Shares of CEB Inc. (NYSE:CEB) were up 21.1% as of 11:30 a.m. EST Thursday after the best practices insight and technology company entered into a definitive agreement to be acquired by Gartner (NYSE:IT). Shares of Gartner are down around 8.6% as of this writing.
Gartner will acquire CEB in a cash and stock deal valued at roughly $2.6 billion, and at an enterprise value of $3.3 billion including Gartner's assumption of $0.7 billion in CEB net debt. CEB investors will receive $54.00 in cash and 0.2284 shares of Gartner common stock for each share of CEB they own, which equates to approximately $77.25 per share based on Gartner's closing price yesterday. For perspective, that also represents a premium of 25% to CEB's close yesterday, 31% to its 30-day volume weighted average closing price, and a 41% premium to its 60-day average.
"We are excited about joining forces with CEB, a world-class company we have long admired," stated Gartner CEO Gene Hall. "Our highly complementary business models will create the leading global research and advisory company for all major functions in the enterprise."
Hall added that the acquisition should "create value for our shareholders in both the near and long-term, including immediate accretion on an adjusted EPS basis."
Gartner will fund the acquisition through a combination of cash on hand, its existing credit facility, and new debt financing. And assuming the deal -- which has been unanimously approved by both companies' boards of directors -- closes as expected in the first half of 2017, Gartner will own 91% of the combined company. CEB shareholders will own the remaining 9%.
All told, I see little that could prevent this acquisition from being completed. So with shares trading within half a percent of the agreed acquisition price (after accounting for Gartner's decline today) -- and unless waiting a little longer to sell might result in more favorable long-term capital gains tax treatment -- I think CEB investors would be wise to take their gains and put them to work elsewhere.