I have taken a 110.000 USD position in what I believe is a low risk but exciting acquisition play.
The company, Karo Pharma, is an pharmaceutical company with OTC-products active in about 60 countries, valued around 15B USD and is currently undergoing a hidden acquisition.
The company that is currently buying Karo Pharma is an investment company named EQT, which is valued around 280B USD.
A couple of years ago, EQT tried to purchase Karo Pharma but only received about 70% of the company. Since then, they have silently bought around 86% of the Karo’s total stocks to a price about 50% above the initial acquisition offering.
EQT really want this company, and they either need to make another offering, or buy more shares to increasing prices. When they reach 90%, they must give the shareholders remaining a new price for their shares.
Today, there is a solid price floor of 55 SEK (5.5 USD), and EQT buys everything they can around that price, but they are very very quiet. The stock is currently trading at 55 SEK (5.6 USD).
As soon as a new buyer takes a small stake, the price spikes, which makes it crucial for EQT to not be noticed. Volume has a very positive effect on the stock.
The company will be bought out from the stock market, and it will most likely be above todays price. Very soon they will need either rise their price floor, or make a new offering, just 4% left.
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