Nortek Calls Off Discussions with United Technologies

Nortek LogoNortek, Inc. announced late Thursday that it has called off talks with an unnamed party who had tendered an unsolicited offer. According to the Wall Street Journal and as we had previously reported, that suitor was United Technologies. Nortek stock closed Friday at $63.97/share or off 3.8%,  on a day when the Dow was up .2%.

See more on this announcement from Nortek…

Nortek is the parent company to Core Brands which is the home of many custom integration brands such as SpeakerCraft, Niles Audio, Elan, Xantech, Panamax and more. Nortek’s stock has been lackluster as the company has been engaged in an aggressive restructuring of manufacturing, distribution and logistics.

When the company reported their Q2 results in August, which included a sales decline, a net loss, and a new round of restructuring – their stock dropped an amazing 6% in just a matter of a few hours.

Stock is Down, Then it’s Up, Then it’s Down Again

Then, the Wall Street Journal reported that Nortek and United Technologies were in discussions that might lead to an acquisition. Nortek’s stock jumped an impressive 3.9% to close at $86.78. At times during the day, the company’s stock price was well into the $90s. Nortek shareholders were apparently excited about the idea of the company being sold.

Photo of Nortek's new Mexico factory.

Nortek’s new factory on the compound they are building in Mexico. From artist rendering to operational in only 9-months.

However, as the discussions behind the scenes seemed to drag on, the stock price began to drift down. The market can be very impatient when it wants something to happen and when no news emerged about a deal – the stock price started setting all new 52-week lows, finally hitting a low of $59.21 a share.

Investors Don’t Appear to be Happy

With Nortek’s announcement of no deal, it’s not entirely clear how the market will digest this news. Although with the immediate decline, it certainly appears that investors are not happy. United Technologies stock, by the way, actually jumped 1.1% to close at $95.37 a share.

“There have been rumors in the press that have created a distraction for us, and we want to thank all our customers and employees for their patience in dealing with any uncertainty this may have caused,” Nortek CEO Michael J. Clarke said in a prepared statement. “We are eager to put this behind us and remain committed to serving our customers, growing our business and increasing shareholder value.”

In the statement, Nortek says their Board of Directors and their advisers had conducted an extensive review of strategic alternatives when presented with this proposed acquisition. But “That review is now complete and all discussions in relation to this proposal have now ended.”

The Party is Over

So far, there is no word from the United Technologies side of the equation. However, some in the industry have speculated that negative market reaction to the news may have helped derail their interest in Nortek. As we reported, a major stock advisory company had called Nortek “a bit of a train wreck” in a detailed analysis of the combination of the parties.

Whatever the reason the deal fell apart, investors are likely suffering from a nasty hangover. The party appears to be over.

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