Adept Technologies Acquired Two Months After Recommendation: 87% Return for Shareholders

Back in July, I recommended a small $100 million company that investors should consider adding to their portfolio. That company was Adept Technologies (ADEP). At that time, shares were trading at $6.95 and down 20% in 2015. I suggested buying shares as the company was a leader in automation robotics, a huge trend going forward in warehouses and manufacturing. Last week, the company announced it was being acquired by OMRON (OMRNY) for $200 million, or $13 a share.

OMRON is a leader in Japan worth more than $8 billion. The company has a long term growth plan of enhancing its automation technology, which makes this deal for Adept fit quite nicely. In the most recent first quarter, Adept reported a 4% increase in revenue. The company’s industrial automation segment, its largest, reported a 9.4% increase in revenue.

Remember that Adept is pretty internationally diversified with the following 2014 split:

  • Europe: 45%
  • Asia: 27%
  • United States: 23%
  • Other: 5%

Adept also has a wide base of customers. With its diversification, the company’s top 5 customers make up only 16% of annual revenue and the top ten customers make up only 25%.

In my original post I even pointed out the shift to robotics and how it could lead to a buyout of Adept. I compared the company to a young Kiva, which was acquired by Amazon for $775 million back in 2002. My target price on shares was $15 over a two to three year period.

Now before we leave this as completely wrapped up, there are several lawyers circling this deal and saying the Board of Directors didn’t act in the best interest of shareholders. Obviously the $13 share price is a far cry from the $21 shares saw in 2014, but the huge premium over where shares were trading has to be considered. If I’m a current shareholder here, I would likely sell my shares. Will OMRON be forced to submit a higher bid? Possible, but not likely. Could OMRON walk away from the deal? Possible, but not likely. DO you want to risk the possibility of shares collapsing on no deal? Probably not.

In Adept, I saw a small cap company that had several exciting catalysts coming in the form of product launches and customer wins. If you’re looking for more small cap stocks trading under $20 that are set to see future gains, consider subscribing to the Stocks Under $20 portfolio. I provide a model portfolio and also weekly picks for investors. All subscriptions come with a 30 day money back guarantee, so you’ve really got nothing to lose.

Posted to Stocks Under $20 on Sep 18, 2015 — 10:09 PM
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  • {[comment.author.username]} — Marketfy Staff — Maven — Member
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