PGTI - PGT Innovations jumps amid poison pill; analyst sees potential $33/share in takeover

2023-03-31 13:42:23 ET

PGT Innovations ( NYSE: PGTI ) gained 12% after the company adopted a limited-duration shareholder rights plan after an unidentified strategic investor accumulated shares.

The "poison pill" becomes exercisable if a an entity, person or group acquires beneficial ownership of 10% or more of PGT Innovations ( PGTI ) stock, according to a statement on Friday. The rights plan is set to expire in a a year.

"We believe there are other private players that could, logically, be potential buyers, and think a takeout multiple in the ~10x EV/ EBITDA range or $33+ share price would be reasonable," Jefferies analyst Philip Ng, who has a buy rating and $28 price target on the stock, wrote in a note on Friday.

The 10x takeout multiple appears reasonable as Masco ( MAS ) sold its Milgard Windows business for ~10.7x 2019E EV/EBITDA to a strategic player and PGTI "offers faster growth and is a much higher-quality business," Ng added.

A 10x takeout multiple implies a ~$33 share price, or ~29% potential upside to the current price.

Evercore is acting as financial advisor to PGTI and Davis Polk & Wardwell LLP is acting as legal counsel to PGTI.

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