This is another quick hitter that will be sparse on details but hopefully with enough information for readers to decide if its worth pursuing.
Identiv is a business built around RFID (radio frequency ID) solutions. Its market cap is roughly $120M-$150M, and on April 2nd it entered into an agreement to sell its physical security, access card and identity reader operations and assets to Vitaprotech for $145M. Its corporate presentation says the sale includes 32% of assets that comprise 63% of revenues. Post sale Identiv is going to focus on IoT (internet of things) applications and expanding its IoT businesses.
A simplistic liquidation analysis looks like this:
Current Assets: $79,486
Liabilities: $35,451
Sale Proceeds: $145,000
Shares: 29,895 (assumes all preferred converts to common)
NAV: $189,035
Per Share: $6.32
Closing Market Price: $5.17
The big question is: What is the post-sale Identiv business worth? Selling 63% of the business (by revenues) for $145M, implies the remainder is roughly worth $85M, or nearly $3/share more. So on the surface it looks like Identiv is trading below liquidation value while being worth as much as double.
The hard part I leave to you; figuring out exactly what is being sold and what will remain.
The liquidation analysis may be high as it’s unclear which assets are being sold. Long term assets comprise close to the 32% of all assets being sold but the presentation says most goodwill isn’t being sold. So that means it’s likely some current assets (A/R and Inventories) are included in the sale.
I first thought the Identity subsidiary was being sold since it roughly matched the revenues being sold, but on a further reading that appears wrong. Digging through the details of the sales agreement and product lineup is needed to make things clearer (IoT and TAG products are excluded on my first pass through the sales agreement).
Ultimately the key question is will this make Identiv a better business that can start generating consistent profits and/or high growth rates? Or will management fritter away this influx of new capital?