A looming acquisition by their company wasn’t making GigaCloud Technology‘s (NASDAQ: GCT) shareholders very happy on Tuesday. Following the Asian B2B company’s news that it is on the hook for an acquisition, those investors traded out of the stock aggressively. It ended the day more than 25% lower, while the S&P 500 index only slumped by 0.6%.
Well before market open, GigaCloud divulged that it has entered into an agreement to acquire the bulk of privately held Noble House Home Furnishings and several affiliates. For this, the specialty tech company is to pay $85 million.
Noble House is undergoing Chapter 11 bankruptcy proceedings, and GigaCloud was the stalking horse in that process. This evocative term simply refers to the initial bidder of an asset or collection of assets in a bankruptcy proceeding.
As its name implies, Noble House is a maker, distributor, and seller of home furnishings. Its wares are sold through a variety of third-party businesses; according to GigaCloud, Noble House goods are available at top retailers.
In its press release trumpeting the buy, GigaCloud quoted its founder and CEO Larry Wu as saying that owning Noble House will complement “our already diverse range of product offerings.”
Another benefit is that GigaCloud “will enhance Noble House’s operational efficiency and expand Noble House’s sales channels.”
Investors clearly weren’t buying that line of reasoning. It seems they don’t feel Noble House’s business is as compatible as touted by GigaCloud. Additionally, they might consider the acquisition price to be relatively costly, as GigaCloud held less than $182 million in cash at the end of its most recently reported quarter.
10 stocks we like better than GigaCloud Technology
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and GigaCloud Technology wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of September 11, 2023
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]
