Miranda Technologies Inc. is the latest Canadian company to succumb to the pressures of U.S. activist investors, delivering a blockbuster $345-million takeover offer Tuesday that wiped away years of disappointment for shareholders.
Montreal-based Miranda, a global provider of broadcast television technology, has agreed to sell to St. Louis-based Belden Inc. for $17 per share, a 64-per-cent premium to the stock's closing price on MondayÖ. Miranda's stock soared in Toronto on Tuesday, closing 13 cents shy of the offer price in heavy trading.
Belden was not an obvious buyer given that its focus is in cabling and it has no overlapping business with Miranda, said CIBC analyst Todd Coupland. "It surprised a lot of people."
But the deal represents a successful turn of events for shareholders after Miranda formally put itself up for sale in March, three months after two U.S. funds, JEC Capital Partners and JMB Capital Partners, with a combined 10 per cent of the stock, began agitating publicly for an overhaul of the board and more aggressive moves to create value for shareholders.
Although Miranda's board rebuffed their attempt to force an early vote, it did agree to add one of the activist group's four proposed alternate directors (broadcast veteran Tim Thorsteinson) to the slate put before shareholders at the annual meeting in April. Shareholders reacted coolly, giving the revised board 72 per cent voting support.
JEC managing director Peter Heiland said in a statement his firm "was pleased when Miranda's board agreed with us and engaged interested parties through its structured sale process. The outcome of that process is great for the company, its employees and its shareholders." He said the offer price was "fair" and encouraged others to vote for it.
Miranda's chief financial officer, Mario Settino, denied that the activist funds were "directly" responsible for instigating the sale, but added, "Even though they're activist shareholders, they're still shareholders. And we listen to all our shareholders."
The power struggle for the future of Miranda came as financial results were steadily improving. Earnings doubled in each of the past two years, to $1.04 per share in 2011, while revenues reached $181.9-million last year, up 27 per cent from 2010. "They've been outgrowing the market for the last year and doing very well," said National Bank Financial analyst Kris Thompson.
Belden, which has bought three other broadcast technology companies in the last three years, said it would leave Miranda management, including chief executive Strath Goodship, in place at the 22-year-old company. "[Mr. Goodship's] experience and strong customer relationships are valuable assets," Belden CEO John Stroup said on a conference call.
Montreal-based small cap fund manager Sebastian van Berkom said Miranda got a "fantastic" price after it underwent a similar fate of many Canadian high-tech firms, selling to much larger global high-tech giants. "The problem with a lot of these companies is they can't scale themselves to go to the next level," he said.