Tungsten Corporation – Who Knew eInvoicing Could Be So Exciting?

It is somewhat ironic that the business of eInvoicing which we might think of as somewhat dull and boring, has created one of the most fascinating business stories of recent times. Tungsten Corporation was created by the vision of Edi Truell, who created a publicly quoted firm from OB10, the well-established eInvoicing leaders, and a bank, purchased to provide the funding to extend the offering into supply chain finance (SCF). Truell is a well-respected City figure with some big successes to his name.

The firm was floated on the London AIM market at 225p a share in 2013, and after initial gains, was attacked by “short sellers” who felt the shares were overvalued and succeeded in driving down the price to some 50p a share a few months back. Meanwhile, Truell stepped back from day-to-day running, and under new CEO Richard Hurwitz, the firm seemed to have turned a corner with the share price rising a little this year. Meanwhile, the eInvoicing underlying business continued to be pretty successful, although uptake of the SCF offering was slower than planned and the firm is still loss-making. A spend analytics option (which we like, and indeed wrote about here) was also launched.

But now, there is drama in the Tungsten world. Truell, who owns 16% of the firm, has made an offer to buy Tungsten, at around 80p per share and stick it together with some of his private corporate interests, creating a new private business. “He set out a plan that stopped short of bidding for the full firm, but would see him buy Tungsten’s network arm and combine it with his telematics business Tantalum and various other assets” says the Telegraph.

Not sure I fully get that – the “network arm” would seem to be basically the core of Tungsten’s business. However, the Board of Tungsten have rejected these proposals, saying it “found them to date to be universally without merit for shareholders.”  Tungsten shareholders would end up with a minority stake in a privately controlled and illiquid business.

Truell responded to that by resigning from the Board and implying that the Tungsten board had encouraged him to make an offer, and that he might even put in a hostile bid for the firm. Meanwhile his brother Danny (I’m thinking “Dallas” here, for those of you of a certain age) is still a non-exec on the Tungsten Board – and is keeping quiet.

I haven’t met Truell although Jason Busch has. However, we did question some of his more optimistic claims when he was running the firm; for instance, he got investors rather excited about the prospect of a huge German public sector eInvoicing deal.

Anyone who knows the German public sector always thought it very unlikely that the central government would ever mandate some national eInvoicing solution when the states (Länder) and even cities are so powerful. So we’re not sure he did a lot of good for the firm with some of those claims about future growth prospects, and his whole "buy a bank" strategy unwound with the bank being sold a few months back.  The current management have been much more measured and seem to be focused on steadily building the business.

Having said that, shareholders who bought at £2 a share might not be averse to selling out having seen their investment drop considerably. So there is a price as always at which Truell could buy the firm, but would he want to be the guy who floated the firm at £2.25 and bough it back at £1? That would not do his reputation too much good.

Does any of this matter to customers? To be honest, not really, as long as it does not lead to a period of uncertainty. It is more important to the firm that the SCF and analytics offerings realise their potential, building on the market-leading eInvoicing position. But the dynamics of this tussle are fascinating to follow.

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