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: Apartment operator Associated Estates Realty Corporation (NYSE: AEC) jumped more than 16% at the market open today on news that it plans to sell itself to a unit of Brookfield Asset Management (NYSE:BAM) in a deal valued at $2.5 billion. Its shares leaped to $28.45, just under the $28.75 per-share cash bid for the company.
So what: Associated Estates Realty Corporation has been under the gun of activist investor Jonathon Litt, who has voiced his disappointment with the company's operating and share price performance in recent months. In December, Associated Estates put itself in play, announcing that it would be open to an acquisition at the right price, hiring bankers to pursue a possible sale.
The deal comes just two days after Associated Estates released a sternly worded objection to board nominees proposed by Litt, who is active in several other campaigns against companies including MGM Resorts and Macerich.
Now what: The deal is expected to close in the second half of 2015. Associated Estates will pay one last remaining dividend of $0.21 per share on May 1, 2015, but does not plan to pay any additional dividends before the deal closes. It also noted that its upcoming annual meeting has been "postponed indefinitely."
With shares trading at a modest 1% discount to the agreed acquisition price, the market clearly expects this deal to close without a hiccup.