NEW YORK (TheStreet) -- Shares of OM Group Inc (OMG) were soaring, sharply up 27.69% to $33.89 on heavy volume in early market trading Monday after the company agreed to be acquired by funds managed by affiliates of Apollo Global Management, LLC (APO) - Get Apollo Global Management Inc. Class A Report for $34 per share.
The purchase price of OM Group represents roughly a 28% premium over its closing share price from May 29, 2015.
Platform Specialty Products (PAH) - Get Element Solutions, Inc. Report will acquire OM Group's electronic chemicals and photomasks businesses from the Apollo Funds in two separate transactions for a total cash consideration of $365 million.
"Last year, we launched a comprehensive review of strategic alternatives, resulting in our board of directors unanimously concluding that this acquisition of the company is the best course of action to maximize value for OM Group stockholders," said OM Group chairman and CEO Joseph Scaminace in a statement.
About 1.53 million shares of OM Group have exchanged hands as of 9:56 a.m. ET today, compared to its average trading volume of about 192,780 shares a day.
Cleveland, Ohio-based OM Group is a technology-driven industrial company that serves markets, including automotive systems, electronic devices, aerospace and defense, industrial and medical.
The company operates in three segments including magnetic technologies, battery technologies, and specialty chemicals.
Separately, TheStreet Ratings team rates OM GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate OM GROUP INC (OMG) 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. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- OMG's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 14.0%. Since the same quarter one year prior, revenues slightly dropped by 5.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- OM GROUP INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, OM GROUP INC reported poor results of -$5.72 versus -$2.23 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus -$5.72).
- The gross profit margin for OM GROUP INC is currently lower than what is desirable, coming in at 26.72%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.43% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$15.30 million or 446.42% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: OMG Ratings Report