Kit Digital Rebounds for Second Day on Takeover Speculation

Kit Digital Inc. (KITD) rose for a second day, poised for its biggest back-to-back rally in more than four months after Roth Capital Partners said yesterday the maker of online video software may put itself up for sale.

The shares climbed 11 percent to $8 as of 9:50 a.m. in New York, adding to an 11 percent rally yesterday. Kit’s secondary listing in Prague jumped 22 percent to 148 koruna, making it the best performer in the Czech 14-member PX (PX) equity index.

A resignation last week of four board members paves the way for a takeover, with possible bidders being private equity buyers and listed companies including Accenture Plc (ACN) and Cisco Systems Inc. (CSCO), Roth analyst Richard Ingrassia wrote in a report.

“We also believe it is quite probable that Kit Digital will sooner or later become the target of a takeover, which would represent a major impulse for the stock price,” Ondrej Moravansky, an analyst at Cyrrus AS brokerage in Brno, Czech Republic, wrote in a report to clients today.

A private equity company is the most likely buyer as it “would be most willing to pay the low- to mid-teens price shareholders are looking for,” Ingrassia said, citing his communication with Kit’s management and Roth’s “independent checks.” Roth has a buy recommendation for Kit shares with a 12-month price estimate of $25, according to the report.

While Roth doesn’t possess any specific information that suggests a transaction is underway, “it is more likely than not that Kit Digital has at least one party” interested in acquiring it, the brokerage said in a separate report today, clarifying yesterday’s comments.

Daniel Goodfellow, a New York-based spokesman for Kit, declined to comment when contacted by Bloomberg yesterday.

To contact the reporters on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net; Joshua Fineman in New York at jfineman@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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