EnergySolutions Inc (ES.N) agreed to be taken private by investment firm Energy Capital Partners for $338.5 million, two months after the nuclear waste management company said it would have to sell assets to cut its debt.
The deal, which has an enterprise value of $1.1 billion, will help EnergySolutions expand its decommissioning and disposal businesses.
The company's debt is more than double its market value of about $310 million, and high interest costs have hindered its ability to invest in its nuclear plant decommissioning business.
The decommissioning business is expected to see growth in the coming years as Germany and Japan have announced plans to retire most of their nuclear plants.
The private equity firm is offering $3.75 per share, or a 9 percent premium to EnergySolutions' Friday close.
The stock was up 8 percent at $3.72 in afternoon trading on Monday.
"The price they are offering is low," said Imperial Capital analyst Andrew Casella. "Somebody may look at that and say we should come in with a superior offer."
EnergySolutions said it intends to actively solicit offers from third parties through February 6.
Likely contenders are Fluor Corp (FLR.N), URS Corp URS.N or strategic investors, Casella said.
"The company has a unique set of assets, it is definitely a growth story going forward," said Casella, who has a price target of $4.75 on the stock.
Intrinsic valuation on Thomson Reuters StarMine suggests that EnergySolutions' stock should be trading around $4.58.
StarMine's models take into account analyst estimates for growth, usually over five years, and then chart the typical growth trajectory of companies over a longer period of time.
EnergySolutions provides services such as decontamination, spent-fuel handling and waste disposal to customers including Duke Energy Corp (DUK.N) and Exelon Corp (EXC.N).
Energy Capital, whose bid is backed by Morgan Stanley, said it plans to operate the company as a standalone business with the current management in place.
Goldman Sachs is the financial adviser to EnergySolutions.
(Reporting by Swetha Gopinath in Bangalore; Editing by Saumyadeb Chakrabarty, Sreejiraj Eluvangal)