After several weeks of rumblings that it might be for sale, Aldila has entered into a merger agreement with Mitsubishi Rayon America. The move was unanimously approved by Aldila's board ofdirectors. The board further recommended approval to its shareholders. The agreement calls for shareholders to receive $4.00 per share, meaning the purchase price is approximately $22 million.
The move set activity on the publicly traded company in overdrive. Aldila stock closed at $2.50 per share on Dec. 3, but skyrocketed a day later, rising as high as $3.94 per share before closing at $3.85 per share--a jump of 54 percent. Volume also was brisk with 641,435 shares traded compared to the three-month average of just 3,765 shares. The closing price eclipsed the 52-week high by 26 cents.
The merger comes after a strategic review in which the board concluded a sale would be in the best interests of the stockholders and that Mitsubishi offered the best fit. The Aldila brand will continue as a wholly owned subsidiary.
Aldila will be joining with a company that led the PGA Tour in driver-shaft wins in 2012. Mitsubishi had the most driver-shaft wins of any company on the PGA Tour in 2012, including victories by Rory McIlroy at the PGA Championship (as well as a pair of FedEx Cup wins) and wins by Kyle Stanley, Carl Pettersson, Rickie Fowler, Zach Johnson, Jason Dufner, Nick Watney and Sergio Garcia. Aldila also has had significant success on tour, winning in 2012 with Johnson Wagner (Sony Open in Hawaii) and Ben Curtis (at the Valero Texas Open). According to Aldila, citing tour-use research firm Darrell Survey, it led the wood shaft manufacturer count 38 times and the hybrid shaft manufacturer count 39 times in 47 PGA Tour events in 2012.
Mitsubishi Rayon's most popular lines includes Diamana, Fubuki, Bassara and Kuro Kage, while Aldila's top microbrands include RIP, Voodoo and NV.
Despite its success in golf, Aldila has struggled financially in recent years. Its annual report showed that for the twelve months ending December 31, 2011, the company had net sales of $48 million and a net loss of $5.9 million. The previous years showed sales of $54.7 million and net income of $2.3 million, but the report notes that if one-time charges and a tax dividend were removed the income figured would have been a loss of $3.1 million.
The merger is expected to gain approval Dec. 27. at the next stockholder meeting.