Q: How transformative is Akita's integration of Paramount Ressources and the end of the dual share classes? Would you be a buyer here? I hold near 4% in my portfolio, should I trim or hold?
5i Research Answer:
The Fox acquisition is accretive to earnings, cash flow and EBITDA. AKT says it will add between $12.5M and $22.2M in operating cash flow. This compares with operating cash flow of $45M last year. The price is decent at about $75M. We like the deal and the potential here, though the stock is expensive on valuation. We think the share structure change is very positive. Things look good, but with a small company that remains cyclical we would not want to have a giant position. We would be more likely to maintain a position today than add.