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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.
So what: Baldor shareholders will receive $63.50 a share, representing a whopping 41% premium to yesterday's close. The deal, from which ABB believes it will realize more than $200 million in annual savings and global synergies, is expected to close in the first quarter of 2011 as both boards have given their approval to go forward.
Now what: There's nothing left to do for Baldor shareholders to do now but sell and celebrate. Baldor may be the market leader in the U.S. with tasty North American distribution channels, but the premium being offered by ABB is substantially higher than the average premium paid for similar companies over the past five years. With the deal still conditional on most of Baldor shareholders tendering their shares, it just seems like a prudent time to cash out.
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