The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Isaac Pino and Blake Bos discuss topics around the investing world.
It was announced early today that 3M will buy ceramic-components maker Ceradyne for $35 a share and a total net sum of $670 million. The news shot shares of Ceradyne into the stratosphere, closing the day up 43%. Current 3M shareholders appeared to be content with the deal, with shares closing up nearly 1%.
3M believes the acquisition will help it expand into the ceramics business, as its technology becomes more prevalent in modern-day applications like ball bearings and defense applications. The deal will add $500 million to 3M's revenue and $0.01 to earnings per share, excluding acquisition costs.
3M CEO Inge Thulin had mentioned there are potential deals in the pipeline, and the company will probably pursue larger deals. Investors can only wonder whether this is one of the first of these potential acquisitions.
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Blake Bos and Isaac Pino have no positions in the stocks mentioned above. The Motley Fool owns shares of Ceradyne. Motley Fool newsletter services recommend 3M. 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. The Motley Fool has a disclosure policy.