A 67% gain during a tough 7 months!
Since the current price is $8.67, that works out to be a 67% gain since November. Additionally, we have reviewed Sonic's position. We believe both their balance sheet and their business model failed on our reviews. We are not saying that Sonic is a bad company, but rather that we only want companies that fit into our proven model. With that said, we will be preparing our exit strategy.
They are paying $3.75 a share in cash which is below what DivX already had and .514 Sonic stock. This currently works out to a combined value of $9.19.
On November 13, we explained that a price for DivX of $5.26 per share was far too low, considering the cash of DivX alone was around $4 per share, and, well, Sonic Solutions (SNIC) seems to agree as they are willing to pay over $9 a share!
Even though the price is 67% higher than when we first took interest, we believe that DivX could have received more and/or joined or found possibly a stronger merger partner. Although with the total price Sonic is paying and knowing the business model, we believe Sonic will do very well with this merger.
We are pleased to find companies that fit our model of low values, strong earning and outstanding short term performance - which has attracted so much interest as both rumored and real buyouts, helping to further improve our strong clients' performance.
View our past DivX and other reviews here.
Disclosure: Durig Capital owns DIVX for itself, clients and related client accounts. We started buying around 5.07 per share.