NEW YORK (TheStreet) --Shares of Kofax Ltd. (KFX are jumping by 45.73% to $10.93 at the start of trading on Wednesday morning, after the company announced it will be acquired by Lexmark International Inc. (LXK in a deal worth approximately $1 billion.
Shares of Lexmark are up by 7.13% to $43.70 this morning.
Kofax provides smart process applications software and related maintenance and professional services for first mile interactions between businesses, government agencies, and other organizations and their customers. Lexmark services both the distributed printing and imaging, and content and process management markets.
Lexmark will acquire all of the outstanding shares of Kofax for $11 per share. The deal will double the size of Lexmark's enterprise software business. The addition of Kofax "immediately enhances Lexmark's industry-leading enterprise content management and business process management offerings," Kofax said in a statement.
"We believe joining forces with Lexmark benefits our customers, partners, employees and shareholders and the merger will build on Kofax's rich history of continuous innovation. Our market-leading ability to simplify and transform the first mile of customer engagement is a strong complement to Perceptive Software's strength in managing information across silos. As a result, we're excited about the future and working together to realize the full potential of this opportunity to the benefit of all stakeholders," Kofax CEO Reynolds C. Bish said in a statement.
Separately, TheStreet Ratings team rates KOFAX LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate KOFAX LTD (KFX) 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 impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KOFAX LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.30 versus $0.13).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 88.8% when compared to the same quarter one year prior, rising from $2.34 million to $4.41 million.
- The gross profit margin for KOFAX LTD is currently very high, coming in at 80.69%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, KFX's net profit margin of 5.52% significantly trails the industry average.
- Compared to other companies in the Software industry and the overall market, KOFAX LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- KFX has underperformed the S&P 500 Index, declining 11.04% 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: KFX Ratings Report