Time Inc. (TIME) stock jumped 17% on Monday before tapering off to end the day with a near 3% gain. The company’s stock is up 1.88% in premarket trading on Tuesday, surging on news of potential acquisitions. Here’s what you need to know:
1. Edgar Bronfman Jr. Eyeing the Company
Billionaire Edgar Bronfman Jr. is working with two private equity billionaires on a potential purchase of the company. The deal, reported by the New York Post, is $1.8 billion, or $18 a share for the company.
The price is a 30% premium on the company’s Friday closing price.
If the deal goes through, the company will go private. Reports suggest that Time’s board has rejected the deal from Bronfman.
2. Shareholders Are Restless and Want a Sale
Time Inc. went public in 2014 with an IPO of $23. The company’s stock has since fallen to $13.60 as of last Friday, and $16 on Monday. Shareholders are restless, as the company’s stock continues to underperform.
Talks of selling the company is a bonus for investors who are watching the company’s stock dwindle.
The board reportedly heard of the buyout in early November, and sources state the talks died. A special meeting to discuss the fate on the company can be called by 25% of shareholders. Any talks of a potential sale at this point is a positive for investors.
3. Lower Guidance and a New CEO
The offer by Bronfman and his associates is a solid deal. The company’s former CEO, Joe Ripp, stepped down from his position in September. The company also lowered its guidance. The company announced that in Q3, there would be no gain in revenue on the year.
Poor performance has plagued the brand since it went public.
Bronfman’s bid may increase to $20 a share, according to Bloomberg. A public announcement from Time Inc. has not been released at this time.
