Active Power’s Stock Was Halted, Soared 40% Only To Give Up All Of Its Gains
Talk about volatility. Shares of Active Power (NASDAQ: ACPW), a nano-cap company that sells products which use kinetic energy to provide short-term power, saw its shares halted ahead of the stock market’s open at around 8:40 AM ET.
Active Power said in a press release that it has signed an Asset Purchase Agreement with Langley Holdings. As part of the agreement, Langley will acquire substantially all of Active Power’s assets and operations, including its name.
Langley is a privately owned engineering and industrial group based in Europe with a revenue base of $1.1 billion in 2015.
“We are delighted to enter into this agreement with Langley as we believe it equitably addresses the present circumstances facing Active Power with an optimized outcome,” said Mark A. Ascolese, the Company’s President and CEO. “The current capital market environment is very challenging, making it difficult to raise capital through traditional equity financing to support our current operations. Langley is a proven, long-term investor and this deal enables us to avoid a costly liquidation process or further funding operations given our diminished cash balance. We believe it is the best alternative available for the benefit of our stockholders, customers, employees and vendors.”
The news announcement should not have been a surprise to investors. The company did say back in July that it is actively exploring strategic alternatives to accelerate key growth initiatives and improve shareholder value.
Active Power’s Chairman of the Board of Directors said at the time that the board’s position is that the company’s stock price undervalues the company. Pursuing strategic alternatives, including a potential sale of itself is in the best interests of all stakeholders, including shareholders.
Active Power’s stock resumed trading at around 9:15 AM ET and immediately surged higher by more than 40 percent as investors found the company’s announcement to be consistent with its desire to improve shareholder value.
However, optimism quickly soured and the stock sold off. By mid-afternoon the shares traded as low as $0.32 per share which is actually four cents lower than Thursday’s closing price.