Pentair Shares Jumped: 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 Pentair (NYSE: PNR  ) jumped 14% today when the company announced it would combine its business with part of Tyco (NYSE: TYC  )

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.

Interested in more info on Pentair? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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