Telkonet Brings on Roth Capital to Explore Sale or Other Deals
Telkonet, a small Milwaukee-area energy management and connected devices company, said this week it had hired the investment bank Roth Capital Partners “to explore strategic alternatives” with the goal of maximizing shareholder value.
Jason Tienor, president and CEO of Telkonet (OTCMKTS: TKOI), said his company will likely consider a variety of transaction types after doing market research and analysis alongside Newport Beach, CA-based Roth. Possible outcomes include acquisitions, mergers, joint ventures, issuing new shares of Telkonet stock, buying back shares in order to take the company private, or a sale of Telkonet, Tienor said.
“Everything is on the table at this point,” Tienor said in an interview.
Still, there is no guarantee that Telkonet will enter into a major deal or series of deals as a result of its work with Roth, the organizations said in a news release announcing the collaboration.
Telkonet sells thermostats, light switches, wall outlets, and occupancy sensors that can be controlled remotely by smartphones and other Internet-connected devices. Tienor said about half of the company’s clients are in the hospitality industry, and Telkonet also has installed connected systems at hospitals, large apartment complexes, and government and military buildings.
The connected devices industry, also known as the Internet of Things (IoT), is growing and evolving rapidly, Tienor said. Indeed, researchers at Cisco Systems (NASDAQ: CSCO) have predicted that by 2020, the IoT will be a $14 trillion industry, encompassing an estimated 50 billion connected devices.
Telkonet is a small player in the emerging sector. The company reported net income of $3.7 million in 2017 on sales of $8.3 million. Its market value is currently about $23.9 million, and its stock hasn’t traded above $1 per share in a decade. News of the deal exploration bumped its stock price up a few cents, to about 18 cents apiece when the markets closed Friday.
Telkonet has several thousand shareholders, and none of them have a controlling interest in the company, Tienor said.
Tienor took the top job at Telkonet in 2007, following its acquisition of EthoStream, a company he founded six years prior. Last year, Telkonet sold its EthoStream division, which specializes in outfitting hotels and other large buildings with wireless Internet service, for $12.75 million in cash, according to an SEC filing. The buyer was Garden City, NY-based DCI Design Communications.
Tienor said it’s likely to be a matter of months before Telkonet and Roth have done enough research to potentially move forward with a deal. The timeline “really comes down to the number of conversations that we’re having and how they evolve,” he said.