Good things come to those who wait.
RuggedCom (TSX:RCM) today announced it had entered into an agreement with Siemens Canada to purchase all outstanding common shares of the Vaughn, Ontario based company by way of a takeover bid at $33 per share in cash.
The offer, which has the unanimous approval of the RuggedCom board, brings to end a flurry of activity after a long dormant period for shareholders. The stock, which had been struggling since the middle part of 2011, leapt 62%, from $13.61 to $22.69 on December 19th, when 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 Cantech Letter readers will know, Tom Astle, Head of Research for Byron Capital, didn’t buy into the initial euphoria. In a research note after the offer, Astle advised clients to hang on to their RuggedCom, speculating the move could be just the first in a number of bids. Astle said those who might be interested in the company included deep pockets such as ABB, Siemens or Schneider Electric. He then raised his target price on the company to $25 from his previous target of $21.
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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.
On January 4th, after the RuggedCom board, which owns or controls 16.1% of the company, advised shareholders to vote against the Belden offer, calling it “opportunistic” in a circular disseminated after the press release, the stock closed above the Belden offer price, to $24.98. Astle, believing that a “full value” bid for a company he called a “rare property” was now possible, raised his target price the stock to $30.
Clearly the board of RuggedCom believes the Siemens offer is that full value bid, pointing out that is “represents a premium of 142 per cent to the closing price of RuggedCom shares on the Toronto Stock Exchange on Dec. 16, 2011, the last trading day prior to Belden Inc. announcing its intention to make an unsolicited takeover bid for RuggedCom. The Siemens offer also represents a 50-per-cent premium relative to Belden’s unsolicited takeover bid at an offer price of $22 per share.”
Share of RuggedCom closed today up 25% to $32.85.