4 year Chart Breakout - nCipher is off and Running

With the majority of the companies I hold I would be tempted to sell on the back of this news because on the face of it it does look like they have overpaid. However given the conservative management of NCH I am happy to give them the benefit of the doubt.

I see nothing in the recent history of NCH to suggest that this is a deal which would have been done in a hurry without the appropriate due diligence. That doesn't mean that a mistake hasn't been made but I think the management at NCH and Abridean eventually reached a point where it was obvious to both of them that a merger/takeover would be in the best interests of both.

I have read the statement 4 or 5 times now and I see none of the usual corporate speak which always makes me uneasy and 9 times out of ten confirms that it has been the corporate advisers who have driven the deal not the companies. In time I may be proved wrong but I don't expect to be wrong because the decision to get together was flawed or made for the wrong reasons - if I am wrong I think it will only be because market conditions change to the extent that cash turned out to be the best asset the company could have had.

My feeling is that the directors of NCH have probably knowingly overpaid,relative to the current earnings potential of Abridean . Why should they do that ? Probably because they realised after looking at all the possibilities over the last year or two that there were not too many other companies out there which were available at a price they could afford and could also bring something valueable to the table in terms of both securing NCH's own position in the market and opening up future opportunities . The danger was that had they waited too long the partner they had identified could have been snapped up by the competition so they have paid over the odds to avoid that possibility ie a bit like paying for an option instead of just watching and waiting.

The currency side of things must have been a major consideration and having watched the $ strengthen against the odds NCH may have decided to secure their target now in case that trend continued
If the price slips back far enough I will almost certainly buy some more.