Canadian cloud computing firm Softchoice Corp. (TSE:SFTC) is being acquired by privately held World Wide Technology in an all-cash deal valued at $1.3 billion (C$1.8 billion).
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Softchoice said in a news release that the deal values it at C$24.50 per share. The agreement also comes with a C$49 million termination fee. Softchoice is based in Toronto, has more than 2,000 employees, and specializes in cloud computing.
In a news release, Softchoice said that it plans to delist from the Toronto Stock Exchange once the deal is finalized in the first half of this year. World Wide Technology is a private company and its stock does not trade on a public exchange.
Disappointing Performance
Softchoice went public in May 2021 at C$20 a share. After running up to C$40 a share in August of that year, the stock plunged 65% to trade around C$14.50 per share. The company’s share price rose 13% on news of the deal and is now trading right around its acquisition price of C$24.50.
In the news release announcing the deal, World Wide Technology CEO Jim Kavanaugh said the company has been a “transformative player” in the information technology industry for more than 30 years. The acquisition is subject to regulatory approvals in Canada.
Is SFTC Stock a Buy?
SFTC stock currently has a consensus Moderate Buy rating among four Wall Street analysts. That rating is based on two Buy and two Hold recommendations assigned in the last three months. There are no Sell ratings on the stock. The average price target of $23.75 implies 1.86% downside risk from current levels.
