Why InvenSense, Inc. Stock Skyrocketed 67.4% in December

The motion-sensing chip company is being acquired. Here's what investors need to know before that happens.

Steve Symington
Steve Symington
Jan 3, 2017 at 7:18AM
Technology and Telecom

Image source: InvenSense, Inc.

What happened

Shares of InvenSense Inc. (NYSE:INVN) jumped 67.4% in the month of December, according to data provided by S&P Global Market Intelligence, after the motion-sensing chip company agreed to be acquired by Japan-based TDK Corp. (NASDAQOTH:TTDKY).

So what

The jump came in two stages. First, InvenSense stock rose almost 30% in a single day on Dec. 9, 2016, as Reuters reported that TDK had offered $12 per share to purchase the smaller company. That offer would have reflected a 45% premium to InvenSense's opening price that day, but still only 3% above its 52-week high set around the same time a year earlier. 

Then after hovering just below $11 per share for the next week and a half, InvenSense shares jumped another 18% on Dec. 21, 2016 as the two companies made it official. TDK ultimately increased its offer to $13 per share, representing a 52.4% premium over InvenSense's 60-day volume-weighted average trading price as of the previous day's close. 


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Now what

Shares of InvenSense currently trade at $12.79 as of this writing, or a minuscule 1.6% discount to the acquisition price. This reflects the near certainty that this deal -- which has already been unanimously approved by both companies' boards of directors -- will be completed as expected in the second quarter of InvenSense's fiscal year ending March 31, 2018. As such, I think InvenSense investors would be wise to take their profits and put them to work elsewhere.