We have covered off the transaction analysis above; however, there remains a case for investment even if the transaction does not occur. Our valuation for the Company at $0.92 (with no transaction factored in) remains significantly above the current share price of $0.49. Results from new wells at Northern Star and Southern Star (extension area) may also provide downside protection in the scenario where a transaction does not occur (there are currently no reasons why the transaction would not occur, in our view and we believe that other buyers are waiting in the wings). The fact that the Company continues to deploy capital (with near term 6 wells) also provides comfort that there is confidence of successful outcomes. We continue to rate AZZ as a BUY with a price target of $0.69.
AZZ Price at posting:
42.5¢ Sentiment: Hold Disclosure: Held