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 RF Micro Devices, (NASDAQ: RFMD) jumped 21% Monday after the company announced it would merge with TriQuint Semiconductor (NASDAQ:TQNT.DL).
So what: The all-stock transaction is expected to close in the second half of this year, will create a new company with combined revenue of more than $2 billion, and should result in cost synergies of at least $150 million the first two years after closing.
Former shareholders of RF Micro and TriQuint will each own half of the combined company post-merger, and RF Micro shareholders specifically will receive one share of the new company for each share of RF Micro they already own. Upon closing, the companies will execute a one for four reverse stock split resulting in approximately 145 million shares outstanding.
Now what: To be sure, today's press release points out the merger combines two companies with largely complementary product sets, which could effectively serve to boost their prospects for supplying a larger chunk of the chips required by electronics titans like Samsung and Apple. As a result, while I wouldn't go diving in head first today, I still can't blame RF Micro Devices shareholders for hanging onto at least part of their positions even after the pop.