Why Kaydon Shares Soared

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 Kaydon (NYSE: KDN  ) soared 23% today after Sweden's SKF, the world's biggest bearings maker, agreed to acquire it for $1.25 billion in cash.

So what: The deal values Kaydon at $35.50 per share and represents a healthy 22% premium to its closing price on Wednesday. SKF is making the move to bolster its position in the U.S. and lower its dependence on the still-sluggish European market which accounts for about half of its business.   

Now what: SKF expects the deal to generate about $30 million in annual cost savings and roughly $50 million in sales synergies. "We have followed the development of Kaydon for a long time," said SKF President and CEO Tom Johnstone. "The complementary nature of their products and technologies, their geographical and customer presence and their manufacturing footprint will enable us to even better serve our customers and distributors in the industrial market worldwide." So, while Kaydon may now solicit competing bids for a 40-day "go-shop" period, holding out for a dramatically better offer doesn't seem prudent.

With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2624132, ~/Articles/ArticleHandler.aspx, 10/1/2014 2:27:48 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement