Shares of Ferro (FOE) were trading more than 22% higher as of 10:45 a.m. EDT on Tuesday. Driving that rally was news that the technology-based coatings and color solutions company had accepted an acquisition proposal.
Ferro has accepted a buyout offer of $22 per share from Prince International, a portfolio company of the private equity firm American Securities. The all-cash deal values Ferro at $2.1 billion, including the assumption of debt. That's 12.4 times its trailing 12-month adjusted EBITDA. The per-share purchase price represented a 25.1% premium to its closing price Monday and was 33.8% above its 90-day volume-weighed average price.
The company also reported its first-quarter results Tuesday. Net sales rose 14.3% to $288.4 million, which beat analysts' expectations by nearly $28 million. Meanwhile, its earnings jumped 15.8% to $0.22 per share, which was $0.01 per share above analysts' consensus estimate.
While Ferro reported a stronger-than-expected quarter, all eyes are now on the transaction that will take it private. The deal comes at a healthy premium, making it less likely that a competing bid will emerge. Given that the stock rallied to more than $21.50 a share following the announcement, there's not much upside left. Because of that, shareholders might want to consider cashing out now rather than risking the deal falling apart before closing.