For Sale: Is Miranda Technologies Worth More than Gennum or RuggedCom?

Miranda President and CEO Strath Goodship. After a short battle with dissident shareholders the company, which recently posted record numbers, will be put on the block.

Last week, Montreal broadcast technology player Miranda Technologies (TSX:MT) announced that, because it had received “a number of unsolicited expressions of interest regarding potential transactions and partnerships…” it would begin formal discussions with those yet-to-be-named parties.

The language of Miranda’s press release is not unfamiliar to those who have invested in Canadian tech stocks of late. It’s similar to ones issued by companies like Zarlink, MOSAID, Gennum, March Networks and RuggedCom, all of whom were acquired after a collection of mostly US-based firms founds their valuations were too compelling to pass up.

Miranda’s technology is in demand because of the rise of high-definition TV. The company, which was formed more than two-decades ago and went public late in 2005, is the back end that aggregates content and manages the signal path processing and monitoring required by the multi-format environments that are modern television production facilities. The company has grown from $129 million in revenue in fiscal 2008 to just under $182 million in fiscal 2011.

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After Wednesday’s news, many weren’t waiting to see exactly who might be interested in Miranda. The company’s stock closed Tuesday at $10.64 but by Friday was up to $12.75, giving it a market capitalization of just under $280-million. Those looking around for comparables might be encouraged by recent acquisitions in the space.

In January, California-based semiconductor supplier Semtech announced it would acquire Burlington-based broadcast tech company Gennum, a company very close in profile to Miranda, for approximately $500-million. Gennum’s fiscal 2011 revenue was just $137.2-million.

More recently, RuggedCom, a Vaughn, Ontario company that makes communications and networking equipment used in hostile or demanding environments, sold to Siemens Canada for $33 per share after rejecting an earlier offer $22. The offer, which valued RuggedCom at $400 million, was more than four times the $94 million topline its posted in fiscal 2011.

Last week’s press release came after JEC Capital Partners, which owns about 7% of Miranda and JMB Capital Partners Master Fund LP, which owns about 3%, submitted a requisition to remove four of the seven current directors of the company and to elect four new directors wit mergers and acquisitions expertise. While Miranda said the requisition was invalid, it did bump up its annual meeting of shareholders to April 17th.

Fireworks are probably not expected at that meeting, however. After last week’s press release, JEC said it was “delighted that after repeated calls by numerous shareholders, the board of directors of Miranda Technologies has faced up to its strategic imperative and committed itself to a structured sale of the company.”

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