Q: Could you explain today’s press release in layman’s terms,are they headed for a strategic review and does this give them a tailwind,basically your thoughts on this announcement would you buy here for a 1-2 year hold thank you
5i Research Answer:
Simpson Oil owns 20% of PKI. In 2019 the two companies signed a standstill agreement, where Simpson agreed not to buy more shares nor get involved with the company and its direction. After weak share performance, Simpson wanted out of this deal and went to court. The judge essentially tossed out the agreement. Now, Simpson could fight for changes at PKI, try to get Board representaion, or try to take it over or execute a sale of the company. Or, it may do nothing, but this is unlikely since it went to court to get permission to act. It is good news for shareholders: PKI has lagged for some time. Changes we think would be a welcome improvement.