Mktg, Inc. (OTCMKTS:CMKG) Goes Through the Roof on Buyout News
We go through many penny stock companies every day and we see countless ventures trying to get things going, but failing to do so. We also see some that don’t even appear to be making an effort. Mktg, Inc. (OTCMKTS:CMKG) is different.
Their company description says that they are a full-service marketing agency and, as you probably know, there’s a lot of money to be made from this particular business. It’s not easy, but if you have the right people, you can do it. Apparently, CMKG have the right people.
Their latest report covers the fourth calendar quarter of 2013 and the figures contained in it are certainly a lot more solid than the ones we’re used to seeing when researching small cap enterprises. Here’s what CMKG had at the end of last year:
- cash: $7.2 million
- current assets: $25.4 million
- current liabilities: $16.9 million
- quarterly revenues: $40 million
- quarterly net income: $456 thousand
The only negative thing about the 10-Q is the year over year decline in the net income, but on the whole, it’s clear that the people running CMKG know what they’re doing.
Apparently, the officers of a huge international media and digital marketing company called Dentsu Aegis Network tend to agree. Half an hour before the end of Tuesday’s session, Dentsu Aegis announced that they are going to acquire all of the issued and outstanding CMKG stock at a price of $2.80 per share. According to the press release, the cash-only transaction is expected to be completed before the end of the third calendar quarter.
Somewhat predictably, this caused quite a stir on the market yesterday. More than 540 thousand shares changed hands in just six and a half hours of trading resulting in a dollar volume of around $1.47 million. The ticker opened the session at $2.70 (a whopping 157% above its previous value) and fluctuated around that level throughout the day. When the closing bell rang, it was sitting at $2.69 which means that the market cap at the moment amounts to a little over $23 million.
Plenty of investors loaded the proverbial boat and all they need to do now is wait for a call from Dentsu Aegis who will be willing to buy their shares at $2.80 a piece. Sounds like a relatively simple way of making some quick and easy money. Unfortunately, there’s a hitch.
While people were scrambling for shares, four law firms were taking a good look at the terms of the buyout deal and, apparently, they’re not happy with it. Pomerantz LLP, Rigodsky & Long, P. A., The Rosen Law Firm, and Brodsky & Smith, LLC announced that they’re starting their investigations on the deal. They said that according to them the $2.80 per share price is too low for CMKG and urged shareholders who hold the same opinion to contact them.
Currently, there’s no way of guessing what will happen to the merger. Dentsu Aegis might decide to simply walk away or they might raise their offer.
One thing is for sure – the pressure from the lawyers and the uncertainty around the closing of the acquisition could wreak havoc with the stock performance in the coming days and weeks. If the deal falls through, CMKG could drop down to its previous levels and might become illiquid again which will result in huge losses for some of the investors. That’s why, considering all the risks carefully and doing your due diligence is absolutely essential.
