Why Buckeye Tech Shares Boomed

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 Buckeye Technologies (NYSE: BKI  ) soared 25% today after privately held Georgia-Pacific agreed to acquire the speciality fiber maker for about $1.5 billion.

So what: The all-cash deal values Buckeye at $37.50 per share and represents a 25% premium to its closing price on Tuesday. Georgia-Pacific is making the move to expand its cellulose offerings -- used in many personal-hygiene items -- and is the industry's biggest deal since Georgia-Pacific, itself, was gobbled up by Koch Industries in 2005. 

Now what: Georgia-Pacific plans to launch a cash tender offer for the outstanding shares of Buckeye, requiring a minimum of 75% to get the deal done. "Georgia-Pacific's acquisition of Buckeye will provide our company and our employees with exciting future growth opportunities," said Buckeye Chairman and CEO John Crowe. "We will continue to execute on our business plan in partnership with a committed new owner that has a long history of delivering superior business performance through its dedication to operational excellence and innovation." So with Buckeye shares probably all popped out at this point, lightening up on the position seems like the prudent thing to do.

Interested in more info on Buckeye? Add it to your watchlist.


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