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Zoltek (ZOLT) seems like it is in play either for a takeover in the mid teens or a huge cash dividend. If a takeover does come to fruition, shareholders could be looking at a 25% or more price appreciation.

On March 8th, Quinpario Partners filed an SEC 13/d form indicating benefit ownership of more than 5%. In this form, it goes on to say that in November 2012, Quinpario sent a letter to Zolt's board stating:

"Quinpario outlined two strategic alternatives that we believe would create substantial value for all shareholders: (I) an acquisition by Quinpario of all of the outstanding shares of Zoltek at a price per share in the mid-teens; or (ii) a recapitalization whereby Quinpario would make an equity investment in Zoltek that, along with a new credit facility, would fund a sizeable special cash dividend, thereby providing existing shareholders immediate monetization and an opportunity to participate in the future upside of the Company."

The Zoltek board refused to even have discussions with Quinpario on any matters whatsoever.

However, Zoltek stock had a nice rally from $9.25 to hitting a $11.70 high the next day.

Here is where the story gets interesting. This past Thursday, Quinpario filed an updated SC/13Da file indicating it has come to an agreement with the ZOLT board that:

"On March 27, 2013, Quinpario and the Issuer reached an understanding in furtherance of engaging in meaningful settlement communications regarding the proposed Special Meeting and Quinpario's suggestions for the Issuer to capitalize on growth opportunities and enhance shareholder value, including but not limited to, the two strategic alternatives previously proposed by Quinpario to maximize shareholder value, and to determine whether a mutually acceptable resolution may be achieved."

In other words, it seems the two sides are in discussions for either the takeover by Quinpario (in the low teens as previously mentioned) or a recapitilization that will allow Zoltek to pay a big cash dividend.

There was no press release discussing these latest developments, and besides a small pop on Monday morning, the market seems to have missed this announcement altogether. It seems to me this is a very nice buying opportunity. Assuming a purchase price of 15 you would be looking at a 25% appreciation.

There could be two outcomes if no deal is struck with Quinpario:

1. Quinpario could walk away and the stock would go back the 9 area.

2. Quinpario would probably go hostile. They seem to want this company but prefer to do it on friendly terms.

I think for risk adverse accounts the stock makes for a nice long.

Source: Zoltek Seems Like A Takeover Is In The Works, Possibly In The Mid Teens