Q: What do you think the probability of a buy out offer is? What do you feel a offer price would be?
5i Research Answer:
NVEI is in a growing sector and the stock is very cheap, but it has struggled. This makes it attractive to buyers, but management is only likely to engage in discussions only with a good premium to make it 'friendly'. They can't be seen as selling too low. So, it becomes a question of price. At 10X earnings (pre announcement) buyers certainly can pay more if they want. We think deal would need to be at least $30 (US) and would give odds at about 35% to 40% right now.