McCoy appears in a very good position to acquire Hyduke at 1.37 or slightly below. It would be hard for any bidder to justify paying more than 1.37 since the board accepted such offer in June and since then, it is hard to argue that things have gone much better for Hyduke's business. This could change if there was multiple bidders, but so far I have seen no one rushing to them. Also, if Do All is willing to increase its bid a bit, this will help Hyduke negotiating a bid towards 1.37.

 

McCoy results yesterday were very solid with record quarterly revenues and net earnings and they keep saying that: "Key elements of McCoy's growth strategy include the acquisition of complementary businesses and increasing our global sales and service footprint." So far they have been very quiet on the acquisition front.

 

They also entered into a new credit facility on November 5 for 53 million. Here is what they said: "McCoy has pro-actively secured funds at favourable rates so we have the ability to efficiently execute on our growth strategy when the opportunity arises."

 

With 15.5 million in cash on the balance sheet and this facility, they can easily absorb Hyduke and dispose of whatever they don't like within the company or that does not fit within their plans. This could help repay a major chunk of the acquisition. Let's mention once again that Gord McCormack used to be on their board less than 2 years ago.

 

I think that Hyduke is waiting to see what Do All does on Monday. I doubt that there is much support for their bid. If they extend it, or increase it, then we should see fairly quickly the emergence of another bid. If they drop it, then a potential bidder can come in and acquire the company for a dollar or just a bit more.

 

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