November 28, 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 machinery systems-maker Sauer-Danfoss (NYSE: SHS ) jumped in midday trading today, gaining as much as 34% on news of a buyout offer from majority owner Danfoss.
So what: In a deal valued at $580 million, Danfoss plans to purchase the remaining 24% share of Sauer-Danfoss for a per-share price of $49. Danfoss had sent a letter to Sauer-Danfoss' board saying it hoped an amicable agreement could be worked out by the end of the year. Sauer-Danfoss makes electronic and hydraulic systems involved in steering and other functions in machinery, while the Denmark-based Danfoss is a major player in energy-efficient industrial systems.
Now what: This one looks pretty straightforward. Shares of Sauer-Danfoss notably rose above the $49 threshold, indicating that the market may be expecting a higher price. Shareholders may want to sell now while they can get a premium over the $49 buyout offer. Considering Danfoss already owns a majority of the smaller company, the deal is likely to go through.
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