What happened

Shares of building products maker Ply Gem Holdings Inc (NYSE:PGEM) are up more than $3.30 per share to $21.42 as of 12:10 p.m. EST on Jan. 31. The big jump is related to a press release announcing that the company has entered into a definitive agreement to be acquired by private equity firm Clayton, Dubilier & Rice in an all-cash deal worth $2.4 billion. 

So what 

According to the terms of the deal, CD&R will pay shareholders of record $21.64 per share in cash when the deal closes, which is expected to happen in the second quarter of 2018. CD&R announced it had also entered into an agreement to acquire a portion of privately held Atrium Windows & Doors, with plans to combine that company with Ply Gem. 

Smiling man with his arms held high as money rains down on him.

Image source: Getty Images.

Together, the new company would generate some $2.4 billion in annual sales of exterior building products. Once the two deals complete, CD&R would own 70% of the combined company, with the remaining 30% being held by other private equity groups with a stake in Atrium. 

Now what

It may be tempting to hold on to your shares or buy in on speculation of a competitive bid running up the price for Ply Gem, but that's not a tactic I would recommend. Ply Gem shareholders owning more than 50% of the company have already issued written consent approving the transaction, so this is essentially a done deal. 

There are two reasons current investors may want to consider holding until the deal closes: First, if you have owned your shares for less than one year and they're in a taxable account. If you can get past the one-year mark, it would be the difference between being taxed 15% (or 20%) as a long-term gain, or your marginal income tax rate (which would certainly be higher) as a short-term gain. Secont, if you don't have any better ideas for the proceeds, you would get the full $21.64 per share if you hold until the closing, about a 1% premium above today's price. 

If you are ready to sell, click the link below for some of The Motley Fool's best new ideas for your proceeds. 

Jason Hall has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.