Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of energy-services company Superior Energy Services
So what: The merger, announced early this morning, will see Superior end up the surviving company as it combines with the now-larger Complete. Complete shareholders will pocket $7 in cash and end up with 0.945 shares of Superior for each Complete share that they currently own. Superior will also pick up about $650 million of Complete's current debt. The price paid is a 29% premium to the two-month average price for Complete's stock, but the stock has been on a downtrend over that stretch. Based on Friday's closing price for both stocks, the one-day premium was a hefty 61%.
Now what: Based on Superior's stock performance today, it would appear that investors are not terribly stoked about this deal. A primary concern may be that the company is overpaying for Complete. Based on Friday's closing prices, the deal values Complete at right around six times its trailing 12-month EBITDA, which, on a historical basis, doesn't seem like a crazy price. However, with Complete's stock -- and the stocks of the rest of the sector -- in the dumps lately, investors may think that there was a better deal to be struck.
Want to keep up to date on these stocks?
Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.