Q: Somebody thinks this is worth $13 a share, and it trades today thanks to failed takeover at less than half that….what to do?? Buy, sell or hold if you have it??
5i Research Answer:
VLN was a lagging stock for many years, prior to the Flowserve bid, which was blocked by France. The question now is, can it be sold to a different party and get approval, or does it go back to being a lagging small cap stock with little growth? Flowserve was a 'strategic' buyer, and we would not simply assume it is worth $13 to another party. We would see it as a HOLD now. Often, when a company is in this situation there are ofher potential buyers in the wings (but at lower prices than the one that was 'accepted').