Universal Security Instruments (UUU) Stock Pops on Takeover Offer

Universal Security Instruments UUU Stock News

Universal Security Instruments, Inc. (NYSEAMERICAN: UUU) is screaming for the top in the premarket hours this morning, and for good reason. The company seems to have turned down a takeover offer, which is setting the stage for speculation that a hostile takeover may be on the horizon. Here’s what’s going on:

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UUU Stock Pops on Declined Takeover Offer

Early this morning, news broke surrounding a potential transaction at Universal Security Istruments. Essentially, Activist Investing, the largest shareholder of the company, sent all other shareholders a letter. The letter expressed significant concerns about UUU management after it turned away a potential strategic transaction.

Activist Investing said that a serious candidate for a strategic transaction emerged in recent weeks. According to the letter, the transaction surrounds a biopharmaceutical company with a promising therapeutic for COVID-19.

According to Activist Investing, the biopharmaceutical company said that the company failed to act in what they would consider a timely or commercially reasonable manner. As a result, Activist Investing, which owns 9.9% of UUU urged the company to act now, stating:

Given its dire financial situation, we are now more alarmed than ever that the Company will soon find itself delisted from the New York Stock Exchange and on a path towards bankruptcy. Unless you act now, we believe that it will be up to shareholders to take immediate action to halt any further destruction of value. Time is of the essence.

This Is Big News

The news released by Activist Investing about Universal Security Instruments is huge. Don’t forget, UUU is a struggling company that’s barely keeping its head above water. Considering this, a takeover of the company would be great news for investors as it would likely result in a decent premium.

With that said, when publicly traded companies in this position turn down compelling offers, we tend to see hostile takeovers. Considering the fact that the largest investor in the company is getting involved, the potential for a hostile takeover is strong here. All in all, UUU stock is one to watch closely.

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