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Orbcomm has entered into a definitive agreement to be acquired by private equity firm GI Partners, the company announced April 8.
GI Partners made an all-cash transaction that values Orbcomm at approximately $1.1 billion including net debt. Under the agreement, stockholders will receive $11.50 per outstanding share of common stock once the deal closes.
“This transaction will provide immediate and substantial value to Orbcomm stockholders, reflecting the tremendous commitment and work of our employees and stakeholders,” Orbcomm CEO Marc Eisenberg said in a statement. “The partnership with GI Partners will provide us the opportunity to rapidly advance our long-term strategy.”
Orbcomm provides industrial Internet of things (IoT) and machine-to-machine communications hardware and services designed to monitor fixed and mobile assets in markets including transportation. Its shares increased 52% from $7.57 the day the deal was announced to $11.51. The share price has remained steady since with it being reported at $11.55 by market close April 13.
The increased share price reflects what stockholders will receive per outstanding share if the deal is finalized. Orbcomm described it as a premium of approximately 52% to its closing share price April 7 and a 50% premium over the 90-day volume-weighted average price.
Orbcomm hopes the acquisition will help support its momentum in the industrial Internet of Things space since it increases investment in sales, marketing and technology innovation. That will be used to accelerate growth, execute on its long-term strategic plan and global market expansion, and provide added flexibility as a privately held company.
Orbcomm’s board of directors unanimously approved the transaction and recommends stockholders vote in favor of the deal at a special meeting. The meeting will be held after the filing of a definitive proxy statement with the SEC and subsequent mailing to stockholders.
The parties involved in the deal expect the transaction to close in the second half of the year, but it still requires stockholder and regulatory approval. Orbcomm and its representatives also can also solicit and consider alternative acquisition proposals during a 30-day “go-shop” period ending May 7. Orbcomm will become a privately held company, and its common stock will no longer be listed if the transaction is completed.
“Orbcomm has a long history of innovation, providing mission-critical services to customers across the global logistics landscape and a broad range of other industries,” Mark Prybutok, managing director of GI Partners, said in a statement. “We are excited to work with the Orbcomm team to take the business forward as IoT use cases continue to evolve and grow.”
TipRanks said April 9 that investors are cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on two Buys and three Holds. The average analyst price target is at $11.50. That indicates that shares are fully valued at current levels.
Several law firms have launched investigations into the transaction, alleging the stated cash price of $11.51 per outstanding share of common stock doesn’t best serve the interests of Orbcomm’s shareholders. However, the company believes that this transaction provides value to its stockholders.
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