TOP IDEAS: The steal sign is on for Galvanic Applied Sciences (TSXV: GAV)
It is not often when I write two consecutive blog posts about the same company but Galvanic Applied Sciences (TSXV: GAV - $1.85) deserves this attention; for all the right and wrong reasons.
Today Galvanic released its fiscal 2013 annual results for the period ending April 30, 2013. Ignoring the subsequent events, the annual results make shareholders smile. Galvanic had another outstanding year: $0.23 per share in earnings on higher revenues of $17.4 million. Most notable is that the revenues in Q4 are up 19%, compared to last year, fuelled by a 47% increase from sales at Galvanic’s US operations in Lowell, Massachusetts. The Company ended fiscal 2013 with $10.7 million in cash and marketable securities and no debt.
The fiscal 2013 annual results for Galvanic justify the right reason to prepare this blog post. The wrong reason is the actions of the Company’s Board of Directors.
Last week Galvanic’s Board of Directors endorsed a takeover offer for the Company at $1.70 per share. The engagement of this Board clearly demonstrates their lack of effort (laziness) and independent thinking on behalf of its minority shareholders by rolling over to an unsolicited and inferior offer (See: Offer to buy Galvanic Applied Sciences pockets shareholders cash). Shareholders should be entitled to the return of all fees paid and the options granted to current board members of Galvanic if they are not willing to run a process to maximize value for the benefit of all its shareholders.
Fortunately the recent events occurring at this Company have not gone unnoticed. The takeover process (or lack of process) has come under scrutiny by recent articles in the Financial Post (See: Galvanic’s minority shareholders question process and price on going private). It questions if the offer is fair.
Hopefully the media attention and blog postings will help generate an acceptable outcome (a much higher offer) for the minority shareholders of Galvanic.
But for now, using baseball terminology, the steal sign is on and there is no throw going to second, just yet.
For the record, this minority shareholder is not tendering its shares of Galvanic for $1.70. This offer does not add up.
Galvanic Applied Sciences has approximately 16.1 million shares outstanding.
Galvanic Applied Sciences website www.galvanic.com
Author Ownership Disclosure: TSXV: GAV - YES
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