NEW YORK (TheStreet) -- Shares of Checkpoint Systems (CKP) are climbing by 27.5% to $10.06 at the start of trading on Wednesday morning, after it was announced that the antitheft tag maker is being acquired by Canada's CCL Industries for about $422 million.
CCL offered to pay $10.15 per share in cash, which represents a premium of about 29% to Checkpoint's close on Tuesday, Reuters reports.
As part of the deal Ontario-based CCL will assume $33 million of Checkpoint's net cash.
The deal is expected to close in the middle of this year and is to be funded by CCL with its existing $1.2 billion debt, Reuters added.
Checkpoint Systems is a Thorofare, NJ-based manufacturer and provider of antitheft tags to the retail and apparel industries.
Additionally, shareholder rights law firm Johnson & Weaver has launched an investigation into whether Checkpoint board members breached their fiduciary duties in regards to the proposed merger with CCL.
"The investigation concerns whether the Checkpoint board failed to satisfy their duties to the Company shareholders, including whether the board adequately pursued alternatives to the acquisition and whether the board obtained the best price possible for Checkpoint shares of common stock," the firm said.
Separately, TheStreet Ratings has set a "sell" rating and a score of D+ on Checkpoint Systems stock.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CHECKPOINT SYSTEMS INC as a Sell with a ratings score of D+. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
You can view the full analysis from the report here: CKPCKP data by YCharts