It was not a good day to be an investor in European Procure-to-Pay stocks, specifically Basware and Proactis.

Basware

Basware announced it had ended talks with Tradeshift regarding Tradeshift’s possible acquisition of Basware.  This break-up was not a total surprise. Basware’s stock price had never reached near Tradeshift’s proposed offer price, suggesting investors had never been confident in the deal going through (see here).  Nevertheless, Basware’s stock price fell from €37.90 to €29.90, or 21%.

Proactis

Basware’s stock price decline was nothing compared to the hit Proactis’s stock took.  Proactis’s shares dropped more than 50%, halving its market cap from £100 million to £50 million.

Proactis’s stock price apparently fell due to management’s tepid trading update.  TCV bookings were modest. Revenue grew only slightly. But the new CEO’s outlook was the killer:

“Whilst the outlook for the next few months is disappointing, I am confident in our ability to deliver an improved level of performance in the mid to long-term.  Our core markets remain attractive and our core technologies and team are competitive.  I look forward to completing my review for the Board and focussing the Group on a growth strategy that should be successful in all of its territories and returning the Group to the qualities it has demonstrated historically.

“I am delighted with the renewed rate of progress with the APF after investing in additional capacity to move it forward.  There remains much work to do before revenues can be expected but the commitment from HSBC UK is strong validation of the significance of the opportunity and their support for our business.”

The market concluded there was not going to be good news here for a while. (By the way, APF is an accelerated payment facility Proactis is putting together.)

Tungsten

Interestingly, Tungsten, a public e-invoicing company in the UK–not a full procure to pay suite– has been on the opposite trajectory.  Tungsten recently reported positive EBITDA for the first time and 13.9% revenue growth. As a result, Tungsten’s stock doubled in February. (In addition, the company’s CFO invested in the stock after the announcement.)

Tradeshift

What will Tradeshift’s next move be in the wake of the collapse of the Basware deal?  Tradeshift could try to pick up a resurgent Tungsten or catch the falling knife that is Proactis.  These are tiny companies compared to Basware, but Tungsten looks particularly interesting, as it is now EBITDA positive and sells at a reasonable multiple with little debt.  (Proactis has quite a bit of debt to contend with.)  One thing is certain:  Christian Lanng at Tradeshift will not be silent for long! 😉