Rubicon Technology (NASDAQ:RBCN) stock is up more than 60% today on news that Janel (OTCMKTS:JANL) is acquiring a hefty stake in the company. Janel will pay $20 per share as part of the deal. That represents a 120% premium to RBCN stock’s closing price of $9.10 per share on July 1.
Rubicon is a little-known, Illinois-based technology company that specializes in the development of Silicon-on-Sapphire (S0S) wafers used with integrated circuits, optics and in the light-emitting diode (LED) industry. It’s a highly specialized sector. Now, Janel is looking to take a 45% stake in the company.
Prior to today, RBCN stock had largely traded flat this year, near $9 per share.
What’s Happening with RBCN Stock?
According to the news release, Janel will pay cash to buy 45% of the outstanding shares of RBCN stock for $20 apiece. Both Janel and Rubicon Technology’s boards have already approved the deal. The release also says the purchase should be completed within 30 days.
Rubicon CEO Timothy Brog said the following about the deal:
“After careful and thorough analysis, together with the advice of our advisors, the board has endorsed this transaction as being in the best interest of Rubicon’s stockholders.”
Janel says it makes strategic investments in three key business segments: logistics, life sciences and manufacturing. The company’s purchase of RBCN stock — and the big premium it’s willing to pay — show there are still deals to be done in this down market. Recent volatility has put many potential deals on hold, or shelved them entirely. However, today’s deal indicates some companies are still willing to make investments.
While Rubicon is a somewhat obscure name, Janel clearly sees value in the company.
What’s Next?
Anyone holding RBCN stock has to be feeling pretty good today, seeing a massive 60%-plus gain. While the deal still needs to be finalized, it’s a good sign that both companies’ boards have voted in favor. Going forward, though, Rubicon will have to work to keep its share price elevated over the long term.
On the date of publication, Joel Baglole did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
