We are moving shares of GCP Applied Technologies (GCP) to a Sell. Earlier this month, the company announced a definitive agreement to be acquired by French construction materials company St. Gobain for $32/share in cash. This price is 14% above our $28 price target. Activist investor Starboard Value’s sizeable ownership stake and oversight of GCP drove the auction process and successful sale.
As the deal is a definitive agreement with unanimous approval from both company boards of directors, is all-cash, and readily financed by St. Gobain, there was little risk in the share price. Waiting for a possible over-bid by other buyers was essentially a free option. However, after a reasonable waiting period, it appears that there will be no other bids.
The GCP investment produced a total return of approximately +78% since our July 2020 initial Buy recommendation.