March 28, 2011
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 e-commerce services specialist GSI Commerce (Nasdaq: GSIC ) soared a staggering 50% on Monday after eBay (Nasdaq: EBAY ) agreed to buy the company for about $2.4 billion.
So what: The all-cash offer values GSI at $29.25 per share and represents a massive 51% premium to its Friday closing price. eBay has been steadily losing market share to main e-commerce foe Amazon.com (Nasdaq: AMZN ) in recent years, but the move should help it do a much better job connecting buyers and sellers through a greatly expanded distribution network.
Now what: When you make 50% in one morning, taking at least some dough off the table seems like the prudent thing to do. The deal is still subject to regulatory and shareholder approvals, after all, so GSI investors shouldn't wait too long to book some of those juicy gains. While GSI may now solicit competing proposals for a 40-day "go-shop" period, holding out for a dramatically better offer seems risky.
Interested in more info on GSI? Add it to your watchlist.