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Why Rogers Shares Are Soaring Today

By Anders Bylund – Nov 2, 2021 at 1:53PM

Key Points

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The engineered materials specialist just announced modest third-quarter results -- and a buyout bid from an industry giant.

What happened

Shares of engineered materials expert Rogers (ROG 0.89%) skyrocketed on Tuesday morning. First, the company reported third-quarter results as expected. Then, however, market makers largely ignored the mildly disappointing report to focus on a game-changing event. Chemicals titan DuPont de Nemours (DD -0.24%) is buying Rogers in an all-cash deal worth $5.2 billion.

Rogers stock gained approximately 30% on the news, trading 29.7% higher as of 12:40 p.m. EDT.

So what

Let's take a peek at the earnings report first. Rogers saw top-line sales rise 18% year over year to $238 million. Adjusted earnings increased from $1.45 to $1.64 per diluted share. Electric vehicles provided fuel for Rogers' growth, but the ongoing shortage of microprocessors limited the company's third-quarter success. The analyst consensus had called for earnings of roughly $1.78 per share on sales near $240 million, and Rogers fell short of these targets.

At the same time, Rogers accepted DuPont's generous takeover offer at $277 per share. The price tag represents a 33% premium over Rogers' closing price on Monday evening and a 46% value boost over the average share price in the last 30 days.

The acquisition is subject to the usual battery of shareholder votes and regulatory approvals. The companies expect to get the final John Hancocks in place during the second quarter of calendar year 2022.

Person painting a mural of a large yellow fish about to swallow a smaller yellow fish.

Image source: Getty Images.

Now what

Assuming that the transaction is completed as planned, Rogers will give DuPont a robust presence in the electric and autonomous vehicle markets. Rogers also brings significant exposure to the global rollout of 5G wireless networks, where the company provides special materials for 5G antennas, high-speed data cables, and more.

The deal should dovetail neatly with DuPont's recent buyout of electromagnetic shielding specialist Laird Performance Materials -- another significant player in the electric vehicle space. DuPont also reported quarterly results this morning, edging out analyst projections across the board. Reacting to the solid results and the promising prospects of the Rogers deal, the chemicals giant's shares traded 8% higher as of early afternoon.

Rogers' shareholders are likely to approve DuPont's proposed deal terms. Hovering just below the official buyout price, Rogers shares have gained 130% in 52 weeks and tripled in five years.

Anders Bylund 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.

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