- HDS+ subscribers just made a total return of 23.35% in two months on a buyout deal.
- It's a monthly high dividend stock that pays in US dollars.
- It's being acquired at an 18% premium to its previous 52-week high.
HDS+ portfolio holding Student Transportation Inc. (STB), also known as STI, is being acquired by an investor group - CDPQ and Ullico, for a price of $7.50 US per share. The parties expect to close the transaction by the end of the second quarter of 2018.
This represents a substantial price gain/share for Hidden Dividend Stocks Plus subscribers, of $1.36/share. In addition, we've received two monthly dividends of $0.0367/share, for a total profit of $1.4334/share.
The total return is 23.35%. Since this profit happened within a short, two-month period, the annualized profit is huge, at 140.10%.
"Student Transportation Inc., (also known as STI), today announced that it entered into a definitive agreement (the "Arrangement Agreement") with a company (the "Purchaser") sponsored by Caisse de dépôt et placement du Québec ("CDPQ") and Ullico Inc. ("Ullico", and together with CDPQ, the "Purchaser Group") pursuant to which the Purchaser Group will acquire all of the Company's outstanding common shares (other than common shares already owned by the Purchaser Group) by way of a plan of arrangement (the "Arrangement") under the Business Corporations Act (Ontario)."
"Shareholders of STI/STB will receive US$7.50 per common share in cash, representing a 27% premium to the 20-day volume weighted average price per common share on the Toronto Stock Exchange for the period ending February 27, 2018, based on an exchange rate of $1.2776 Canadian dollars per U.S. dollars as of February 27, 2018."
"This transaction presents a compelling opportunity for our investors to monetize their investment at an attractive price. CDPQ has been invested in our company for 16 years and for most of that time as our largest shareholder."
CDPQ currently owns approximately 8.4% of the outstanding common shares of the company.
"We will continue to be the North American leader in student transportation and our unwavering commitment to our employees, customers, safety, service and innovation will remain unchanged," added Denis J. Gallagher, Chairman and Chief Executive Officer of STI.
"CDPQ has been one of Student Transportation's largest shareholders. This transaction represents a significant new step in our relationship with the company, and we look forward to working with the management team for years to come," said Macky Tall, Executive Vice-President, Infrastructure, CDPQ, and President & CEO, CDPQ Infra.
"Ullico is pleased to partner with CDPQ to invest in this transaction and has been impressed with the dedication and accomplishments of STI's management and workforce," said Rohit Syal, Head of Acquisitions for Ullico's Infrastructure Business.
"The Board of Directors of STI (the "Board"), after consultation with financial and legal advisors, and based on the unanimous recommendation of a special committee of the Board (the "Special Committee") comprised entirely of independent directors, has unanimously approved the Arrangement, has unanimously determined that the Arrangement is in the best interests of the Company, and recommends that the Company's shareholders vote in favor of the Arrangement. Scotiabank has also provided the Special Committee and the Board with its opinion that the consideration to be received by holders of Company's common shares, other than the common shares owned by the Purchaser Group, is fair, from a financial point of view, to such shareholders. Each of the directors and executive officers of the Company have entered into support agreements to vote their common shares in support of the Arrangement."
"The Arrangement Agreement provides that the implementation of the Arrangement is subject to customary closing conditions, including court approval of the Arrangement, approval of two-thirds of the votes cast by holders of common shares in person or by proxy at a special meeting of STI's shareholders and approval under the Canadian Competition Act and U.S. HSR Act. The parties expect to close the transaction by the end of the second quarter of 2018."
"The Arrangement Agreement is subject to customary non-solicitation provisions, including STI's right to consider and accept superior proposals, subject to a right to match in favour of the Purchaser. A termination payment of US$28.4 million will be payable by STI to the Purchaser Group should the transaction not close in certain circumstances, including if the Arrangement is not completed as a result of a superior proposal. Part of the consideration is to be funded with equity commitments from the Purchaser Group. The remainder of the consideration will be funded with committed debt financing by BMO Capital Markets."
"Further information regarding the Arrangement will be included in STI's management information circular, which will be mailed to STI's shareholders in due course." (Source: STB site)
STB has been a somewhat controversial stock due to the debate about its dividend coverage, which we've covered in previous articles.
Congrats to longtime and recent shareholders on this deal, which prices STB at an 18% premium to its previous 52-week high of $6.34/share.
If you're interested in discovering other attractive income vehicles, we urge you to try a 2-week free trial period for our new service, Hidden Dividend Stocks Plus, on the Seeking Alpha Marketplace. Our service focuses on undervalued and undercovered dividend stocks and income vehicles, with yields ranging from 5% to 10%-plus.
Unlike the SA public site, where articles now disappear behind a pay wall after 10 days,
you’ll have unlimited access to our exclusive articles, as an HDS+ subscriber.
We’ll be adding new ideas weekly, as we build this portfolio.
We hope you'll consider joining this investing community.
This article was written by
Robert Hauver, MBA, aka “Double Dividend Stocks” was VP of Finance for an industry-leading corporation for 18 years and has been investing for more than 30 years. He focuses on undercovered and undervalued income vehicles and he leads the investing group Hidden Dividend Stocks Plus.
With Hidden Dividend Stocks Plus he scours the world's markets to find solid income opportunities with dividend yields ranging from 5% to 10% or more, backed by strong earnings. Features include: a portfolio with up to 40 holdings at a time including links to associated articles, a dividend calendar, weekly research articles, exclusive ideas, and trade alerts. Learn More.
Analyst’s Disclosure: I am/we are long STB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.