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Why Shares of Schawk Inc. Popped Today

By Travis Hoium - Mar 17, 2014 at 4:17PM

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Is this meaningful or just another movement?

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 Schawk (NYSE: SGK) jumped 36% today after the brand development company announced it is being acquired.

So what: Matthews International ( MATW 1.28% ) said it will buy the company for cash and stock for an implied $20 per share. That covers $11.80 per share in cash and 0.20582 shares of Matthews stock for each Schawk share.  

Now what: With the acquisition, Matthews expects to build a global brand solution company. According to a press release, it also anticipates $35 million to $45 million in annual cost savings synergies, a buzzword that's often used in acquisitions. However, the cost savings rarely turn out to be as big as expected.

There's only a penny or two of upside for investors; if you've been looking to sell shares, today would be the day to do it. Unless the price is increased there's really no reason to hang onto the stock because you risk the deal falling through.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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