It’s a very rewarding trading day for investors in Radisys Corporation (NASDAQ:RSYS) with shares up over 100%, making the stock Wall Street’s bull of the day.
Why the excitement? The telecom solutions firm announced that it has entered into a definitive agreement with Reliance Industries under which Reliance will acquire Radisys for $1.72 per share in cash, a 146% premium to yesterday’s closing price.
The transaction is subject to certain customary closing conditions, including regulatory approvals and approval of Radisys’ shareholders, and is expected to close in the fourth quarter of 2018. RIL intends to finance the transaction through its own internal accruals.
“Reliance and Jio have been disrupting legacy business models and establishing new global benchmarks. Radisys’ top-class management and engineering team offer Reliance rapid innovation and solution development expertise globally, which complements our work towards software-centric disaggregated networks and platforms, enhancing the value to customers across consumer and enterprise segments,” said Akash Ambani, Director of Reliance Jio. “This acquisition further accelerates Jio’s global innovation and technology leadership in the areas of 5G, IOT and open source architecture adoption.”
Brian Bronson, CEO of Radisys said, “The backing and support of India-based global conglomerate Reliance, will accelerate our strategy and the scale required by our customers to further deploy our full suite of products and services. The Radisys team will continue to work independently on driving its future growth, innovation and expansion. The addition of Reliance’s visionary leadership and strong market position will enhance Radisys’ ability to develop and integrate large-scale, disruptive, open-centric end-to-end solutions.”
If we step back and look at the bigger picture, we can see that overall Radisys stock has a ‘Strong Buy’ analyst consensus rating. In the last 12 months, the stock has received 6 back-to-back buy ratings, with an average analyst price target of $3.90, which implies a 170% upside potential from the current share price.