Why Lincare's Shares Surged

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 home-health-care services provider Lincare Holdings (Nasdaq: LNCR  ) were healthier than ever today, gaining as much as 22% in intraday trading after the company agreed to be purchased by the Munich, Germany-based Linde Group.

So what: Both longer-term Lincare shareholders and those who gambled on the rumors last week got a big win today as Lincare announced that it has agreed to be bought out by Linde for $41.50 per share in cash. In all, the deal will cost Linde $4.6 billion, but will give it a bigger presence in the massive U.S. healthcare market. 

Now what: As of March, Linde had just under $3 billion in cash on its books, but it's planning to raise $4.5 billion through an acquisition loan through the capital markets. While there's the possibility that Linde runs into roadblocks getting funding, it seems very unlikely. Investors appear to agree, as Lincare shares closed trading at $41.34 -- a mere 0.4% below Linde's offer price. While it's still in the realm of possibility that another buyer tries to step in, that seems like a bad bet -- analysts are already saying that Linde is paying a high price.

For those who currently hold Lincare shares, the question of whether to sell today or wait until the transaction closes really boils down to whether there are other good opportunities on your radar. Because the differential between the deal price and current price is so small, those with promising ideas waiting for capital can probably feel pretty comfortable selling now and moving the money elsewhere.

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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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