Intrinsyc Technologies (ITC) – Merger Arbitrage – 4% Upside

Current Price: C$1.74

Merger Consideration: C$1.81

Upside: 4%

Estimated Closing: January 2020

Arrangement agreement

 

This is a very short and time sensitive note on the Intrinsic Technologies acquisition by Lantronix.

Consideration stands at $0.55/share in cash + 0.2135 LTRX per each ITC share (cash is 40%). The transaction is very small ($27m) and currently in its final stage. Shareholders have already granted the approval (30th Dec) and only the court and customary conditions remain. The closing is estimated this month, yet 4% is still here for no apparent reason. Borrow is available and cheap (2.51% annually). Maybe the reason is the micro size of the transaction. Financing is in place. Recent liquidity is about 20k shares/day.

Both companies operate in IoT business.

7 COMMENTS

  1. jwestern

    For readers: note LTRX and the $0.55 in cash are both in USD. Seems the spread has closed.

    1. dt

      Indeed – after yesterday’s -5% move in LTRX share price, the spread has closed for now.

  2. jwestern

    The play would be to short LTRX and buy ITC in the appropriate proportion, right? There’s no way to do this by going long only?

    1. Ilja

      You can go only long, but then you’re left exposed to LTRX price volatility. It is always best to hedge that risk.

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