Shares of Accuride, Corp. (NYSE:ACW) Plummet Following Announcement

Leading supplier of components to the North American and European commercial vehicle industries, Accuride, Corp. (NYSE:ACW) announced yesterday the expiration of the 35-day “go shop” period included in the previously announced merger agreement under which Accuride will be acquired by an affiliate of Crestview Partners for $2.58 per share in cash.


Accuride Corporation (ACW) (“Accuride”) – a leading supplier of components to the North American and European commercial vehicle industries – today announced the expiration of the 35-day “go shop” period included in the previously announced merger agreement under which Accuride will be acquired by an affiliate of Crestview Partners for $2.58 per share in cash (the “Transaction”).

Under the terms of the merger agreement, Accuride and its representatives were permitted to solicit and engage in negotiations with respect to alternative acquisition proposals until 11:59 p.m. (Eastern Time) on October 7, 2016. During the “go shop” period, Accuride and its representatives solicited alternative acquisition proposals from 59 potential acquirers. During such time, 4 parties executed a confidentiality agreement with Accuride, but no party submitted an alternative acquisition proposal.

Accuride has filed with the Securities and Exchange Commission preliminary proxy materials related to the special meeting of shareholders to vote on the proposed transaction. Details regarding the date, time and place of the special meeting of shareholders will be announced when the definitive proxy materials are finalized and filed.

The Transaction is expected to be completed in the fourth quarter of 2016, subject to Accuride shareholder approval and other customary closing conditions. The Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with the merger as of September 27, 2016.

Accuride’s Board acknowledged its receipt of the letter, dated October 7, 2016, from Coliseum Capital Management with respect to the Transaction. John Risner, Chairman of the Board of the Company, stated: “The Accuride Board believes that the Crestview transaction offers certain, compelling and immediate value to our shareholders. We look forward to a constructive dialogue with Coliseum Capital Management to understand their perspective and to discuss the factors that led to our determination that the Crestview transaction is in the best interests of all Accuride shareholders and our unanimous recommendation that the Accuride shareholders vote to approve the Crestview transaction.”

Accuride expects to reach out to other shareholders as well to understand their perspectives.

The Accuride Board also announced that, in order to ensure the full and fair opportunity for all shareholders to make an informed decision with respect to the Transaction, and to mitigate the risk that a shareholder or group of shareholders accumulates an ownership position that now or in the future results in a transfer of actual or de facto control without paying an appropriate control premium, the Accuride Board has authorized a limited duration shareholder rights plan (the “Rights Plan”). The Rights Plan is scheduled to expire upon the earlier of March 31, 2017 and immediately prior to the completion of the Transaction.

Terms of the Rights Plan

Under the terms of the Rights Plan, one preferred stock purchase right will be distributed for each share of common stock held by shareholders of record on October 21, 2016. Subject to certain exceptions, the rights will be exercisable if a person or group acquires 20% or more of the Company’s common stock (including the number of shares that are synthetically owned pursuant to derivative transactions or ownership of derivative securities) or announces a tender offer for 20% or more of the common stock. Under certain circumstances, each right will entitle shareholders to buy one one-hundredth of a share of Series A Junior Participating Preferred Stock of the Company at an exercise price of $7.75. The Company’s Board of Directors will be entitled to redeem the rights at $0.01 per right at any time before a person or group has acquired 20% or more of the outstanding common stock. The Rights Plan also includes a qualifying offer provision, which allows shareholders to demand a special meeting to consider redemption of the rights plan in response to a qualifying offer. The rights will expire on the earlier to occur of March 31, 2017 or immediately prior to the completion of the Transaction, unless earlier redeemed, exchanged or terminated by the Company.

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Accuride, Corp. (NYSE:ACW) shares are moving -0.40% on the news today and have traded in the range of $2.48 – 2.50 during the current trading session. A number of brokerage analysts have recently weighed in on the stock, providing price target projections. The covering firms currently have a consensus one-year price target of $2.58 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.  This is the average number from the individual targets provided by the firms.  Analysts are projecting earnings per share of $-0.04 for the next fiscal quarter.  For the current year, analysts are predicting earnings of $0.06 per share according to First Call.

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In looking at where Accuride, Corp. (NYSE:ACW) is trading on a technical level, the stock is trading +6.05% away from its 50-day moving average of $2.34.  Based on the most recent available data, the equity is -22.26% off of its 52-week high of $3.19 and +235.14% away from its 52-week low which is $0.74.  The price to current year EPS estimates from research analysts currently stands at 41.33.

Today, the stock opened at $2.49 and the last bid at the time of writing stood at $2.48.  During the session thus far, the equity dipped down to $2.48 and touched $2.50 as the high point.  Accuride, Corp. (NYSE:ACW) has a market cap of $443265.

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Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.

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