What happened
Shares of defense and transportation technology systems company Cubic (NYSE: CUB) are up 25% as of 11:10 a.m. EDT.
So what
In an announcement today, the company disclosed a stake by activist investment manager Elliott Management, and said it had adopted a limited-duration shareholder rights plan, saying it believes it has "excellent" prospects as a stand-alone company.
Image source: Getty Images.
The shareholder rights plan does not prevent the board of directors from considering any fair offer that is in shareholders' best interest, and does not deter any potential offer. Cubic said that Elliott, along with a private equity partner, has informed the company they have an interest in acquiring the company.
Now what
Through direct purchases as well as derivative positions, Elliott now owns, or has exposure to, nearly 15% of Cubic's outstanding shares.
Revenue for the approximately $1.5 billion company comes from both transportation systems and defense mission and performance solutions. In its response to the Elliott interest, Cubic said it believes "significant" future shareholder value will be driven by its NextCubic initiative, which aims to improve efficiencies, reduce leverage, and drive higher returns on capital through higher margins and recurring revenue.
Cubic's lead independent director, David F. Melcher, said the board's focus was on "creating long-term value and ensuring that our shareholders are able to realize the full potential of their investment."
He said the adoption of the shareholder rights plan, which is now in effect for one year, was meant to allow time for informed decisions regarding any offers, without any third party taking control "in a manner and at a price that are not in the best interests of Cubic's shareholders."
10 stocks we like better than Cubic
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Cubic wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of August 1, 2020
Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
