MoSys Inc. (NASDAQ: MOSY) is off to an incredibly strong day in the market today. This comes following various reports that paint the company as a prime candidate for a takeover. However, is a takeover of the company likely? Before we get too deep into that answer, we'd like to give thanks to our partners at Trade Ideas for being the first to alert us to the gains. At the moment (11:17), MOSY is trading at $2.58 per share after a gain of $1.09 per share or 73.15% thus far today.
What Is MOSY
For those of you who haven't been following the company, MoSys is a semiconductor company. In particular, the company is focused on selling integrated circuits (ICs) for high-speed networking, communications, storage, and computing markets. Ultimately, the company is focused on providing high performs ICs for packet processing and improved signal integrity. This type of product is most interesting to IC distributors as well as semiconductor manufacturing companies.
However, for MOSY, it's not necessarily about product manufacturing and sales, the story is more of an IP story. In fact, about 45% of the company's revenue in 2015 and 24% in 2016 was the result of agreements surrounding their intellectual property. In fact, by the end of the year 2016, the company owned 67 United States patents as well as 36 foreign patents. The expiration dates on these patents range from 2018 to 2035.
The Value Proposition
At the end of the day, the big value proposition with regard to MOSY is these patents. After all, what company in the industry wouldn't want to get their hands on more than 100 patents, many of which are already driving revenue through IP agreements? Not to mention, in order to make the value proposition an even stronger one, the company is working on a massive restructuring plan.
Under the restructuring plan MoSys will be implementing a reduction of workforce. This is an attempt to conserve cash through reducing operating expenses and realigning resources.
MOSY Is Up For A Takeover
Now that we know the value proposition, what about the company? Is MOSY interested in selling? The answer here is yes as well! In fact, the company recently informed investors that its Board of Directors has engaged an investment bank to act as a strategic financial advisor. In particular, the company is hoping that the bank will explore and review a range of strategic alternatives. Of course, when investors hear strategic alternatives, the first thing that comes to mind is “takeover”, and that idea is clearly not off of the table.
Would Anyone Be Interested In Buying The Company
In order for a takeover to happen, there has to be interested buyers. Well, here again, we find that MOSY is in a perfect position for this to take place. After all, the semiconductor industry as a whole is one that is restructuring. We've seen several mergers and acquisitions as of late as companies in the sector vie for power. Considering this, if MOSY did put itself up for sale, it likely wouldn't take long to find an interested buyer.
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Is A Takeover Going To Happen?
This is the $26 million question my friends, and the truth is that I don't have an answer. At the end of the day, it looks promising that a takeover could indeed happen. However, promise doesn't always turn into reality. Nonetheless, with strong assets, a decent value to revenue ratio, and a willingness to sell, anything is possible here. We'll continue to follow the story and bring the news to you as it breaks!
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