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 ClickSoftware Technologies Ltd (UNKNOWN:CKSW.DL) rose as much as 28% on Thursday after the Israeli business software company announced that it had agreed to be acquired by private equity firm Francisco Partners for $12.65 per share in cash. (The stock closed Wednesday at $9.82 per share and was trading at $12.44 as of 1:45 p.m. Thursday.) The offer values ClickSoftware Technologies at roughly $438 million.
So what: In a crafty move, ClickSoftware took the opportunity to drown out a profit warning in the hullabaloo of the deal announcement. According to its "preliminary first quarter results," the company now expects revenues in a range of $26 million to $27 million (analysts' consensus estimate: $33.3 million) and a net operating loss, on a GAAP and non-GAAP basis, where analysts were looking for ClickSoftware to eke out $0.01 in earnings per share [GAAP stands for Generally Accepted Accounting Principles.] The warning is having absolutely no impact on the shares today; the price action reflects only news of the deal.
Now what: If you don't already own this stock, I don't recommend you buy it now to try to earn the arbitrage spread between the current price and the acquisition price (which would net you less than a 2% return, anyway). There are plenty of professional investors that play in this arena and individual investors bring no competitive advantage whatsoever to this game. If you're an existing shareholder, the narrow spread reflects the market's verdict that this is essentially a done deal -- enjoy the acquisition premium.