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MONTCLAIR, N.J. - 180 Degree Capital Corp. (NASDAQ:TURN), a publicly traded registered closed-end fund with a current market capitalization of $37.5 million, has announced an all-stock merger with Mount Logan Capital Inc. According to InvestingPro data, TURN has shown resilience with a 2.18% year-to-date return, despite challenging market conditions. The combined entity, operating under the name Mount Logan Capital Inc., is expected to have over $2.4 billion in assets under management (AUM) and will focus on the private credit market and regulated insurance solutions.
The merger is structured to provide 180 Degree Capital shareholders with full net asset value at closing, with the combined company planning to pay quarterly dividends, subject to board approval. This marks a significant shift for TURN, which InvestingPro analysis indicates has historically not paid dividends to shareholders. The company's weak overall financial health score of 1.32 suggests this strategic merger could provide needed operational improvements. The deal has secured support from approximately 20% of 180 Degree Capital and 23% of Mount Logan shareholders, with additional indicative support from other shareholders.
The new company will leverage 180 Degree Capital's track record and network to expand Mount Logan's credit and investment capabilities. Shareholders of 180 Degree Capital are anticipated to benefit from the transition to an asset-light operating company structure, which is typically valued based on multiples to operating metrics.
Under the terms of the agreement, the ownership of the new entity will be approximately 40% for current 180 Degree Capital shareholders and 60% for current Mount Logan shareholders, based on the net asset value of 180 Degree Capital and a valuation of Mount Logan at $67.4 million.
The leadership team will include Mount Logan's CEO, Ted Goldthorpe, serving as CEO of the new entity, and a seven-member board of directors, with a majority from Mount Logan.
The transaction is subject to regulatory approvals and approvals by the shareholders of both companies, with completion expected in mid-2025. The combined company will be listed on Nasdaq under the symbol MLCI.
A conference call to discuss the transaction will be held today at 11am ET. Details of the merger agreement and additional information can be found in the related SEC filings and on the companies' websites. For investors seeking deeper insights into this merger's implications, InvestingPro offers comprehensive analysis tools and a detailed Pro Research Report, available for over 1,400 US stocks, including TURN's complete financial health assessment and future growth potential.
This news article is based on a press release statement.
In other recent news, 180 Degree Capital Corp. has released its third quarter 2024 financial results, highlighting a reduction in operating expenses from $6.5 million to $3 million annually. The company's portfolio companies, including Potbelly (NASDAQ:PBPB) and Synchronoss, reported positive metrics, with Brightcove exceeding earnings expectations. In a recent development, 180 Degree Capital Corp. anticipates growth and enhanced stock value from investments like Ascent Industries, expecting to generate $40-50 million in cash from the sale of its remaining assets.
However, the company faced challenges with Lantronix (NASDAQ:LTRX) in Q3 2024, leading to a reduction in the company's stock position. Despite a 10-11% decline in 180 Degree Capital's stock price following the earnings report, management remains optimistic, citing strategic realignments and cost reductions as key drivers for improvement.
Investors have shown interest in the renewal of the AT&T contract, expected by the end of 2024. Potbelly has plans for a 10% store growth in 2025, while Brightcove's stock responded positively after beating earnings expectations. Lastly, Arena's first profitable quarter resulted in a stock surge of over 200%.
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