Please ensure Javascript is enabled for purposes of website accessibility

Why Leaf Group Stock Soared Today

By Joe Tenebruso - Apr 5, 2021 at 4:20PM

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 digital media specialist is getting bought out.

What happened

Shares of Leaf Group (LEAF) surged 21% on Monday after it agreed to be acquired by Graham Holdings (GHC -2.03%)

So what

Graham Holdings will acquire all of Leaf Group's outstanding stock for $8.50 per share, representing a 21% premium to its closing price on April 1. The all-cash deal values Leaf Group at roughly $323 million.

Two people are shaking hands.

Image source: Getty Images.

After receiving Graham Holdings' bid on Feb. 9, Leaf's Board of Directors tasked Moorgate Securities LLC to shop the deal. After 10 potential buyers declined to submit a competing bid, Leaf's board accepted Graham's offer.

"After thoroughly reviewing the strategic alternatives available to Leaf Group, the Board of Directors concluded that this all-cash premium transaction with Graham Holdings achieved the Board's long-term objective of fully recognizing the value of the business and delivers immediate and substantial cash value to our shareholders," Leaf Chairperson Deborah Benton said in a press release.

Now what 

Leaf's digital media portfolio -- which includes fitness brands Well+Good and, as well as art and home design brands Saatchi Art and Society6 -- experienced strong growth during the coronavirus pandemic. Leaf's revenue rose 44% year over year to $65 million in 2020. 

As a diversified holding company, Graham Holdings can provide financial support to accelerate Leaf's expansion. "Together, we look forward to continuing to build on the strong momentum Leaf Group generated over the past year, with the additional resources and expertise of Graham Holdings helping us further grow the reach of our young brands and innovate for our customers, creators, and audiences," Leaf CEO Sean Moriarty said.

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

Leaf Group Ltd. Stock Quote
Leaf Group Ltd.
Graham Holdings Company Stock Quote
Graham Holdings Company
$597.14 (-2.03%) $-12.35

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

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.