MSCC can only be acquired by a US entity. And for now we are assuming the candidates have to be larger than MSCC to swallow both the equity and the debt. Here is how we see the current strategic buyer setup.
Conclusion: companies who do their due diligence will realize MSCC has no scale at nearly any manufacturing technology, they have under-invested in R&D and roadmaps, the underlying, organic revenue factors are negative, and that the company is connected by spit, grit, and duct tape, which comes undone as soon as Jimmy P leaves. The period of discovery post-deal would make nearly any company engaged in this process a raging SHORT from the time the deal is announced.
What to do with the stock? It is a highly tempting Short here. We estimate ~40% downside risk. No one wants to step into an M&A process but...we have been through this before, and it is a little bit too coincidental that the rumor pushed the stock above $60, which is the selling point on Jimmy P's large equity incentive package. A little too fishy. Still, we suggest waiting an appropriate # of days with no further news on M&A to allow the subject to pass just like last time. The countdown begins!
