Why the LoJack Acquisition Is an Absolute Win for Shareholders

LoJack Corp. (NASDAQ: LOJN) was stunning investors in a good way on Tuesday, despite the huge downturn in the market. This comes on news that CalAmp Corp. (NASDAQ: CAMP) has made moves to acquire LoJack. However with every acquisition, we have to ask if the company bought out is getting a fair deal, and if shareholders are getting enough out of it.

Under the terms of the deal, CalAmp will acquire all the outstanding shares of common stock of LoJack for $6.45 per share in an all cash transaction valued at approximately $134 million.

The transaction was unanimously approved by both boards of directors, and management seemed fairly optimistic on the deal. Randy Ortiz, president and CEO of LoJack, commented on the deal:

This transaction delivers immediate and significant cash value to our shareholders at a substantial premium and represents a successful conclusion to the Board’s review of strategic alternatives to enhance shareholder value. We are proud that CalAmp recognizes LoJack’s success over the last 30 years in creating best-in-class theft recovery solutions and developing strong channel and end customer relationships around the world. With CalAmp as our partner, the LoJack brand will continue to expand beyond our foundational stolen vehicle recovery business by providing our customers and partners with enhanced product offerings to better protect and manage their assets. We look forward to working with the CalAmp team to ensure a smooth transition and accelerate the strategic initiatives already underway at LoJack as we take our great brand into the future.

So let’s look at some other stats surrounding the deal.

LoJack has a consensus analyst price target of $5.00, which only implied upside of 8.2% from the 50-day moving average of $4.62 and upside of 37.7% from the 200-day moving average of $3.63. However, this is mainly due to lack of analyst coverage.

In terms of the $6.45 offering price, there is upside of 39.6% from the 50-day moving average and 77.7% from the 200-day moving average.

Also prior to the offer, LoJack’s market cap was hovering just under the $100 million mark, though now it has jumped to nearly $120 million. Consensus estimates also projected that total revenues for 2016 would be $136.50 million. Also looking at the balance sheet, we see that for the most recent quarter (September 2015), LoJack had about $19 million in cash and equivalents and only held roughly $7 million in long-term debt.

So far in 2016, LoJack has outperformed the market, with the stock down only 3.6% year to date. Although, over the past 52 weeks, the stock has skyrocketed up over 150%. By the looks of it, investors who were long on this stock had the right idea.

Shares of CalAmp were trading up 5.6% to $17.86 on Tuesday, with a consensus analyst price target of $26.06 and a 52-week trading range $14.01 to $21.82.

Shares of LoJack were up nearly 20% to $6.41, within a 52-week trading range of $2.11 to $6.42.

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