Converge Technology Solutions Corp T.CTS

Don't drink all the Kool-Ade

[templetooth2]

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%.

[eiementai]

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[Mephistopheles3]

Good post for random thoughts.  I actually agree with the majority of your points.  You can see with the NCIB and with the comments that went with it that management and the BoD clearly think this stock is $10 or so.  If a bidder would have come out at $12, this would have been over in like 5 days.. so we can safely rule out a huge bid coming in.  So most of the private equity

[ddogold]

In the mean time looks like a lot of daytraders are playing the swings . 

[TeamEddie]

you forgot going private is an option and they also will be dealing in reality not speculating on reality if their math says $7 is a good offer they will take it. not base their expectations on the past like retail

[AlwaysLong683]

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