Although most investors were paying attention to news from China, specifically in regards to the crypto markets, the best-performing stocks on Monday were actually a pair of small engineering firms. These companies received unexpected buyout offers from larger competitors in both cases, which single-handedly sent shares skyrocketing. One of which was Raven Industries (NASDAQ: RAVN), an engineering developer that agreed to be bought out by agricultural equipment maker CNH Industrial (CNHI).
The deal was announced on Monday morning, with CNH agreeing to pay our $58 per share, or around $2.1 billion in cash, to buy out the company. That’s a massive premium over Raven’s Friday close price of around $39 per share. CNH focuses on designing agriculture precision technology as well as equipment, trucks, and vehicles. However, the agricultural giant is planning to divest some of its vehicle business segments following this Raven deal, with management warning the transition period could see some financial turbulence for shareholders. Shares were up around 49.3% in response to the news.
“Raven has been a pioneer in precision agriculture for decades, and their deep product experience, customer-driven software expertise, and engineering acumen offer a significant boost to our capabilities. This acquisition emphasizes our commitment to enhance our precision farming portfolio and aligns with our digital transformation strategy,” said CNH CEO Scott Wine in an official statement.
Raven wasn’t the only company to skyrocket following a buyout announcement either on Monday. Another engineering firm, Lydall (LDL), surged after a private company called Unifax offered to buy it out for around $62.1 per share. That comes down to an 85% premium compared to Friday’s close. Instead of focusing on agricultural technology, Lydall is focused more on filtration, EV battery systems, and alternative, energy-saving systems. Shares are up more than 85.4% following the announcement.
As the global economy begins to open back up, now might be the last chance for companies to make acquisitions while valuations are still relatively cheap. Additionally, borrowing in the form of debt has never been less expensive, with interest rates sitting at near-zero lows. Although stock indexes like the Dow Jones and the Nasdaq are trading near record highs, some individual companies that are listed on these exchanges are still trading fairly cheaply. As the economy continues to get better, even these stranglers should start seeing significant price increases.
While betting on new acquisition targets isn’t always easy, every industry has a handful of hot-star companies that are seen as prime buyout targets. Traders can easily double or triple their initial investments by correctly picking out one of these companies before an acquisition deal is announced.
Raven Industries Company Profile
Raven Industries Inc is a diversified technology company providing products to customers within the industrial, agricultural, energy, construction, and defense markets. The company has three reportable segments namely Applied Technology, Engineered Films Division, and Aerostar Division. Applied Technology sells its precision agriculture control products to both original equipment manufacturers and through aftermarket distribution partners. Its Engineered Films produces high-performance plastic films and sheeting for geomembrane, agricultural, construction, and industrial applications, and Aerostar serves the aerospace/defense, radar, and lighter-than-air markets. It generates a majority of its revenue from the Engineered Films segment. – Warrior Trading News
