Fusion Merger With Birch Likely To Close Within Two Weeks

Fusion (FSNN) has been a gift that keeps on giving to traders. Ever since they announced the Birch merger, the value in the stock has become apparent to investors. Closing with Birch will also give them the scale necessary to get on funds’ radar screens. The result is the stock has moved up substantially since we got involved at $1.50, but has room to move further. So, trading this from the long side is a no-brainer.

However, the merger with Birch is taking longer to close than anyone had thought. Check out the chart. Most analysts and investors think that the combined company should be trading over $5 per share, just based on cash flow and comparables. Yet, it continually backs down below $3 on concerns about the deal closing. Anything below $3 seems to be a great buying opportunity for a move higher. There’s nothing like buying a stock on weakness, knowing that a major catalyst is coming…it’s a game I’ve played a few times here.

The next time FSNN trades through $3 could be the last, however. That’s because we are nearing the close of the Birch transaction. The rumors on the street is that the final regulatory hurdles have been cleared and it now comes down to Goldman Sachs finalizing the debt transaction. Based on SEC filings regarding the most recent extension of the merger date and a second proposed acquisition, it appears that the debt is very close to closing.

I believe that Fusion will close the Birch transaction here in early May. Doing so could be the catalyst to push the stock through $4 and possibly much higher. The stock is undervalued on an EBITDA multiple and is starting to finally see organic growth, which should help it gain an even higher multiple eventually.

TW Research's Disclaimers & Disclosures: TW Research may have been compensated for writing this article. For a full list of disclaimers and disclosures, please visit http://tailwindsresearch.com/disclaimer/.


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