With the company’s entry into non-disclosure agreements with 17 parties as the first step in its pursuit of a privatization takeover, Callidus represents an untapped opportunity “for investors looking for both short-term and long-term upside with a company that has largely flown under the radar on the Canadian exchange,” markets observer Chris MacDonald wrote in a February 28 piece for The Motley Fool Canada.
“This process started in the fourth quarter of last year, and the CEO has expressed that the privatization process should take about six months, which means we are now approaching the final stages of the process in which offers will be considered, and the company will undergo more rigorous private-equity analysis,” the analysis explained.
“National Bank recently provided a target price range for Callidus in the $18-22 range, and it looks like the upper end of the range, plus some sort of premium, should be expected as a privatization offer,” MacDonald added. “Doing the math, if we expect a 10% premium over and above the upper end of the target price range for Callidus, we can expect a per-share price of $24-25 to be achieved within the next six months, providing investors with a very nice, quick return should the privatization proceed as expected.”
And even in the worst-case scenario of the privatization fizzling out, the company will remain a reliable investment choice.
“Due to the stable stock price, the current dividend yield of almost 6.5% is very healthy and safe, providing investors with enough of an upside over the long term to justify an investment at current levels, which approximates a price-to-earnings ratio of 14.”
MBN
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