It is a well trod path to (corporate) perdition: make a ‘transformational’ acquisition funded by issuing shares, only to watch them slide over the next year, prompting a shareholder revolt.

That is the scenario unfolding at BPS Technology (ASX:BPS), which operates the well-known Bartercard business.

A year ago it paid $25 million to buy Entertainment Book, the popular business which sells books of coupons to restaurants, leisure events and the like — often via schools, community groups, charities and the like.

BPS issued shares at 94c to raise $30 million, which are now trading at 77c, off the recent low of 74.5c.

Unsurprisingly, a group of shareholders speaking for only around 7 to 8 per cent of the capital, now want to spill the board.

Since the top three holders sit on the board and speak for around a third of the shares on issue, the push to replace the board looks to be quixotic at this stage.

Not helping the board’s popularity was a recent profit downgrade which, even though only slight, has helped fuel the ire of those looking for a showdown.

The Entertainment Book merger has helped to double revenue, with the gross profit, as measured by earnings before interest, tax, depreciation and amortisation (EBITDA) pushed ahead by a more modest 50 per cent or so.

But bedding down any deal takes time, with one fund manager, Salt Funds Management, taking advantage of the recent share price weakness to snap up a 5 per cent shareholding.

Following the recent disclosure of the slightly softer-than-expected earnings, broker Baillieu Holst reiterated its ‘buy’ call on the shares, with a $1.55 price target. It reckons synergies from the Entertainment Book purchase will flow through to fiscal year ’18.

Even though the Entertainment Book business is travelling well, the Bartercard mainstay is exposed to the retailing sector, which remains subdued.

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