Heritage-Crystal Clean trades through takeover offer on potential for higher bid

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Heritgage-Crystal Clean (NASDAQ:HCCI) jumped 10% and traded through its announced $45.50 a share sale to J.F. Lehman & Co. as at least one analyst sees a potential higher bid.

"We have previously speculated that CLH would be a natural fit as an acquirer of HCCI, and with the implied valuation low relative to CLH’s current NTM multiple, we consider it highly likely that CLH/other suitors offer a competing bid," Baird analyst David J. Manthey wrote in a note.

Crystal Clean (HCCI) announced on Wednesday that its sale to J.F. Lehman included a 35-day "go-shop" period, during which Crystal Clean and its board can solicit other takeover offers for the company.

Truist analyst Tobey Sommer sees it unlikely that a strategic buyer makes a higher offer for Crystal Clean (HCCI) and downgraded the stock to hold from buy as the deal is expected to go through.

"In our view, HCCI's lack of disposal assets (i.e. haz waste landfills) and outsized exposure to base oil pricing make the company a less attractive acquisition target to larger Environmental Services peers," Sommer wrote in a note on Wednesday.

Although there may be some holders disappointed by the "modest" 8.5% premium in the deal, holders are still likely to vote in favor of the transaction, Sommer added.

More on Crystal Clean

• Heritage-Crystal Clean: Cleaning Up Nicely
• Heritage-Crystal Clean: Value Out Of Waste

Comments

[NJ Trader]

Good to see it trading higher. The premium, given their valuation, is a joke, and I question the board's motives for accepting it.

[Fred. L.]

@NJ Trader

Agree. This makes no sense. ECOL was taken out by RSG at a higher multiple.

[Sabermetrics]

@Fred. L. At least $50 or more.

[nkvbradenton]

@Fred. L.
I remember half heartedly taking a small position in this name in upper twenties and lost interest to sell out of it. Congrats on calling this correctly.

P.S. Anything on the options front? I had some ET calls and took my 50% gain yesterday. Did not have conviction to go deep, although, I should have.
I have bought some calls of BUD with the intention of eventually exercising those and today sold puts and bought some calls on Discover . Any such moves? Banks worked out quite well (both USB and PNC) and I bought quite a bit of KEY, sub $10.
Lastly, thank you for LNC tip. It was just too cheap at almost ten dollars lower! Go figure.