Baldor Electric 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 industrial motor maker Baldor Electric (NYSE: BEZ  ) surged a staggering 40% after agreeing to be acquired by Swiss giant ABB (NYSE: ABB  ) in a deal worth $4.2 billion.

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. 

Interested in more info on Baldor? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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