Nuix shares resume trade, as it is poised to appoint defence adviser

Nuix provides services to governments, advisory law firms and large corporations around the world.

Australian listed software company Nuix halted trade in its shares on Friday morning ahead of a statement to be released to the market that follows speculation about buyout interest in the company.

It comes after DataRoom reported late online on Wednesday that US software company Reveal is understood to have hired investment bank Barrenjoey for a possible tilt at Nuix.

Shares in Nuix opened up 26 per cent on Friday before trade was paused at 87c and shares are currently trading at 82c.

The stock closed on Thursday at 69c and was at 80c when trading resumed about 1.20pm.

This column understands that the $220m technology company Nuix is yet to receive a formal offer, as confirmed with a statement issued by Nuix on Friday, but a bid was due this week.

Nuix also defended a move by chief executive Jonathan Rubenstein, who purchased shares in the company this week, revealed in a Change of Director’s Interest Notice lobbed Thursday showing he now owns 500,000 shares after buying 350,000.

The shares were purchased on Tuesday, Wednesday and Thursday for just over $236,000 collectively and are now valued at about $304,500, with his total holding worth $435,000.

But Nuix said in a statement that the recent change of director’s interests was compliant with the company’s Securities Trading Policy.

It is understood that Nuix is in the process of appointing a defence adviser in the coming days after informal approaches about buying the business from various parties in the past month.

Interest in Nuix comes after Macquarie executive Dan Phillips stepped down from the board last week.

Nuix was floated by Macquarie Group, which was a 65 per cent owner in 2020.

When it listed, the company was worth $1.8bn, excluding debt.

Macquarie is understood to be keen to maintain independence for options surrounding a possible buyout of the business and to avoid any conflicts of interest.

Nuix software allows users to make sense of huge amounts of data.

The company provides services to governments, advisory law firms and large corporations around the world.

But the float was a disaster after unexpected profit downgrades, and a probe into prospectus forecasts and continuous disclosure.

Despite its challenges, Nuix is considered to be fundamentally a good business.

It generated $12m of earnings before interest, tax, depreciation and amortisation in the past financial year, but $60.6m in the previous corresponding year.

The deterrent for a buyer is a legal case being brought against Nuix by former chief executive Eddie Sheehy, who is claiming $183m over options in the business.

As well as a legal case and a class action, Nuix has also been the subject of an investigation by the Australian Securities & Investments Commission over its market disclosure.

ASIC had been examining the company’s pre-listing financial statements, but said at the start of the year it would not take any action over that matter.

The corporate watchdog is also investigating Nuix’s former chief financial officer Stephen Doyle over an alleged insider trading case.

That case is expected to be resolved in the near future and should the corporate watch dog find in favour of Nuix, this would mean the only impediment for a buyer would be the case against Mr Sheehy that will take longer to resolve.

However, Nuix’s legal woes mean that any buyers would probably be keen to buy Nuix assets rather than bid for the company as a whole, so that they would not be on the hook for potential additional costs.

The challenge for a buyer would be to drive down costs and find new growth opportunities.

For the year to June, Nuix made a $22.8m loss after reporting a $25.2m net profit in the previous financial year.

Revenue for the year fell 13.5 per cent to $152.3m, with the company ruling out the payment of a dividend.

Cash receipts from customers were $172m for the 2022 financial year after it struck some multi-year deals.

Another name said to have shown interest in Nuix along with Reveal is Relativity.

It offers legal and compliance software solutions, is said to have weighed a purchase of Nuix before it floated.

There has also been a suggestion that private equity may be considering an acquisition, with a company such as Bain Capital a potential contender.