MAGS up 32% to 16.59; mentioned as possible acquisition target
NEW YORK (Dow Jones)--Magal Security Systems Ltd. (MAGS) shares reached a 52-week high Monday following Israel's assassination of Hamas founder Ahmed Yassin.
The death of Yassin, the highest-ranking member of the militant Palestinian group responsible for numerous suicide bombings, prompted unprecedented threats of revenge.
With Yassin's death seen as inciting a major escalation of the conflict between the Palestinians and Israel, Magal's stock has risen as security concerns move to the forefront. The company's chairman and chief executive, Jacob Even-Ezra, acknowledged the assassination as a possible reason for the stock movement.
The Israel-based company's stock already saw an impressive run in the past week, as General Electric Co.'s (GE) planned takeover of fellow security company Invision Technologies Inc. (INVN) helped drive the sector's performance.
The sector is consolidating, and investors are speculating Magal may be an acquisition target, said Eric Brock, partner and portfolio manager for Clough Capital Partners, a significant shareholder in Magal.
When Invision's stock price momentarily breached GE's $50 takeover price Thursday, investors began speculating other companies were looking to acquire the company or other security names such as Magal, Brock said.
"Investors were already starting to anticipate (the increased interest in security), but this just drives home the point more," he said. "(Magal's stock movement) is more follow-through from the Invision deal."
Even-Ezra said there "is money in the market looking for homeland security companies." He added Magal's shares have been undervalued for several weeks, and the stock is starting to look attractive to investors.
"The expectation is if the industry consolidates, we think the stock can go a lot higher," Brock said.
Magal is always looking to possible mergers or acquisitions, but there is nothing in sight for the near term, Even-Ezra said. He said he believes some investors look at Magal as an acquisition target, and he added a takeover is a possibility.
Brock said he also sees Magal winning additional business in India. The company used some of its technology in building a small portion of a security fence in the Kashmir region of India, and it appears the country is willing to expand the project, which could be meaningful for Magal, he said.
Magal recently traded up $2.08, or 16.6%, to $14.58, on volume of 1.2 million. Average daily volume is 71,400 shares.
Earlier Monday, shares reached $15.22, above the 52-week high of $12.60 reached March 16.
-By Roger Cheng, Dow Jones Newswires; 201-938-5393; roger.cheng@dowjones.com |
