Why EnergySolutions Shares Jumped

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 EnergySolutions (UNKNOWN: ES.DL  ) jumped as much as 12.8% today, on news of a buyout of the struggling company.

So what: Energy Capital Partners has agreed to buy the company for $3.75 per share, for a total deal of $1.1 billion. Two months ago, the company said it would have to sell assets to cut debt, and this was another way out for the board.

Now what: Usually, buyouts come with a larger premium than 9%, and investors have bid shares past the offer price during trading today. This usually means that they are expecting someone to come in with a better offer. That's a risky bet and, with little upside when the deal goes through, I would cash in my chips today.

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  • Report this Comment On January 23, 2013, at 12:25 PM, paddlinfaster wrote:

    I actually own a little ES (bought some at $3 & then more than doubled up when it was slammed down to $1.50) & I'm confused.

    This would be my 1st stock to go "private" & I'm confused why the stock price is now over the proposed buy-out price of $3.75 (today it's at $3.90). Is this because "people" know that the price will be raised due to stockholders' unhappiness with lowball offer?

    My original hope of owning this stock for years & seeing a 6-10 bagger does not look possible anymore but I'm still hoping the buy-out price is at least close to $5. What do you think are the chances?

    And one more question - say the stock price keeps going up into the $4.25 - $4.50 range, do you think this means the chances of the buyout price going up is good (because SOMEbody who "knows" something is doing the buying?

    When would it be announced when a buyout price is being raised? Or is it?

    Thanks for any info.

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