CompuDyne: Secure in going private

Posted Aug 8th 2007 1:30PM by Tom Taulli
Filed under: Private Equity

CompuDyne Corp. (NASDAQ: CDCY) has an number of business lines, including electronic security products for prisons and jails, video badging services for the US Air Force, and even bullet and blast resistant windows.

In light of the need for security, it seems like CompuDyne is in a growth sector, right? Not for shareholders. Over the years, the stock price has been fairly choppy.

Well, the company has now decided to go private in a deal worth about $59 million, which is a 32% premium from Monday's closing stock price. The private equity investor is the Gores Group.

Interestingly enough, CompuDyne mentioned Sarbanes-Oxley as a key reason for the transaction. After all, the compliance costs have been about $4-$5 million per year.

CompuDyne also reported its quarterly results. And, unfortunately, there was a 7% drop in revenues and earnings fell 33% to $204,000.

In other words, the fundamentals are not getting better. So, perhaps the private equity folks can make some big changes to get things back on track.

If you want to check out other recent M&A deals, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Tags: CDCY, CompuDyne, Gores Group, GoresGroup, Sarbanes-Oxley

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Reader Comments (Page 1 of 1)

8-08-2007 @ 4:29PM

michael schneider said...

When I started the Barrelomoney Web site a few years ago, (http://www.Barrelomoney.com) I posted 3 stock selections- Petrokasakhstan, Scientific Games and Compudyne. The 1st company was taken out quickly for a 70-80% gain. The 2nd moved higher and is double where it was after fluctuating a bit. Compudyne was the loser- being cut in half from where it was when terror was a bigger concern. Still, I got out of CDCY due to a stop- loss type of practice and recently moved back in when the stock was down around 6 so personally i am about even on the stock-- oddly I had mentioned that I thought it was a takeover candidate when I 1st posted. The company has had all kinds of trouble earning money but I still am not real happy about giving it up-- it was a neat terror hedge which could have gone much higher than the $7 takeout price if, God forbid, we had another 911 type attack. I have no doubt that Petrokasakstan (I don't remember how to spell it) would be trading much higher today if it had not been bought out. Takeovers are not always good is my ultimate conclusion.