Why Zoltek Shares Jumped
Mar 5th 2013 5:01PM
Updated Mar 5th 2013 5:04PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Zoltek were looking stronger today, gaining as much as 27% after Quinpario Partners disclosed a 10.13% stake in the carbon-fiber maker and plans to take over the company.
So what: Quinpario didn't buy those shares just to sit on them. Zoltek revealed in an SEC filing that the investment group is planning a hostile takeover, calling for the removal of all current board members and seeks to replace the board with Quinpario founder Jeffry Quinn and his honchos. In a letter to Zoltek's chairman, Zsolt Rumy, Quinn said, "It has become even more apparent to us that Zoltek is underperforming and that significant opportunity exists to dramatically improve operational performance and enhance shareholder value."
Now what: It's rare to see such a blunt attack on a company, but investors clearly seem to like it. Quinpario also tried to buy Zoltek last November but was denied. With only 10% of shares, Quinn will need shareholder backing if he wants his plan to go through. A battle for control of the company seems likely to ensue. In its most recent quarter, Zoltek's net income was $3 million, down from $9.7 million the year before, and revenue is projected to decline this year.
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