Online marketing services company ValueClick
Expanded opportunities combined with lower operating expenses make the acquisition a good bargain for the money. The company will exchange just under 0.8 shares of its own stock for every share of Fastclick's. Given Fastclick's roughly $81 million in cash and marketable securities, the net value of the transaction drops to about $133 million. ValueClick also predicts that the merger will help it save $4 million a year in operating expenses.
Given FastClick's uninspiring financial performance to date, this is just the opportunity the company needs to avoid an unhappy future. As industry giants such as Google
Despite this good news, the recent rally in Fastclick's share price seems a bit excessive. After learning of the buyout, the market sent Fastclick's stock up from $8.85 to $10.55 by Monday's market close. This meteoric rise is troublesome, since it exceeds the merger share price of $10.11. If the market overshoots the merger's value, the stock should be improving on its own merits. It hasn't, but investors conveniently seem to have forgotten that.
Both companies' boards have approved the acquisition; the deal now only requires approval from a two-thirds majority of Fastclick's shareholders. If the rally continues to inflate Fastclick's price in the meantime, investors looking to pick up shares may find themselves in for a rude awakening. Whether or not the merger goes through, the share price will fall below its current mark; overpaying for Fastclick now would be a mistake.
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Fool contributor Tarek Sultani is a freelance journalist. He does not have a financial interest in any of the companies listed above.