Thursday, July 06, 2006

Hit #104

Encore Medical (ENMC) last Friday agreed to be acquired by the Blackstone Group for $870 million in cash. At $6.55/share, this offer represents a premium of 26% over my average cost per share of $5.19/share.

Encore wasn't an immediate takeover play when I bought the shares a few weeks ago. It was more of a turnaround and growth pick, and hopefully after substantial gains, a takeover target. As such, this takeover is a disappointment since the price is too low. I did not expect a private equity buyout, much less a Blackstone buyout. Encore would have been much more valuable to larger players in the orthopaedic devices sector like Zimmer.

I first came across Encore when it acquired Compex, a company I was following but had not yet bought into. Encore itself seemed to be undervalued then because of its ill-managed acquisition spree.

Previous hit - Republic Bancorp (#103)


Post a Comment

<< Home