will work its way higher over time, though I certainly don’t expect it to be a straight line!
