Why Supertex, Inc. Shares Skyrocketed

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 thesis.

What: Shares of Supertex, (NASDAQ: SUPX  )  jumped more than 35% Monday after Microchip Technology (NASDAQ: MCHP  )  announced it has agreed to acquire the semiconductor manufacturer for $33 per share. 

So what: The deal values Supertex at approximately $394 million, including cash and investments on its balance sheet of approximately $148 million. What's more, the acquisition is expected to close sometime in the second quarter, and should be accretive to Microchip's adjusted earnings per share in Q3. 

Now what: Keep in mind while the acquisition has already been given the go-ahead by both companies' boards of directors, it's not a done deal as it still requires the approval of Supertex's shareholders. A number of law firms have also stepped out to suggest the deal may not be in Supertex investors' best interest. With Supertex stock currently trading just pennies below the acquisition price, I think shareholders would be wise to take profits after today's pop.

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