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 Emulex Corp. (UNKNOWN:ELX.DL) jumped nearly 26% Thursday after the network connectivity specialist agreed to be acquired by Avago Technologies (NASDAQ:AVGO) for $8 per share. Avago stock also climbed more than 13% on the news of the acquisition and its earnings report.
So what: Avago expects to fund the transaction, which values Emulex at $609 million net of cash and debt acquired, with cash available on its balance sheet. Upon the deal's expected closing in the second half of Avago's fiscal year ending Nov. 1, 2015, the transaction should also be immediately accretive to Avago's adjusted earnings per share.
"Our leading portfolio is a strong complement to Avago's offerings and capabilities," stated Emulex CEO Jeffrey Benck in a press release, "accelerating our strategy to support next generation server and storage architectures."
Now what: Emulex stock is currently trading at exactly the offered price of $8 per share. So unless you have owned this stock for less than a year and hope to wait it out to take advantage of lower long-term capital gains taxes, I think Emulex shareholders would be wise to take profits now and put them to work elsewhere.