Investors trounce troubled Trojan
canoe.ca
OTTAWA, Oct 1 (Reuters) - Troubled Trojan Technologies Inc. (TUV-T) marched into takeover target territory on Friday as the stock fell 53 percent over three days of trade.
The drubbing follows the London, Ont.-based water disinfectant firm's profit warning on Wednesday, its second downgrade in three months.
Investors have torn a strip off the stock, which tumbled 50 Canadian cents on the Toronto Stock Exchange on Friday afternoon to a new 52-week low of C$5.45. That is a decline of C$6.30, or 53 percent, from the close of C$11.90 on Tuesday.
The firm, which controls 70-80 percent of the market for ultraviolet water disinfection systems, now faces the threat of takeover.
"It doesn't take rocket science to realize that there will be plenty of people out there taking a very close look," said Sara Elford, analyst at Canaccord Capital Corp. in Vancouver. "There are a whole slew of potential candidates that could be eyeing the company."
Trojan doesn't yet have a shareholders' rights plan so-called poison pill plan, in place, she said. Such a plan would give the firm additional time to solicit competing offers if a hostile bid is tendered.
"It's up to the company, at this point in time, to cover all their bases from a defense strategy," Elford said.
No spokesman for Trojan was immediately available for comment.
Trojan issued a warning on Wednesday that it expects to break even in the fiscal year ending August 31. An internal audit showed an accounting input problem meant the costs of goods and overhead were understated.
It is the firm's second profit warning in three months, following its revision of consensus estimates of C$1.07 per share to 60-65 Canadian cents per share on June 29. That change was tied to increased competition and higher-than-expected legal and product development costs.
Trojan said it will announce year-end results before the end of October. The firm expects it will return to profitability in fiscal 2000.
"What the market is going to want to hear is numbers and they're also going to want to have confirmation that this is it and we can move forward," Elford said.
($1=$1.47 Canadian) |
