Boenning & Scattergood 'Not Convinced' AVI Partners' Offer For YuMe Will Result In A Deal

Boenning & Scattergood says the buyout offer for YuMe Inc YUME from AVI Partners will not lead to a transaction, due to the limited premium and conditions around cost cuts. However, it expects the offer to further increase activist pressure on management.

YuMe said it has received an indication of interest to be acquired by its second largest shareholder AVI Partners, LLC for $4.52-$5.22, subject to certain conditions. The offer represents a premium of 22-41 percent over Tuesday's closing price of $3.70.

"We do not believe the premium at these levels is "too good to pass up," and YUME stock may be able to achieve levels similar to the offer on its own if management executes on its strategy," analyst Murali Sankar wrote in a note.

Sankar noted that management has been reluctant to deploy cost cuttings already suggested by shareholders, and it's unclear whether they would be willing to commit to a $10 million a year reduction.

Sankar has a Neutral rating on YuMe, which provides multi-screen video advertising technology.

At time of writing, shares of YuMe rose 5.14 percent to $3.89.