Another day, another Canadian tech M&A deal
News item: NYSE-listed Belden to acquire Miranda Technologies (MT:TSX) for 64% premium
It seems like just yesterday when we were talking about institutional investors not getting tech (see prior post “$1.1B Q9 Networks deal another reminder that Canadian markets don’t get tech” June 4-12), and here we have the news of the outcome of Miranda’s review of its strategic alternatives. The review only began on March 21, 2012, and BMO Capital Markets has already delivered a handsome $345 million EV purchase price. As premiums go, the $17 price was 42% over the 90-day VWAP and a 64% premium to the prior day’s close. A definite winner.
Now, Belden says it’s going to keep Miranda’s existing ops, including R&D and manufacturing in Montreal. Which might take some of the sting out of it for we Nationalists. GMP Securities estimates the price to be 8.7x C2012 EV/EBITDA, 1.7x sales, and 15.4x current year EPS. Seems plenty decent enough to accept, and that’s exactly what investors will do.
When the deal was announced, GMP had a fundamental value of $12.25 on the stock, and estimated that it could be worth in the $17+ range in a takeover. Other analysts thought $15 would be a decent clearing price off the $10.64 quote the day before the Miranda Board announced its was looking for a buyer.
The hedgies bought some stock that day, including some of us punters, and drove the price up to $12.25. But at that price, you were protected on fundamental value, with a good chance of a bid arising at the end of the process. Even then, only 432k shares traded at first. Over the next month, company shares bounced around $13, and some shareholders laid part of their positions off onto the risk/arb guys/gals.
But as the Euro crisis took a turn for the worse, stocks sold off. Miranda shares sold off along with them, touching $10.35 again last week. Some folks obviously figured that a buyer might never appear given the macro uncertainty overseas. The M&A market did shut down during the Fall and Winter of 2008, so there is precedent to be conscious of if you think Europe’s banking situation has become Hell-on-wheels.
However, just as with Belair, Bridgewater, Dalsa, MKS, Q9 Networks, etc., etc., Miranda found a great buyer at a great price. One of these days, perhaps Canadian institutions will notice all of the money being made in tech land, and encourage the i-bankers to try a few tech IPOs.
I can imagine there are firms from Vancouver, Ottawa and Montreal and beyond that fit the bill. You could do worse: like being overweight oil and gas stocks.
(disclosure: Belair and MKS were portolio companies)