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Byron Capital’s Tom Astle: Hang on to your RuggedCom

RuggedCom President and CEO Marzio Pozzouli. Byron Capital analyst Tom Astle think the $22 all-cash offer the company received on Monday from Belden Inc. may be followed by others.

RuggedCom President and CEO Marzio Pozzouli. Byron Capital analyst Tom Astle think the $22 all-cash offer the company received on Monday from Belden Inc. may be followed by others.
Ruggedcom (TSX:RCM) is the talk of the TSX today after St. Louis-based Belden (NYSE:BDC), a manufacturer of signal transmission and networking products used in demanding environments, made a $22 all cash offer for the Vaughn, Ontario base company.

But as the the stock’s closing price on Monday, $22.69, might suggest, some think the Belden offer might not be the last.

In a note to clients this morning, Bryon Capital analyst Tom Astle says that while the offer represents a premium of 62% over Friday’s closing price of $13.61, the move could be just the first in a number of bids. Astle says those who might be interested in Ruggedcom include deep pockets such as ABB, Siemens or Schneider Electric.

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RuggedCom, as its name suggests, makes communications and networking equipment used in hostile or demanding environments. Success in the electric power and transportation markets have meant growth for the company, from $39 million in 2008, to nearly $94 million in fiscal 2011.

Astle believes that while Ruggedcom is profitable, it could be much more profitable as part of a larger entity. On Monday, he raised his target price on the company to $25 from his previous target of $21 because he thinks RuggedCom could achieve up to $1.90 a share in earnings for an acquirer. Multiplying this number by fifteen times equals $28 a share. With the downside on the stock now seemingly limited to Belden’s initial $22 offer, Astle recommends hanging on to Ruggedcom while the situation plays out.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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