Imagine: two prominent engineered equipment leaders join forces, for the good of the world. Do you think working together would create some sort of tension between the two groups? Or, do you think it would create change or innovation?
Now, what would you do if I told you that this just happened?
What Happened Thursday?
Today, Duravant LLC, which is a global engineered equipment company based in Downers Grove, Illinois, announced that it has signed an agreement that allows it to acquire Key Technology, Inc. (NASDAQ:KTEC), which is another engineered equipment company that focuses primarily on manufacturing digital sorting, inspection, processing, and conveying equipment.
As for the question posed above, I would say that the masses are reacting in a positive manner to the news. This gives an indication that investors, and probably the general population, believe that this new-found partnership between Duravant and Key Technology will result in change and innovation.
Currently, Key Technology is trading at $26.64, putting the KTEC stock up $8.88, or 50.00%. Considering the markets will be open for another 3 hours, it will be interesting to see if Key Technology can move past the 50% mark and catch up to Lightbridge Corporation (NASDAQ:LTBR), who is currently trading up 60.47% on the same exchange.
The Acquisition
Based on what we know thus far, I would say that I’m pretty confident that this acquisition will lead to some pretty interesting things down the road.
Why? Well, for starters, the transaction between the two will extend both Duravant’s voice and reach across food processing by introducing new products. For Key Technology, the company, based on the term’s of the agreement, will receive a tender offer from Duravant, which states that it will acquire outstanding shares of the company’s common stock for $26.75 in cash. The transaction is valued at roughly $175 million.
Both companies expressed a tremendous amount of excitement today. Key Technology CEO Jack Ehren stated that the integration of both companies global infrastructure will help his company advance its commitment “to the increased geographic market and new application penetration.” If all goes as planned, the transaction is thought to come to an end in the first quarter of this year.
The Takeaway
At this point, it seems very likely that both Duravant and Key Technology will benefit from this acquisition, and create change and innovation in the world.
Meanwhile, until the ball really gets rolling, I think Key Technology will start to see more benefits than Duravant. The stock just hit a new 52-week high after the news reached the masses, and the company still has its Fiscal 2018 Q1 conference call set for this afternoon. Why is this important? Because if the call is positive, it could lead to an even larger increase in its stock price.
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