EnergyConnect Group, Inc. (OTC:ECNG) Finally Got the Deserved Value?
10 Mar 2011

Yesterday’s session was an ordinary one for the stock of EnergyConnect Group, Inc. (OTC:ECNG) in its new trading range. The share price had made a huge gap up last week to reach the announced cash acquisition offer and remains that high despite the questionable for many investors terms of the transaction and the numerous law firms that declared to have launched investigations against the company’s Broad of Directors.

ECNG closed with a minor percentage increase from the previous close at $0.213 yesterday. Trading volume was 1.48 million shares, much larger than the average, but not as high as the volumes on the first two day of the news announcement. Obviously, the news that EnergyConnect has executed a plan of merger with Johnson Controls Holding Company, Inc. and its wholly-owned subsidiary Eureka, Inc. has been perceived as a huge event by the market.

But as it seems, not all investors and shareholders are pleased with the negotiated by the Board of Directors conditions for the acquisition. According the SEC filing, shareholders of ECNG will receive a cash price of $0.2253 for each share they hold. On the day following the announcements, a number of investigation have been declared, initiated because of the suspicion that ECNG Board has agreed upon a lower value for the company’s stock than the fair market valuation would have been.

The argument pointed out by all of the law firms is an existent analyst target price of $2.50 per share for EnergyConnect stock. Considering the most recent operational results of EnergyConnect, it looks actually questionable if the $32.2 million offered for its stock are a price fair enough.

ECNG is a provider of smart grid demand response services and technologies. As of October 2010 the company reported $25.8 million in assets and no long-term debts. ECNG shows also substantial growth in the sales over the past four quarters, whereby in the three months ended October 2, 2010 the sales grew 2.7 times and the company reported net income of $1.45 million.

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