The stock of smart home products and services specialist Snap One Holdings (SNPO -0.09%) felt like a very smart investment this week. A premium-priced buyout deal sent the company's shares rocketing well higher in price, to the point where they had risen by 30% week to date before market open on Friday, according to data compiled by S&P Global Market Intelligence.
Buyout at a 32% premium
The new owner of Snap One is set to be home tech products maker Resideo Technologies (REZI 0.21%). The two companies announced in a joint press release Monday that they agreed Resideo will purchase Snap One for $10.75 per share. The transaction will be effected fully in cash, and is valued at a total of roughly $1.4 billion inclusive of net debt.
That price was 32% above Snap One's closing level one trading day before the deal was made public. Friday morning, the company's share price was hovering just under $10.60, indicating at least some skepticism that the transaction would be completed, at least at the agreed price.
This might be unwarranted. The boards of directors of both companies have unanimously approved the sale. Meanwhile a clutch of investment funds that hold around 72% of the Snap One common shares that are to be sold have consented to the arrangement.
Synergistic effects touted by management
In the press release, Resideo quoted its CEO Jay Geldmacher as saying that it and Snap One "are highly complementary businesses and together will meaningfully enhance our strategic and operational capabilities as a significant player in attractive growth categories."
The two companies expect that their transaction will close at some point in the second half of this year. It is subject to approval by the relevant regulatory authorities.
