The cat has already been let out of the bag regarding Ambarella being in play, so now it is just a question of colour. As well as Sony it is said that Intel are running the rule over the video compression group, something which makes sense in terms of synergy with both potential acquirers. In addition it would appear that there are three banks involved here, JP Morgan, BAML, and our dear friends at Goldman Sachs.
Ambarella is allegedly looking for a $70 plus takeout price, something which given the current stock price at $46 and rather negative chart configuration might be viewed as a little rich. However, as we know, if you don’t ask, you don’t get. What will be interesting to see in coming days is whether the stock remains above the initial April bear trap lows (flushing out bulls in the stock “by accident”) before any deal materialises. The ideal scenario is that there is no further uncomfortable probe below $45. An alternative strategy here would be to wait on a break of the 200 day moving average at $52, but of course there is a risk of missing out altogether with such an approach.
P.S. If there is no M&A development on Ambarella by next month, an update will be forthcoming.
Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.