Shares of VivoPower International (NASDAQ:VVPR) have soared in recent weeks, delivering triple-digit returns to investors. However, the company’s planned spin-off of its Tembo e-mobility subsidiary suggests the stock could still have significant upside remaining.
In early April, VivoPower announced that Tembo E-LV will go public through a merger with special purpose acquisition company Cactus Acquisition Corp. (CCTS). The deal values Tembo at $838 million, with VivoPower shareholders receiving 5 Tembo shares for each VVPR share they own.
Even in a conservative scenario where Tembo trades at just $1 per share after the merger, analysts estimate VivoPower’s market cap could increase by at least 4 times based on the value of the Tembo dividend shares. If Tembo trades at $6 per share, a 40% discount to the $10 deal price, VivoPower’s share price could surge 25 times higher.
The spin-off’s potential is further validated by a $120 million investment in Tembo from a Dubai family office, implying a $40 per share valuation for VivoPower – 7 times its current price. Meanwhile, VivoPower has authorized a $5 million share buyback program to boost shareholder value.
While VivoPower’s stock has already rallied sharply, the Tembo spin-off transaction appears to offer shareholders significant additional upside potential in the coming months.
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