Please ensure Javascript is enabled for purposes of website accessibility

Why Ferro Stock Is Soaring Today

By Matthew DiLallo - Updated May 11, 2021 at 11:48AM

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 coatings and color solutions company had some big news.

What happened

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. 

So what

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. 

Businessmen shaking hands with arrows pointing upward overtop.

Image source: Getty Images.

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. 

Now what

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.

Matthew DiLallo 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.

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

Ferro Corporation Stock Quote
Ferro Corporation

*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 analyst team.

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 08/16/2022.

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.