assuming the acquiring company offers him shares but the acquiring company has much more scale and potential than Joes standalone? i did some math and factor that Joes is fully priced for a takeout at today's trading price 10-15% max premium, but it will have to be majority stock swap with around 15-20mm cash. Nobody in the industry will fork out $100mm cash at this time on small returns since joe's standalone is not making any significant profits, over 5mm a year with 110-120mm sales. Stocks are high now so paying with stock is a good thing.
so i go figure, a takeout price based on today's performance will value the company approx 90-110mm give or take. it could be the price was already factored at 1.20 when it was trading at .85 cents in dec, but now the stock ran up, it could be a slight take under or max 10-15% premium to today's stock prices.
the good thing is if we get stock in the acquiring company, it gives more long term investment to be excited about in a much better long term and viable company.
take a look at Parlux was bought by PERF several years back, they paid all in stock, and PERF ended up owning PARL line of fragrances. I can see another similar play coming on this sooner than later. If it pulls back significantly I would say it is a good time to buy.
i still stand by my former valuation on Joez should still be in the 100mm range, nobody wanted to agree, that explains the volatility here. market is still on steroids with all the margin leverage people have used with other stocks, once the market comes down next month, we will go back to the 1.50's or even less range. I was pulled into getting on the high side valuation on stocks before, small caps like joez usually collapse as well when market generally collapses.
they use their cash only equities to cover margin calls.
Why do people keep talking about a takeover? When was that ever discussed by management?
Crossman is still growing the business. I'm sure if a company approached them with a reasonable offer, it would be considered BUT there has been NO PROOF of any such thing. Why would a company (such as VF Corp) buy J O E Z at this point? I can see if it were a TRLG. The ONLY possible reason would be - they are cheap but that is for a reason......less earnings.
I agree with you yokota. I know Crossman well enough to know that he would NOT consider selling this company at this time with the growth potential over the next few years looking as bright as it is now.
Sentiment: Strong Buy
what is crazy about what I said? i said there may be more potential if Joez was part of a larger company like ICON and wouldn't mind getting some shares plus cash for premium. However, it's not ready to be valued as such hence the reason it hasn't sold for more yet.
We will see today whether sales have increased as much to signal more growth ahead and margins increasing.