Apis Capital Management has pulled its unsolicited $198 million cash offer for Costa Mesa-based Veritone Inc.
Veritone, which is trying to crack into the artificial intelligence segment, said in a Jan. 9 regulatory filing that the West Palm Beach, Fla.-based investor confirmed to its financial advisers it did not have sufficient capital or committed financing to close the deal—a bid the Business Journal covered in a front-page story last month.
“Veritone’s board of directors had significant concerns regarding the credibility of their proposal, which were confirmed by Apis’ subsequent disclosure that they had begun selling their Veritone stake the same day they announced their acquisition proposal,” the regulatory filing said.
Apis began selling Veritone stock and call options on Dec. 4, lowering its stake from 937,196 shares, or just over 5% of the company’s total outstanding shares, to about 82,000, or less than 0.5%, according to filings with the Securities and Exchange Commission.
Apis executives told the Business Journal last week that it didn’t make any money on its Veritone securities sales.
Its initial bid of $10.26 a share was announced on Dec. 10, it represented an 82% premium to Veritone’s stock price at the time.
Apis pulled the bid 10 days later.
The Florida-based company was established in 2015 as a traditional hedge fund focused on volatile trading. Last year, it announced it would offer investors a strategy that uses artificial intelligence-driven algorithms to focus on trading volatility in the S&P 500 Options and VIX Futures markets.
Apis told the Business Journal last month that it viewed Veritone’s AI technology as a strategic fit, particularly in improving the billing process and mitigating diagnostic errors in the medical industry.
“The deal was not to buy Veritone and grow the company, but to buy Veritone and sell the revenue producing application like ad tech and get to market faster with our suite of medical diagnostic tools we’re working on,” Apis Managing Director Edgar Radjabli told the Business Journal last week.
That said, “It became clear the deal was going nowhere.”
Veritone (Nadaq: VERI) shares were trading at $5.07 and a $97 million market cap as of press time. It’s been one of Orange County’s more volatile stocks over the past year.
Last month, D.A. Davidson & Co. analyst Thomas Diffely in an investor note expressed doubt the Apis deal would get done, citing mixed shareholder reaction.
“Many of these investors want to maintain exposure in the emerging AI market and Veritone is one of the few investable pure plays in this space,” he said.
Veritone remains bullish on its future.
“Even if Apis’ proposal had been credible, given Veritone’s significant future growth prospects, the level of such proposal is significantly below that which the Board believes would be in the best interests of Veritone’s stockholders,” co-founder and Chief Executive Chad Steelberg said in the recent SEC filing.
Radjabli said his company is content to wait it out.
“We have 99% certainly they’re going to look for financing,” he said. “We’ll be there when the time comes.”
Veritone plans to report fourth-quarter results Feb. 21.
Low-Power Buy
Irvine-based chipmaker Cosemi Technologies Inc. is back to growth mode, having acquired a South Korean company and inking a distribution deal with the world’s largest online retailer, Amazon.com.
Financial terms of its buy of Optella Co. were undisclosed.
The Gwangju-based company said its chips provide a low-power and cost effective method to efficiently maximize the transmission of data over several kilometers.
It’s a nice complement to Cosemi’s focus on short-reach methods of data communications, company officials said.
“This will bring Cosemi one step closer to its mission of bringing the unparalleled benefits of fiber optics to every interconnect application, over both short and long ranges,” Samir Desai, senior vice president of business development, told the Business Journal.
Cosemi employs about 25 in the U.S., 35 in China and 10 in South Korea following the Optella buy. It declined to provide revenue figures.
Last month, the company also began to distribute its HDMI cables on Amazon.com.
The cables, which cost about $170, are billed to provide higher bandwidth, faster speeds and added security in connectivity for 4K TVs and gaming consoles, home theaters and set-top boxes, among other devices.
The chipmaker, which was established in 2006, sold its photodetector business—sensors of light and other electromagnetic radiation—in 2017 on undisclosed terms to a unit of Broadcom Ltd., renamed Broadcom Inc. last year.
Cosemi retained its business lines for high-speed fiber optic components and active optical cables to provide connectivity, and said it planned to focus on the data center market with those products.
