February 16, 2012
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 Advance America (NYSE: AEA ) surged a whopping 33% on Thursday after Mexican company Grupo Elektra, owned by billionaire television mogul Ricardo Salinas, said it would acquire the payday lender for $656 million.
So what: The all-cash deal values Advance America at $10.50 per share and represents a 33% premium to its Wednesday closing price. The move also marks Elektra's first investment in the U.S. financial services market, putting Salinas under the eye of U.S. regulators who've recently been focusing on the payday lending space.
Now what: When you make 30%-plus 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 approval, after all, so Advance America investors shouldn't wait too long to book some of those juicy gains. While Advance America may now solicit competing bids for a 45-day "go-shop" period, holding out for a dramatically better offer seems a tad risky.
Interested in more info on Advance America? Add it to your watchlist.