A bid higher than $4.15 for Sandvine is probable, says National Bank

His prediction that Sandvine (Sandvine Stock Quote, Chart, News: TSX:SVC) would garner a higher bid than the $3.80 a share Vector Capital offered yesterday came true, but National Bank Financial analyst Richard Tse think an even higher offer might be forthcoming.

Yesterday, Sandvine announced that it had received a binding offer from an affiliate of Francisco Partners to acquire the company for $4.15 per share, besting the $3.80 offer from Vector Capital on May 26.

Tse says we will know very soon what the outcome will be, but he is putting better than even odds on an even better bid.

“Vector has five days to match or beat this competitive bid. We wouldn’t be surprised if Vector exercised its matching clause given the analysis noted above,” Tse says. “That said, we’re of the view that a strategic buyer like Francisco has more upside potential given notable cost synergies. With only five days to go, we’d take a bet on a potentially better bid.”

In a research update to clients today, Tse maintained his “Outperform” rating and one-year price target of $4.50 on Sandvine, implying a return of 17 per cent at the time of publication.

Tse thinks Sandvine will post EBITDA of (U.S.) $25.7-million on revenue of $131-million in fiscal 2017. He thinks those numbers will improve to EBITDA of $28.2-million on a topline of $131.9-million the following year.

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