I am considering a half position in NWC after reading your recent report. Considering their P/E relative to peers, low debt, well established beachheads in frontier markets and any other relative factors, can you give an opinion on where their takeover candidacy might be currently?
Thank You,
Tim
Control is in the market, and insiders do not own much. It is also the type of company that doesn't necessarily need to keep current management (unlike, say, a tech company where the engineers are key). At 12X earnings, with many of its focus areas with little competition, we think some bigger players would certainly be interested here. At $2.4B in sales it is not a huge bite, and may be too small for some, but it has been consistently profitable with good cash flow. Payback period is a big high at maybe eight/nine years, but could make sense strategically for a buyer. The largest sharerholder has less than 5%, and with weak peformance we think an overture would likely be received well. All that being said, we might expect some activist shareholder action before a takeover.