Please ensure Javascript is enabled for purposes of website accessibility

Why Global Cord Blood Corporation Stock Is Jumping Today

By Prosper Junior Bakiny - Mar 2, 2021 at 12:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company received an acquisition offer.

What happened?

Shares of Global Cord Blood Corporation (CO 1.89%), a provider of umbilical cord blood stem cells storage, are rising sharply on Tuesday, following the company's announcement of an unsolicited non-binding acquisition proposal. As of 12:25 p.m. EST, Global Cord Blood's stock was up by 11.5% after popping by as much as 14.6% earlier in the day.

So what

Global Cord Blood announced that it has received an acquisition proposal letter from Alternate Ocean Investment Company Limited, a subsidiary of Hong Kong-based investment bank Haitong International Securities Group Limited. Alternate Ocean is acting on behalf of an unnamed third party in this proposed transaction.

The offer is to acquire all outstanding shares of Global Cord Blood for $5 per share. The company's shares closed Monday's trading session at $4.32 apiece.

Man standing in front of two doors with three question marks over his head.

Image source: Getty Images.

The roughly 15.7% premium (based on Global Cord Blood's closing price as of yesterday) explains why investors are bidding up shares of the healthcare company today. However, it's important to remember that this offer isn't a binding one at this time. Global Cord Blood's board of directors will discuss the proposed acquisition and decide whether to move forward with it or reject it.

Now what

What should long-term investors do with this news? Trying to profit off the short-term gains that Global Cord Blood is experiencing today is certainly a risky move. After all, if the company's board of directors decides to reject the acquisition offer, its stock could fall. And if the offer advances, it's much better to decide whether to buy Global Cord Blood's stock based on its underlying business (and that of its would-be acquirer) than based primarily on today's news.

In other words, like much of the day-to-day fluctuations on the stock market, there isn't too much to see here for investors focused on the long game. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Global Cord Blood Corporation Stock Quote
Global Cord Blood Corporation
CO
$2.69 (1.89%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.