Neuquén, Inc., a publicly traded firm, is considering the acquisition of a privatecompany, Artforever.com, which specializes in restoring damaged artwork and vintagephotographs for high net worth individuals.
Neuquén's CEO and chairman of the board,Willie Ray, described the motivation for the acquisition as follows: "We are running outof profitable investment opportunities in our core vintage shoe restoration business, andour shareholders expect us to continue to grow.
Therefore, we must look to acquisitionsto expand into growing markets."Neuquén, Inc.'s common stock is currently trading at $50 per share, and the firm has100,000 shares outstanding.
The book value of the common stock is $20 per share.
However, as mentioned by Mr. Ray, sales had been slowing recently and the board wasconcerned that soon the share price would also begin to flag as investors figured out that the firm was running out of positive NPV investments.
The firm has $2,000,000 market value of bonds trading at a yield to maturity of 6.2%.