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: The new company will contain Pentair and Tyco's flow control business, making a dominant force in the industry. The company will be 52.5% owned by Tyco shareholders and 47.5% owned by Pentair shareholders.
Now what: The market is reacting to a potentially strong partnership that will retain the Pentair name. Tyco is in the process of breaking itself up and this is a piece of that strategy. The all-stock deal won't be a drain on Pentair's balance sheet and it could be a boon to earnings. Pentair thinks the deal could add $0.40 per share to earnings in 2013 and $5 per share by 2015, so this may be a great buying opportunity.
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