Material engineering firm Meta Materials' shares rallied 19% on Monday as investors digested news about its acquisition of Optodot Corporation.
Meta Materials signed a definitive agreement last week to acquire Optodot for a total consideration of $48.5 million. Management expects the acquisition to close in June.
Meta Makes materials engineered to have a property that is not found in naturally occurring materials. They are made from assemblies of multiple elements fashioned from composite materials such as metals and plastics.
Optodot is a leading developer and licensor of nano-composite battery separators and infrared optical coating technologies. The company is based in Devens, Massachusetts. MMAT has already made plans to expand capacity at its facility in Thurso, Quebec, utilizing Optodot’s products that can be combined and coated using Meta’s plasma fusion technology.
MMAT will pay $3.5 million cash and issue $45 million worth of shares for the balance. The share based component will be priced at the volume weighted average price (VWAP) for the twenty trading days ending on the day prior to closing. The acquisition includes 67 issued and 22 pending patents along with other intellectual property.
Optodot President & CEO Dr Steve Carlson commented on the transaction saying; “Our complementary technologies and partnerships will help accelerate market adoption in electric vehicles and other industries. We look forward to leveraging the combined expertise and technology of each firm, and the benefits of scale and visibility, which META will bring to the Optodot platform."
The company cited Yano Research Institute forecasts that the global market for Lithium-ion battery separators is expected to almost double to $9 billion, from 5 billion by 2025. Additionally, the number of separator shipments are projected to grow to 15.9 billion square meters in 2025, from its current 5.5 million square feet, with the company poised to benefit from the secular demand tailwinds.
Analyst MacMurray Whale from Cormark Securities believes this is an important acquisition for Meta as the current generation of technology (which is licensed by LG) used in the industry requires ceramic coatings of polymers.
Whale notes that Meta will likely eliminate its polymer products and replace it with a porous ceramic to increase heat resistance.
Optodot’s technology is expected to provide cost reductions for Meta by integrating its of electrode and separator products.
The firm believes MMAT is well positioned to market next-generation separators successfully and maintains a ‘buy’ recommendation with a $5 target price.
MMAT has a consensus ‘buy’ rating across the 3 institutions that cover it with an average $3.60 price target, suggesting 106% upside..
Options market sentiment supports the bullish institutional view, with open call interest outweighing put interest . The Fintel put/call ratio of 0.10 is derived from all disclosed positions.
The graph provided below shows the put/call ratio for MMAT over the last 3 months:
Meta Materials was featured in a Fintel article last month when it rose to 4th place on the short squeeze leaderboard with a score of 97.56. Since the story was published, the stock's short squeeze score has fallen to 72.10. MMAT currently has 16.5% of its float shorted according to Nasdaq and Capital IQ data.
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