MANDA Portfolio Additions: NCX & HIFN

It looks as if M&A activity isn’t completely dead. Yesterday, Abu Dhabi state-owned International Petroleum Investment Co (IPIC) launched a $500 million takeover of Nova Chemicals on Monday in an effort to rescue the Canadian-based plastics maker from drowning in debt. Note that Nova trades both on the Toronto exchange and on the NYSE under ticker symbol NCX. Under the proposed terms of this friendly deal, IPIC will pay NCX shareholders (US) $6 per share in cash with the caveat that at least two-thirds of the shares are tendered.

Looking at the chart of NCX yesterday (shown below), my first thought was that too many people already owned the shares at higher prices and would be loathe to part with them at a loss. But last night I looked at the chart again and noticed the substantial rise in trading volume in recent weeks. Adding up the daily volumes, I found that more shares than the float (approximately 85.6million versus a float of 82.6 million shares) had been traded since 1/21/09 when the stock price began trading under $5. The stock hit a low of a buck and change on 2/3 and has stayed below the $2 mark until yesterday when the acquisition was announced. With more than the float changing hands below $5, this was the reassurance I needed to jump in at today’s opening price of $5.20.

Right after my purchase of NCX, I bought shares of Hifn (NASDAQ: HIFN) for $3.80, a maker of processors used in network and data storage security. Chip maker Exar (NASDAQ: EXAR) agreed to buy all Hifn stock giving Hifn shareholders the choice to receive 0.3529 shares of Exar plus $1.60 per share in cash, or $4 a share. Based on $4/share, the deal is worth $58.9 million. It has been unanimously approved by both boards and is expected to close early in the second quarter.

The MANDA portfolio table will be updated to reflect these new additions.

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