Furmanite (FRM) Stock Gains on Merger With Team, Inc.
NEW YORK (TheStreet) -- Shares of Furmanite (FRM) were gaining 6.8% to $7.42 with heavy trading volume on Monday following the announcement that company will merge with fellow industrial services company Team, Inc. (TISI).
Under the terms of the merger, Team will acquire all outstanding shares of Furmanite in a stock-for-stock deal valued at about $335 million.
Furmanite shareholders will receive 0.215 shares of Team common stock for each share of Furmanite they own under the agreement. The deal represents an 8% premium to Furmanite's closing stock price on October 30, based on the closing share price of both companies on that day.
The deal is expected to close in the first quarter of 2016.
"After a comprehensive evaluation of strategic alternatives, the Furmanite Board of Directors concluded that a merger with Team is in the best interests of Furmanite stockholders," Furmanite interim President and CEO Jeffery G. Davis said in a statement. "This value-maximizing transaction will allow our stockholders the opportunity to participate in the significant expected upside driven by the compelling strategic and financial benefits of the combination."
About 3.1 million shares of Furmanite were traded by 3:32 p.m. Monday, above the company's average trading volume of about 76,000 shares a day.
TheStreet Ratings team rates FURMANITE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate FURMANITE CORP (FRM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite currently having a low debt-to-equity ratio of 0.47, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.73 is very high and demonstrates very strong liquidity.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.9%. Since the same quarter one year prior, revenues fell by 11.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Construction & Engineering industry average. The net income has significantly decreased by 25.1% when compared to the same quarter one year ago, falling from $4.51 million to $3.38 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, FRM has underperformed the S&P 500 Index, declining 7.85% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: FRM