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EMU@GSR is an analyst with Gridstone Research tracking the Energy, Materials and Utilities sectors.
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Gridstone Research
  • CAM-NTG merger - Acquired company shareholders gain the most in the short-term 0 comments
    Jun 2, 2009 10:46 AM | about stocks: CAM, NTG

    Cameroon Enterprises and Natco Group boards reportedly have approved a merger proposal of 1.185 shares of Cameron common stock in return for each of Natco's approximately 20.3 million shares outstanding, giving Natco shareholders about 10% ownership of Cameron's outstanding shares.

    The deal seems to be skewed in favour of Natco's shareholders based on the stock performance today and order backlog and net income for the recent periods.

    FY08CAMNTGCombined
    Revenue58496576506
    % of total 10% 
    Net Income59435629
     % of total 6% 
    Backlog56072805887
     % of total 5% 

    Source: Gridstone Research

    The merger ratio seems to be based on revenues and not income or order backlog as indicated by % of total.

    For CAM, this merger seems to bring comfort in size and diversification of revenues in a scenario of falling customer spend in the Oil and gas sector. 

    Overall, the merger ratio seems to be skewed in favour of NTG shareholders in line with conventional wisdom - acquired company shareholders benefit more than shareholders of a acquiring company. The stock price movements today seem to reinforce this.

    Disclosures: No holdings in either CAM or NTG.

    Stocks: CAM, NTG
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