Why Cubic jumped over 25% today
Shares of the Defense and Transportation Technological Systems Company Cubic (NYSE: CUB) are up 25% as of 11:10 a.m. EDT.
In an announcement today, the company disclosed a stake in activist investment manager Elliott Management and said it has adopted a limited-term shareholder rights plan, saying it believes it has “excellent “prospects as an autonomous company.
The shareholder rights plan does not prevent the board of directors from considering any fair offer that is in the best interest of the shareholders and does not discourage any potential offers. Cubic said Elliott, along with a private equity partner, informed the company that they had an interest in acquiring the company.
Through direct purchases as well as derivative positions, Elliott now owns, or is exposed to, nearly 15% of Cubic’s outstanding shares.
The company’s revenues of around $ 1.5 billion come from both transportation systems and defense mission and performance solutions. In his response to Elliott’s interest, Cubic said he believed “significant” future value for shareholders would be driven by his NextCubic initiative, which aims to improve efficiency, reduce leverage. and generate higher returns on capital through higher margins and recurring revenues.
Cubic’s senior independent director, David F. Melcher, said the board’s focus is “creating long-term value and ensuring that our shareholders are able to realize the full potential of their investment.”
He said the adoption of the shareholder rights plan, which is now in effect for one year, was intended to allow time to make informed decisions about any offer, without any third party taking control “of a company. in a manner and at a price that are not in the best interests of Cubic shareholders. “
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