What happened
Shares of Avantax (AVTA) are up 29% this week as of Thursday's close, according to data provided by S&P Global Market Intelligence, after the tax-focused financial planning and wealth management firm agreed to be acquired by privately held Cetera Financial Group.
So what
In a press release dated Monday, Sept. 11, Avantax announced it has entered into a definitive agreement to be acquired by Cetera in an all-cash transaction valued at roughly $1.2 billion, net of Avantax's debt. More specifically, holders of Avantax common stock will receive $26 per share in cash -- a roughly 30% premium from Avantax's closing price on Sept. 8, 2023 -- subject to required withholding taxes. The stock closed Thursday at $25.59 per share.
"This transaction, upon closing, will deliver immediate cash value to Avantax stockholders," stated Avantax CEO Chris Walters. "It is a result of Avantax's strategic transformation and value creation efforts, which, when combined with the sale of TaxAct in December 2022, has unlocked significant value for our stockholders."
Now what
The deal still requires the approval of both shareholders and regulators. But assuming all goes as planned, the transaction is expected to close by the end of 2023. At that time, Avantax will become a privately held company and will no longer trade on the Nasdaq exchange.
As it stands, with shares trading at only a modest (1.6%) discount to the agreed acquisition price -- and assuming waiting until closer to the the transaction's closing date wouldn't push a given investor over the one-year holding period required to qualify for long-term capital gains tax rates on their profits -- I think most Avantax shareholders would do well to sell now and put that money to work in any number of other promising stocks.
