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Why Imperva Inc. Stock Soared Today

By Steve Symington – Sep 23, 2016 at 10:24AM

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The security software company is reportedly fielding buyout interest.

Image source: Imperva Inc.

What happened

Shares of Imperva Inc. (NYSE: IMPV) were up 20.1% as of 11:00 a.m. EDT Friday following reports the cybersecurity software specialist may be an acquisition target.

So what

According to a Bloomberg report citing "people with knowledge of the matter," Imperva's effort with Qatalyst Partners to find a buyer has resulted in interest from not only publicly traded tech behemoths including both Cisco Systems and IBM, but also private equity firm Forcepoint, a joint venture owned by Vista Equity Partners and Raytheon. And while it's unclear exactly what price Imperva could command for its business, Bloomberg's sources revealed bids are due in roughly two weeks.

Now what

That's not to say this should come as a big surprise. As fellow Fool Leo Sun pointed out recently, Bloomberg already reported Imperva hired Qatalyst partners in early July to explore a potential sale -- a move that came after activist investor Elliot Associates revealed a 10% stake in the company, and after Imperva received "unsolicited takeover interest." In fact, Leo even suggested at the time, "Imperva's market-leading WAF technology would be a good fit for many larger tech companies with growing security portfolios like Cisco and IBM."

That said, acquisitions like these are never a sure thing. And while it's encouraging that Imperva is reportedly receiving interest from multiple companies -- so could enjoy the fruits of a bidding war once the offers are revealed -- today's pop makes the stock significantly less attractive if such a buyout was a significant part of your thesis. As such, I think Imperva investors would be wise to take at least some of today's quick profits off the table.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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