CriticalControl Solutions (TSX:CCZ) could be the surprise winner in one of its immediate comparables search for shareholder value, says Industrial Alliance analyst Steve Li.
On October 31st, Zedi announced that it was reviewing options to maximize shareholder value, including the potential sale of the company.
Li says he believes a potential suitor for Zedi might also consider acquiring the energy division of CriticalControl Solutions. He says the offerings would be complementary and the combination could drive cost synergies.
Calgary-based CriticalControl Solutions was founded in 1999 by current CEO Alykhan Mamdani. The company is divided into two segments; one supplies data management and enterprise content management tools to half the provincial ministries of the Alberta government. The other supplies tools such as cloud-based schematics and field device control technologies to oil and gas companies.
Li notes that Zedi is currently valued at a trailing-twelve-months enterprise value to sales of 1.1x. If, he says, one applies the same multiple to the energy segment of CriticalControl Solutions, the result is a potential takeout price of $30-million or $.58 a share. Add that to the companies Service Bureau Operations, which generated more than $15.4-million in sales over the past twelve months, and a reasonable breakup value for the company could range between $.80 to $.88.
In a research update to clients yesterday, Li maintained his STRONG BUY rating, but raised his one-year target price on the stock to $.60, up from his previous target of $.50.
At press time, shares of CriticalControl Solutions were down 4.5% to $.42.