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 Protective Life Corp. (NYSE: PL) are trading 11% higher today following news that Japan's Dai-ichi Life Insurance is planning to spend approximately $5 billion to buy an American insurer. Protective Life is the only insurer named in most reports, but its current market cap ($4.6 billion) remains a bit below the rumored buyout price.
So what: The news of Dai-ichi's intentions broke first in Japan's Nikkei financial newspaper, which lends its name to the popular Japanese market index. Early reports stated that Dai-ichi was prepared to spend up to 500 billion yen, which translates to roughly $4.9 billion. Dai-ichi has since responded with a public statement confirming its interest in an American acquisition, but denying any specific interest in Protective Life. Protective Life, for its part, has stated that it is company policy not to comment on speculative media reports.
Now what: If Protective Life does sell to Dai-ichi, it could still pull in a further 7% premium, which is not worth the risk for investors who might jump in after today's 11% pop. However, Protective Life is worth keeping an eye on if the deal doesn't materialize, as it's been a four-bagger over the past five years, with EPS growth of over 200% and a dividend that's doubled since late 2009. Shares will drop if the deal falls through, and that might present a good buy-in opportunity for eagle-eyed investors.
