Lakeside Steel Inc. (CVE:LS) (PINK:LKSSF) share price is staying high since it gaped up 286% this Tuesday upon positive news. The accompanying trading volume topped 4 million during the session and the stock continues to attract exceptionally high interest from traders.
On December 20 the company announced a non-binding letter of intent with a potential buyer which offered to acquire the business at 40 cents per share. Naturally the stock price will try to get to this level before the acquisition occurs, however since the buyer was not identified it leaves a lot of speculation behind this potential agreement.
In reality there is currently nothing material that could justify the bloated price – it is all based on pure expectations. Not only there is no definitive agreement the acquisition would require to satisfy a lot of conditions before the companies can proceed. The due diligence should be complete before January 9, 2012 which will or will not be followed by a final acquisition and lock-up agreements.
The company has delayed their plans to take out a $22.5 million loan and do a $7.5 million private placement until the due diligence is complete.
In light of uncertainty it can be expected for the share price to either stay in consolidation at its current rate or slowly decline until the company announces further details.
