Shares of Cambridge Display Technology Inc. shot up nearly 89% Tuesday, closing at $11.62, on news that Sumitomo Chemical Co. is acquiring the company for $12 a share, or $285 million, in cash.
You can see why. The deal is an absolute lifeline for investors in CDT, a money-losing maker of flat-panel displays whose shares have languished since the company went public in December 2004. At $12 a share, the deal offers a modest payout to private equity firm Kelso & Co., which invested $55.8 million in CDT in 1999 and which sank an additional $33.2 million in the company two years later. Kelso, which retains a 40% stake, will salvage about a $15 million gain on its investment, financial filings indicate. For other shareholders, Sumitomo's offer amounts to a 107% premium over CDT's 90-day average closing price and a 95% bump over Cambridge’s July 30 close.
CDT is a textbook example of a technology company that would've been better off staying private. The company, which British tech investor Hermann Hauser helped spin out of Cambridge University in the early 1990s, is a pioneer in technologies that use polymer organic light emitting diodes, which show promise for replacing liquid crystal in TV screens, computer displays, cell phones and other applications.
Despite CDT's strong products, however, the market for OLEDs has grown slowly. After its founding in 1992, CDT raised at least $240 million in private capital, including some from Hillman Capital, before going public in 2004 at an offer price of $12 a share. Since then the company has struggled to gain traction, with its revenues topping out at $22.3 million in 2001 before sliding to $7.9 million in 2006. —Alain Sherter
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See May 2005 story from TheDeal.com
Tags: m&a, vc, venture+capital
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