Great news today – If you recall from my original analysis of GTSI, the company owns approximately 37% of Alaskan information technology provider, Eyak Technology, LLC (“EyakTek”). In a surprise move, EyakTek made an offer for GTSI amounting to $7/share cash. This is a 35% premium to the previous close of $5.18.
Now the question becomes whether this is a good offer. From my original analysis, an offer of $7.00 is below the low end of my valuation range. Clearly the GTSI board feels that this offer is too low (though this is not an uncommon occurrence!) as they have evidently rejected EyakTek’s offers privately for the bulk of the summer. I tend to agree with GTSI and expect that EyakTek will have to raise its offer, or go hostile. Alternatively, we might also see another bidder enter the ring.
I see a low likelihood of EyakTek withdrawing its offer solely because GTSI’s board is refusing to negotiate. Any potential acquiror would expect such behaviour. I am going to wait for a better offer.