Fund holding Starent Networks (STAR) has announced an agreement to be acquired by Cisco Systems (CSCO) for $35.
- Cisco and Starent Networks today announced a definitive agreement for Cisco to acquire Starent Networks. Starent Networks is a leading supplier of IP-based mobile infrastructure solutions targeting mobile and converged carriers. The Mobile Internet is at an inflection point as IP-enabled Smartphones and other connected mobile devices gain rapid acceptance.
- Under the terms of the agreement, Cisco will pay $35 per share in cash in exchange for each share of Starent Networks and assume outstanding equity awards for an aggregate purchase price of approximately $2.9 billion. The acquisition has been approved by the boards of directors of both companies.
This is not a hostile takeover of any sort and even if it was, I typically sell upon a first offer because I want my cash either sitting in my vault or working for me, rather than waiting and hoping some secondary suitor shows up (a low probability event in any acquisition). I do believe this price is a good valuel for Cisco considering where Starent Networks fits in the ecosystem of the mobile internet. [Apr 29, 2009: Starent Networks (STAR) 3G Player with 4G Potential]
So with that we'll sell all our Starent Networks today, with approximately a 39% gain from our current cost basis. We originally began our position in May 2009 at a price of $18.20 (current price is about 90% above that) and as with all our core holdings have been trading around a long term position. [May 8, 2009: Bookkeeping - Beginning Starent Networks] Unfortunately this is one of my favorite companies from a fundamental basis, with a unique footprint, so finding something similar to replace it will be nearly impossible.
In under 2.5 years this is the 3rd company of ours that has been an acquisition target; 1 deal fell through due to hedge fund interference (Alpha Natural Resources). That is a pretty solid percentage considering we run a concentrated fund with around 25 long positions at any one time.