Hemisphere GPS is a small firm that has been rumored for years to be an acquisition target. Despite great R&D, Hemisphere struggle to achieve meaningfull profitability. By being part of a bigger ag player, Hemisphere could benefits from stronger sales channels and lower G&A expenses and achieve greater profitability.
So, should Hemisphere GPS hire some merchant bank like CIBC World Market and put themselves up for sale ? I think this could be an interesting option for the company and its shareholders.
Who could be the potential suitor ? First, there are Hemisphere direct competitors like Trimble Navigation, Novatel, Novariant, Raven and Topcon. A second type of potential acquisitor could be big OEM manufacturers like CLAAS, STARA or John Deere. Hemisphere products could be a nice fit in their current offerings.
In conclusion, I have no clue if Hemisphere GPS is going to be acquired in 2011 but I think it remains a logical possibility.
Related posts:
Good article! Public markets are really ignoring HEM’s potential with the stock trading at extreme low valuations (in comparison to peers such as Trimble, Raven etc.). With a single board member holding 8% of the stock and certain Canadian brokers owning another 8% (following a bought deal) it is logical to assume that the company will at the very least entertain offers in the event the stock doesn’t pop post Q2 numbers. But the question is at what price would shareholders sell? My personal view is that anything shy of $2.00 would simply not be worth it. In terms of ability to pay, the strategics such as Raven would be able to pay $2.50 to $3.25, however a takeout premium this high doesn’t happen very often. Time will tell.
… one additional point to add. Before CSI Wireless (HEM’s prior name) went public it was owned by OMERS, so quite possible that the private equity arm of a pension fund might be interested (or even the likes of a Birch Hill for that matter).
Philippe,
What price do you think they could realistically get if they sold the company?
Thanks for your comments Opportunistic Investor and Mike,
I think it could be around 2$, like Opportunistic said, more than that would be a huge premium
Yikes! HEM’s share price is falling off a cliff! I really don’t get it as fundamentals appear to be gradually improving & there have been several new OEM deals announced. Any updated thoughts/views?
@Mike aka Opportunistic Investor aka dt_core : Why should the market bother with a marginally profitable micro-cap stock like HEM when there is a lot of better quality growth stocks at bargain price.