Vocus Inc. will be bought by the private equity firm GTCR Valor Merger Sub Inc.
The firm will offer $18 per Vocus share, a 48% premium of the stocks close on Friday, April 4. GTCR will also spend $77.3 million to purchase Vocus' Series A convertible preferred stock.
The deal is expected to close in the second quarter of 2014.
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TheStreet Ratings team rates VOCUS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate VOCUS INC (VOCS) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VOCS's revenue growth trails the industry average of 16.1%. Since the same quarter one year prior, revenues slightly increased by 0.7%. 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.
- VOCS's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that VOCS's debt-to-equity ratio is low, the quick ratio, which is currently 0.65, displays a potential problem in covering short-term cash needs.
- Net operating cash flow has significantly decreased to -$0.63 million or 108.22% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has decreased by 5.5% when compared to the same quarter one year ago, dropping from -$3.73 million to -$3.94 million.
- You can view the full analysis from the report here: VOCS Ratings Report