NEW YORK (TheStreet) -- Shares of Planar Systems (PLNR) were gaining 34.2% to $6.24 on heavy trading volume Thursday following the announcement that Leyard Optoelectronic will acquire the digital signage technology company.
Leyard will pay $6.58 a share to acquire all outstanding shares of Planar Systems. The transaction values Plana at about $156.8 million.
The acquisition will help augment Leyard's current range of LED display products, and will enable it to expand outside of the Chinese market.
"I believe this transaction represents an outstanding opportunity for our shareholders, employees and customers," Planar Systems President and CEO Gerry Perkel said in a statement. "The acquisition by Leyard will provide our investors with a 42% premium to market based on our latest closing price and a 51% premium based on a seven day volume-weighted average price of Planar common stock of $4.35, and will position the Planar business for continued growth and innovation."
The companies expect the deal to close in the fourth quarter of 2015.
About 2.9 million shares of Planar Systems were traded by 11:47 a.m. Thursday, above the company's average trading volume of about 149,000 shares a day.
TheStreet Ratings team rates PLANAR SYSTEMS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PLANAR SYSTEMS INC (PLNR) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 19.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PLNR's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
- In its most recent trading session, PLNR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for PLANAR SYSTEMS INC is currently lower than what is desirable, coming in at 25.70%. Regardless of PLNR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.27% trails the industry average.
- You can view the full analysis from the report here: PLNR Ratings Report