Sunedison Inc (NYSE: SUNE)
Sunedison is in the midst of a battle. The company has a very complex business strategy, one that includes reaching for aggressive growth at the cost of massive amounts of debt – and I mean massive. At the moment, the company has billions of dollars worth of debt to pay off and its aggressive growth plan seems to be backfiring. It’s at points like these that publicly-traded companies are willing to do just about anything to stay ahead of the curve, even if that means selling their business to competitors. With everything going on, I’ve seen several reports saying that it would be a good idea for SUNE to look for a buyer and be acquired. Of course, this would help to lift the company out of the deep water it’s in. However, is an acquisition likely? If so, now would be a great time to invest and reap the rewards of such activity. Today, we’ll talk about whether or not I believe that SUNE will look to sell, why it would be a great time to get involved if this were to happen, and what we can expect to see from the stock moving forward. So, let’s get right to it…
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Is It Time For SUNE To Sell?
This is the million dollar question my friends – will SUNE sell its company? If you ask me, it’s about that time. The reality is that Sunedison’s aggressive approach to building its business has opened the door for the company to take on massive amounts of debt. At this point, the company has several projects under way with no ability to fund the continuation of these projects. In fact, it is in such dire straights that the company has made the decision to start selling its assets in India. However, an acquisition could save the company and turn it profitable again.
The reality is that SUNE is a great company with a great business plan. The only problem is that they moved too quickly. They had their eye on taking the lion’s share of the solar pie, and in doing so, they forgot one of the key fundamental factors associated with running a business… don’t let it grow out of your control! Because of this SUNE has dropped from over $30 per share to just about $0.30 per share. While this is absolutely horrible, it does open the door for acquisitions.
You see, if a company is going to acquire Sunedison, they’re going to want to do it at an incredibly low price considering the massive amounts of debt the company has built up. With the company’s stock price where it is today, the company that would acquire SUNE would be getting an incredible deal! So, with where SUNE is sitting right now, it is ripe for the picking if some brave solar company (or even hedge fund) decides they’d like to purchase the sinking ship and patch the holes.
This Could Open The Door To Opportunity For Investors
The reality is that there are few things that have the ability to move the needle in the market like acquisitions. When one company acquires another, they pay a premium on top of the current stock price, generally around 30% or so. Even with a good premium, the buyer would be getting one hell of a deal. Nonetheless, that deal would lead to great gains for the investors in SUNE as well. Think about it, buying around $0.30, then a company comes along with an acquisition offer and SUNE takes the offer. Over night, your $0.30 per share stock climbs to $0.40 or even $0.45 per share. That’s big gains in no time flat!
Is This A Realistic Expectation?
Many will ask, will SUNE ever sell? Well at this point, it doesn’t seem as though the company has much of a choice. They are going to have to sell something big in order to get their footing back, and the best move for the company and its shareholders would be to look to be acquired. With that said, I would say that it is realistic to expect SUNE to start looking for a buyer.
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What Do You Think?
Do you think SUNE will be acquired? Why or why not? Let us know your opinion in the comments below!
[Image Courtesy of Wikipedia]