Companies playing hardball and rejecting takeover offers is all very well and good in terms of extracting shareholder value. In the case of Vuzix, the story here is that versus a share price currently of under $8, it has said no to an offer of $15 a share.
They are rumoured to be wanting $20 as a takeover price. This compares to the all-time high to date of $22.
The punchline here is that Vuzix’s major partners are also its major takeover candidates– so it has a captive audience of competing companies in terms of M&A, if only for them to get the upper hand in this new flourishing tech niche.
The Story So Far:
Companies that become associated with buzzwords or fads are always going to be the best and sometimes the worst on the stock market. However, as far as Vuzix is concerned we appear to be looking at a company which is both on the zeitgeist, as well as being underpinned strategically. This is just what one would want in a potential M&A situation.
Apart from being deeply entrenched in the Wearables / VR / AR space, the company has the support of Intel, who if it converted all its shares would own as much as 18% of Vuzix.
Interestingly enough, the presence of Intel means that another potential suitor, Google, would have to be either rather aggressive or reach deep into its pockets to get its hands on what is clearly a very desirable asset in the new consumer technology space.
Of course, being partnered with retail giant Amazon does no harm to the cause of Vuzix either. Incidentally, private equity may also be interested in making a move here, with Silver Lake Partners said to be leading the field in this respect.
As can be seen from the daily chart, in Vuzix, it has been quite a volatile ride of late, with a discernible rollercoaster effect in place. This is despite a decent flow of announcements of late such as the company joining the Russell 2000 in June, and a M300 Smart Glasses Follow-on Order from AMA as well as completing FCC and EU CE Certification Processes for Vuzix Blade® Smart Glasses.
However, from a technical analysis perspective, one would like to see $8 broken at the 2018 resistance line. Once this zone is broken, a return to 12-month highs towards $11 could be an initial target.
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