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CUI deal update +3

08:51 11-Jul-19


CUI Global has issued a press release which focuses on Jim O'Neil joining its board.  Although he has excellent experience, cutting his teeth at Halliburton and then growing Quanta Services during his rise to CEO, I see affirmation that the Nikola deal is going through as being more important, along with the following:

As a result of due diligence conducted, the company is now focused on acquiring two rather than four companies, resulting in a much less dilutive deal
The updated terms and companies are not detailed, but I am nonetheless encouraged that the company is once again taking care of its shareholders and avoiding missteps by not being indiscriminate about its acquisitions.  More will follow, though; in the words of Mr. O'Neil the company will

embark on an aggressive acquisition strategy that leverages the traction that CUI Global’s Orbital North America energy segment has gained with oil and gas customers in the Permian Basin to implement my vision and leverage my experience in aggregating and growing energy infrastructure services companies. We are in unprecedented times in the U.S. energy infrastructure and telecom industry...
I agree with the unprecedented part, and hope that projected cash flows will ramp quickly to support such a strategy, and I will be looking for updates on the details by the time the company reports again in a month.  I can't predict how or if the market will react to this news, but at prices below $1, I am likely cautiously increase my positions in some accounts.