Delphi Shares Jumped: What You Need to Know

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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.

What: Shares of specialty insurer Delphi Financial (NYSE: DFG  ) were skyrocketing today, gaining as much as 73% in intraday trading after Japan's Tokio Marine announced that it's buying Delphi.

So what: Under the terms of the deal, Tokio Marine will pay $43.88 per A share and $52.88 per B share of Delphi. In addition, each share will receive a $1 special dividend. In total, Tokio Marine is paying $2.7 billion for Delphi.

For Tokio Marine, the buy gives it a bigger foothold in the U.S. insurance market. The company made its first splash in the U.S. by buying Philadelphia Consolidated in 2008.

Now what: For Delphi Financial shareholders, the question now is whether to cash in at the $44 that the market is offering right now, or wait to cash in the full offer. For individual investors, the choice largely boils down to whether you see better opportunities for your money. If you have some stocks on your radar that you think have good upside potential and have been waiting to invest in, this could be the time. If, on the other hand, you don't see a whole lot of great options right now, it may be worth sticking around for the final couple of percentage points available from this deal.

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Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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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.

  • Report this Comment On December 21, 2011, at 6:08 PM, prginww wrote:

    Besides the common stock, Delphi also has a preferred stock (or an exchange traded debt security) with the symbol of DFP. The call price is $25 and when the announcement was made the price jumped around .90 to approx $24.95.

    I decided to contact Investor's Services and was told that DFG would become a subsididary of the Japanese company, but there was a good chance that DFP would be not be called, but rather taken off the NYSE and traded privately. I had no idea what this meant, but decided to sell around 1,000 shares I owned. When the market closed, I noticed that it dropped from the high and ended up .45 for the day. If you own DFP, you better do some work to determine what will happen to the stock once sold as it may not be as liquid as it currently is.

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