RE:Don't drink all the Kool-Adetempletooth2 wrote: Very random thoughts from a not-very-committed shareholder:
- Under the NCIB the company bought back 5 million+ shares at about $6.04 per share. You would have to think any takeover bid would have to be nicely in excess of that price.
- The weighted average exercise price of some 2.8 million stock options outstanding is $8.60
- There are billions and billions of private-equity dollars sitting in takeover funds. Buying CTS just before a recession would take some nerve, but remember, the potential audience here is the professional investor class. These people know one should buy high and sell higher. Putting that axiom into practice is hugely difficult in the teeth of a recession.
- The greatest impediment to a deal is probably management, or rather, management's expectations. If bids cluster around the $8 level, will management accede? Or will they reject on the theory there's much more available at the end of the rainbow.
- Age-old dilemma: $8 today or $10+ some years down the road. Having spent 2 years or more assembling this baby, there's substantial risk management can accept someone else's idea of value here.
- If an $8 bid is rejected, expect this baby to visit the $3 level in the proverbial blink. Obviously, I don't know the risk of this negative scenario playing out, but it's a lot higher than 5% IMO. Likely more like 25%.
I agree. If another party offers $8 or more per share, sell IMO. If the best offer is higher, great, If not and the CTS committee does not recommend a sale to shareholders, my guess is the share price will get hit again as it appears CTS paid way too much for acquisitions during the tech boom years and thus generated a huge Goodwill number which will likely be subject to a writedown at some future point in my view. Add too much debt and product-heavy revenue to the mix and it doesn't look good, especially in a now rising interest rate and inflationary environment with the possibility of a recession in 2023. I still don't own shares, but if I did, it would be solely in the hopes of a takeout at a decent premium. Another option is a hostile takeover offer made directly to shareholders by the interested suitor should the Committee reject all firm takeover bids.
Hope existing shareholders do get a nice takeover offer to vote on.