Shares of Best Ideas Newsletter holding EDAC (click ticker for report: ) are hitting a new all-time high after the firm entered into a merger agreement with Greenbriar Equity Group. Details of the deal can be found here.
We’re a little surprised by the deal, especially since the future outlook continues to look wonderful. However, management and the Board of Directors readily tendered its 18.2% of the company, so perhaps the $17.75 per share bid, which is in-line with the low-end of our fair value range, exceeded the level of share appreciation the firm thought possible in the near-term.
The terms of this deal also beg the question of whether EDAC’s recent share price surge was composed of Greenbriar building a sizeable position, which makes the deal seem more attractive.
Although we would have loved to participate in its growth as a public company, we couldn’t be happier with the performance of EDAC. We’ve achieved a return of 238% from our current cost-basis, and we plan to close the position today (remove it from the portfolio of our Best Ideas Newsletter), as the time value of holding out for an additional few cents is simply not worth it. Because EDAC is an under-covered and under-loved company, we do not believe any activist investor will come to drive a higher bid, even though we think Greenbriar acquired the company on very attractive terms.
With our EDAC position being closed, our cash position will now sit somewhere in the mid-30’s range in the portfolio of our Best Ideas Newsletter. We will be looking to put some of our dry powder to work as soon as possible, and Valuentum subscribers will be the first to know.