PGT Innovations Inc shares shot up 22% to $31.83 in midday trading on Tuesday after the doors and windows maker rejected a $1.9 billion takeover offer from Koch Industries-backed rival Miter Brands, calling it inadequate, Reuters reported.
The media outlet noted that Miter, which offered $33 per share, may be prepared to raise its offer to $36 per share.
Analysts at Jefferies noted a $36 offer as being "more reasonable" seeing that it would be closer to a 10 times enterprise value (EV) to earnings before interest, taxes, depreciation, and amortization (EBITDA) takeout multiple.
"In 2019, MAS sold its Milgard Windows business for ~10.7x 2019E EV/EBITDA to MI Windows, and we believe PGTI offers faster growth, and it's a higher-quality business," the analysts wrote.
"PGTI generates high-teens EBITDA margins, compared to Milgard's ~8%, and plays in premium window & door markets as opposed to commodity products, though interest rates are higher and the macro backdrop is more uncertain today," they added.
In March, PGT put a poison pill in place that prevents any investor from accumulating a position of 10% or more in its stock for a period of 12 months.
Shares of PGT Innovations have gained 77% year to date.
Contact Sean at sean@proactiveinvestors.com