Current Price – $3.8
Tender Price – $3.75 – $4.25
Upside – 12% or $45 (if tender is priced at the upper limit)
Expiration Date – 9th of March 2018
No proration for odd lot holders
This is quite standard odd-lot dutch tender. Pay-off depends on how many shareholders tender and at what price points they do it. I do not have position myself, but this tender is interesting from two perspectives:
1) It is quite large – 17.8% of shares will be accepted in the tender.
2) Insiders (holding 27.7% of shares) are not tendering.
This suggests that tender has relatively high chance of being priced at the upper limit and that proration will be low. Thus might be an option to play this not only with odd-lot portion.
For more background on SCKT please see this write-up. Few days ago company reported disappointing Q4 results after which share price dropped to current levels. Estimates were mostly missed due to lumpy orders by their enterprise customers – at least that was the explanation given in the conference call, although one analyst at the end of the challenged this. Q4 results have obviously increased the number of shareholders that will be willing to tender shares.
SCKT is levering up to finance the tender offer – credit facilities have already been arranged.