TrueContext shareholders should take the deal, Beacon says

A buyout offer on TrueContext (TrueContext Stock Quote, Chart, News, Analysts, Financials TSXV:TCXT) is a fair deal for shareholders, says Beacon analyst Gabriel Leung.

On March 13, TCXT announced that it had entered into an agreement to be acquired by Battery Ventures for $1.07 per share, valuing the company at approximately $1.07. The deal has been unanimously approved by the company’s board.

“Truecontext welcomes our new partner Battery Ventures as we continue our journey of delivering best-in-class workflows to field technicians,” said CEO Alvaro Pombo. “We are excited to work with Battery to accelerate the next chapter of our continued growth in the field intelligence space.”

In a research update to clients March 25, Leung changed his rating on the stock from “Buy” to “Tender” and his price target moved from $1.05 to the buyout price of $1.07.

“With the high degree of shares locked in, along with, in our opinion, a fair value being offered, we expect we believe investors should Tender to the offer,” the analyst wrote. “Therefore, we have changed our recommendation from Buy to Tender. We are also increasing our target price to C$1.07/sh (was C$1.05/sh).”

Leung says investors should take a look at the current landscape, in light of private equity buyouts, and take a look at other compelling small cap Canadian stocks.

“On a side-note, given recent M&A activity in small-cap Canadian technology (i.e. MediaValet and MDF Commerce (MDF-T, Not Rated)), we believe investors should give names in our coverage universe with compelling growth profiles, product offerings and existing customer bases a second look such as Wishpond (WISH-V, Buy, C$7.00), Kraken Robotics (PNG-V, Buy, C$1.55) and Tantalus Systems (GRID-T, Buy, C$3.00) (before PE or strategic partners do),” he concluded.