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En Pointe Technologies: A Great Arbitrage Opportunity

|Includes: En Pointe Technologies Inc. (ENPT)

 

We are adding En Pointe Technologies, Inc. (OTCPK:ENPT) to our ValueHuntr Portfolio. On March 1, 2009, the company agreed to be acquired for $2.50/share in cash. This represents a potential 13% absolute return relative to the company’s current price of $2.22/share if the merger is materialized, which we expect it will.
 
About
 
En Pointe Technologies, Inc., through its subsidiaries, provides information technology hardware and software products and services in the United States. The company offers a range of hardware and software products, such as desktop and laptop computers, servers, monitors, memory, peripherals and accessories, operating systems, application software, and consumables and supplies. It serves large and medium sized companies, and government entities. The company was founded in 1993 and is headquartered in Gardena, California.
 
Catalyst
 
ENPT’s Board of Directors, acting upon the unanimous recommendation of a special committee comprised entirely of independent directors, has approved the merger agreement and resolved to recommend that the Company’s stockholders vote in favor of the agreement. Pursuant to the terms of the merger agreement, the Acquiror has agreed to pay to the Company’s stockholders $2.50 in cash for each outstanding share of the Company’s common stock. The merger agreement contains customary representations, warranties and covenants made by the Company, including covenants that the Company will run its business in the ordinary course of business consistent with past practice and will refrain from taking certain actions between the date of the merger agreement and the date of closing of the merger.
Conclusion
We are adding En Pointe technologies, Inc. to our ValueHuntr Portfolio because we believe the probability that the merger will consummate before the end of Q3 is fairly high. Therefore, we see this investment as one which can provide us with a quick 13% absolute return with little to no risk.
 
The proxy statement submitted by ENPT regarding the special shareholder meeting prior to merger approval can be found here.
 
 
Disclosure: We currently have a position in ENPT