NEW YORK - Steel Connect, Inc., an investor holding roughly 9.8% of DMC Global Inc. (NASDAQ:BOOM), has publicly reaffirmed its offer to purchase the remaining shares of the company for $16.50 each in cash. This proposal, initially extended on May 31, 2024, now represents a roughly 51% premium over DMC's current share price, which has seen a significant decrease in recent months.
In a letter to DMC's Board of Directors, Steel Connect expressed frustration over the lack of progress since the original offer, citing the board's refusal to engage in discussions or due diligence as obstructive to shareholder value. The investor also criticized DMC for not providing updates on its strategic alternatives or the valuation of its put/call right for Arcadia.
Steel Connect's proposal is not contingent on financing and is intended to deliver maximum value to shareholders. The investor has also shown an interest in potentially acquiring two of DMC's business units, DynaEnergetics and NobelClad, for a combined $185 million, blending cash with its existing shareholdings.
The letter, signed by Warren Lichtenstein, Executive Chairman of Steel Connect, emphasized the company's readiness to engage in good faith negotiations and urged the board to move swiftly to a transaction. It also hinted at alternative actions, including a possible tender offer for DMC's outstanding shares, should the board continue to resist engagement.
This development comes as DMC's stock has experienced a 17.5% decline since the initial acquisition proposal was made public. With this renewed bid, Steel Connect is pushing for a more responsive approach from DMC's board to consider the offer seriously, which they believe would secure near-term value for shareholders.
The information in this article is based on a press release statement from Steel Connect, Inc.
In other recent news, DMC Global has reported stronger-than-expected financial results for the second quarter, with sales amounting to $171.2 million and an adjusted EBITDA of $19.4 million, despite facing challenges in its primary markets of construction and energy products. The company's Building Products division, Arcadia, saw a significant increase in gross margin, while DynaEnergetics, its Energy Products business, experienced a slight decrease in sales. NobelClad, the composite metals business, reported a modest sales increase.
However, DMC Global provided guidance for the third quarter, expecting consolidated sales to fall between $158 million and $168 million, and adjusted EBITDA forecasted to be between $15 million and $18 million. Amid these recent developments, Stifel maintained a Buy rating on shares of DMC Global but reduced the price target to $19.00 from the previous $24.00, following the company's second quarter results.
Stifel's revised price target is based on a sum-of-the-parts analysis, which takes into account the different segments of DMC Global's business. The firm believes that the potential sale of DynaEnergetics and NobelClad could be significant catalysts for the company's stock. These recent developments indicate that DMC Global is exploring strategic options to enhance shareholder value.
InvestingPro Insights
Amidst the ongoing acquisition saga, DMC Global Inc. (NASDAQ:BOOM) has been navigating a challenging market environment. The company's current market capitalization stands at $218.62 million, reflecting investor sentiment and market conditions. With a Price to Earnings (P/E) ratio of 16.83, which adjusts slightly to 16.46 over the last twelve months as of Q2 2024, DMC Global's valuation metrics suggest a company with earnings power, albeit at a price that has been more appealing to value-oriented investors lately.
One of the InvestingPro Tips that stands out is the company's high shareholder yield, which is a positive sign for investors looking for returns on their investment. Additionally, DMC Global's liquid assets surpass its short-term obligations, indicating a level of financial stability and the ability to meet its immediate liabilities. This is crucial information for shareholders considering the potential acquisition by Steel Connect, as it speaks to the underlying financial health of the company.
Furthermore, with the stock trading near its 52-week low and having fallen significantly over the last year, Steel Connect's offer appears even more attractive. The company's stock has taken a big hit over the last six months, with a six-month price total return of -40.21%, and a year-to-date price total return of -43.04% as of the latest data point. These metrics underscore the premium that Steel Connect's offer represents relative to the recent market performance of DMC Global's shares.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, offering further insights into DMC Global's financials and market position. These tips can be accessed through the InvestingPro platform.
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