Sommer Company has experienced the following results over the past three years.

The price of Sommer€™s common stock has declined steadily over the three-year period. At the end of year 3, it is trading at $10 per share. Early in year 4, Bottom Fischer, who specializes in taking over poorly performing businesses, has offered shareholders of Sommer $18 per share for their stock. Why would Fischer be willing to pay such an amount? What does he see in the company that suggestsvalue?

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Year (In thousands) Net income (loss) Depreciation and amortization Net cash flow from operating activities Net expenditures for plant assets 2 3 $2,000 $(10,000) $ (8,000) (11,000) (14,000) 18,000 5,000 13,000 9,000 15,000 6,000