October 11, 2010
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Gymboree (Nasdaq: GYMB ) jumped 22% today on news the company will be purchased for $1.8 billion by Bain Capital.
So What: After rumors that the company was up for sale to private equity buyers last month, Gymboree is selling itself for $65.40. This represents a 57.4% premium to the Sept. 30 closing price.
Now What: Gymboree can still solicit bids until Nov. 20, but given the premium paid by Bain, I'm doubtful bidders will emerge. As I'm writing the stock is trading at $64.97, so this could be a great exit point for shareholders who don't want to risk the deal falling through. It is unlikely Bain will back out, but there's always risk the deal won't close so it might be time to take your gains and run.
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