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By Malcolm Stacey | Wednesday 11 July 2018
Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Hello Share Smackers. It’s not that long ago that I suggested you take a peek at Cambian Group (CMBN). It’s a company which provides specialist education services for children, including ways of resolving their behaviour problems. Well, I hope you took my suggestion seriously because some great news has just come in.
There have been earlier rumours of a take-over, that always hoped-for happy news from any company. But now Cambian has confirmed a possible share and cash offer by social care provider CareTech Holdings (CTH). The share price has risen by a third as I write. Earlier I said the growing cash pile was a fine incentive to buy. But of course, I can’t claim credit for predicting a possible take-over. Because I don't think I did.
Never mind, the Cambian case reminds us once again that it’s not just company performance that counts. Take-overs play a significant part in the money we make. So I’m saying that if you dither over buying a share, you should also factor in the added benefit of a possible take-over to shoot your investment into the stratosphere.
But is it worth buying more Cambian Group now? Or would it be wiser to sell on the rise? - bearing in mind that it’s not a done deal. As I write Cambian shares have reached 199p. CareTech’s proposal values the share at 220p. But its full cash alternative is only 200p.
CareTech is a very similar company to Cambian. It focuses on supporting adults and children with learning disabilities. So bags of synergy here. The deal would be funded by new debt. A few take-over plans involving other firms have gone awry lately and I am very tempted to sell my Cambian holding now for a profit of at least 50%.
But while I lean towards dumping my Cambian shares on the news, it is a hard decision to make and you must, of course, make up your own mind.
Perhaps in the Punter’s Return.
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