Why Vitacost.com, Inc. Stock Skyrocketed

Is Vitacost.com's stock move today meaningful or just another movement?

Jul 2, 2014 at 1:49PM

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 Vitacost.com (NASDAQ:VITC) soared 27% today after supermarket giant Kroger (NYSE:KR) agreed to acquire the online vitamin seller for about $280 million.

So what: The all-cash deal values Vitacost at $8 per share and represents a premium of 27% to its closing price on Tuesday. Kroger is making the move to expand its presence in online retailing and, judging by its own stock's flat trading today, Mr. Market isn't too upset with the price that management is paying to do it.

Now what: The transaction is expected to close in the third quarter of 2014. "Vitacost.com's core focus on healthy living products is complementary to our fast-growing natural foods business, and we intend to grow Vitacost.com's strong position in the online nutrition market," said Kroger CEO Rodney McMullen. "At the same time, we will build on Vitacost.com's eCommerce platform by integrating it with our existing digital offerings to create exciting new levels of personalization and convenience for our customers." So while Vitacost is likely all popped out at this point, Kroger's strengthening Internet presence might be worth looking into.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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