OfficeMax Shares Popped: What You Need to Know 

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: Shares of office supplies retailer OfficeMax (NYSE: OMX  ) jumped more than 10% in intraday trading amid buyout rumors. The excitement was sparked when an analyst at JPMorgan Chase suggested that the company could be a good buyout target because of the room the company has to improve operations, along with the stock's valuation.

So what: It's no stretch of the imagination to think that a retailer like OfficeMax could be a takeover target. The company has the strong cash flow that private equity buyers like to see, and both P/E players and strategic buyers in the retail sector have been back on the acquisition trail lately. On Monday, Gymboree (Nasdaq: GYMB  ) agreed to sell itself for $1.8 billion to Bain Capital, while Unilever (NYSE: UL  ) said late last month that it's buying Alberto-Culver (NYSE: ACV  ) .

Now what: Buyout rumors often prove to be just that -- rumors -- and the excitement of a buyer charging in and paying a big premium ends up fading. So investors who have their eyes on OfficeMax now are well-advised to get interested in the underlying company and the stock's valuation, not just the hope for a buyout. The same holds true for other rumored buyouts including Office Depot (NYSE: ODP  ) -- also mentioned by the JPMorgan analyst -- and Avon Products (NYSE: AVP  ) , which it has said could be snapped up by L'Oreal, Procter & Gamble (NYSE: PG  ) , or Unilever.

Interested in more info on OfficeMax? Add it to your watchlist by clicking here.

Unilever is a Motley Fool Global Gains recommendation. Procter & Gamble and Unilever are Motley Fool Income Investor recommendations. The Fool owns shares of and has written covered calls on Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his Motley Fool CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policyassures you no Wookiees were harmed in the making of this article.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1329741, ~/Articles/ArticleHandler.aspx, 8/30/2014 10:38:07 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement