The specialty chemical manufacturer announced it has entered into a merger agreement in an all-cash transaction valued at $392 million. H.I.G. will acquire all outstanding shares of American Pacific's stock at a price of $46.50 a share, an 18.9% premium on Thursday's closing price and 17.1% higher than the stock's two-month average.
H.I.G. intends to commence a tender offer to acquire the shares no later than Jan. 24.
American Pacific's Board has unanimously approved the acquisition and recommends stockholders to tender shares upon offer.
Shares soared 19% to $46.55 by 10a.m. EST.
TheStreet Ratings team rates AMERICAN PACIFIC CORP as a Buy with a ratings score of B. The team has this to say about their recommendation:
"We rate AMERICAN PACIFIC CORP (APFC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 19.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems.
- Compared to its closing price of one year ago, APFC's share price has jumped by 117.32%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, APFC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The gross profit margin for AMERICAN PACIFIC CORP is rather high; currently it is at 57.58%. It has increased significantly from the same period last year. Along with this, the net profit margin of 18.50% significantly outperformed against the industry average.
- You can view the full analysis from the report here: APFC Ratings Report