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I have had this stock for about a year... I bought 2500 shares at $7 then it went up to $10 I was really happy with form Acquiring Cascade but got even more happy when I saw this... Cascade Microtechnology and form factor together both have a revenue of 700 million!!!! Last week I bought more shares because I know that in a couple years..... Form could be in the billions.
Zippy your numbers confirm my estimates. Like your thinking.
This acquisition is exactly what they were looking for and actually quite hard to find in their sector. A profitable company of good size that could add substantially to revenues and earnings immediately. CSCD checks all the boxes. And judging by their financials they run a tight ship.
Have been hoping we would see this type of deal and now here it is. Very very happy.
As for the arbitrage BS we just have to wait for it to blow over. We are headed to much higher prices from here in my opinion and that sunny day is right around the corner.
Sentiment: Strong Buy
More from the announcement and conference call:
2015 Actual (FORM alone) vs. 2015 Pro-Forma (FORM + CSCD) guidance:
Revenue $282m $486m
Non-GAAP GMar 35% 42%
Non-GAAP OMar 8% 12%
Non-GAAP EPS $0.37 $0.65
EBITDA Margin 11% 15%
That's right: just putting the two companies together would mean FORM having $0.65 in 2015 EPS instead of the $0.37 they reported. And that's just financial synergies, never mind product and sales synergies in years 2, 3, 4, etc. Pre-Deal, FORM's 2016 EPS estimate is $0.48. That means post deal it's more likely to be around $0.80...for a $6.75 stock for a company that will dominate this space.
It's bizarre that FORM is down, given that just completing the merger alone yields so much cost and tax synergy. Stupid algo traders reacting to the news and not even bothering to see the accretion.
Good deal for both parties.
- CSCD roughly $100M in assets, no debt
- CSCD steadily growing revenues last few years
- CSCD and FORM both solid Q4 numbers
First CSCD can use FORM NOLs so tax reduction leads to following numbers
- $10M+ synergies
- $16M+ CSCD 2016 profits
- $25M+ FORM 2016 profits (yahoo finance est 2016)
- $51M+ earnings 2016 adding above numbers
- share count 58 + 10 to CSCD = 68M
- 75+ cents earnings per share 2016
- PE should be 15-20 range
- 11.15 - 15$ per share applying PE to earnings
As seen by the above math I think this will finally boost FORM into the 12-15$ price range.
This will also make FORM a more attractive target down the line to Teradyne (what are you waiting for!!! Teradyne!!).
Sentiment: Strong Buy
Cascade Microtech the company FormFactor is acquiring has just announced rock solid results for 2015.
• Record Annual Revenue of $144.0 million
• Record Quarterly Revenue of $40.4 million
• Record Annual Income from Operations of $17.9 million
• Record Quarterly Income from Operations of $6.5 million
• Record Quarterly Bookings of $48.7 million
FormFactor is getting it at roughly 2 times enterprise value.