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 Ann (NYSE: ANN) were up nearly 19% as of 12:45 p.m. Monday after the specialty apparel retailer announced it will be acquired by Ascena Retail Group (OTC:ASNA). Ascena shares were down 3.7% by 12:45 p.m.
So what: Per the terms of the agreement, Ann shareholders will received $37.34 in cash and 0.68 of an Ascena share for each share of Ann they own. In total, that values Ann at $47 per share, or a 21.4% premium over Friday's closing price. By afternoon Monday, ANN stock was trading at just under $46 per share.
Now what: Following the acquisition, Ann shareholders will own roughly 16% of the combined company, which will boast trailing-12-month sales of more than $7.3 billion from over 4,900 stores. The transaction is expected to close in the second half of 2015. By the end of the third year following the close, the companies expect to generate $150 million in annualized run rate synergies.
That's fair enough; by joining forces, Ascena and Ann are effectively creating an even larger retail giant focused exclusively on women's apparel. But as it stands, shares of Ann currently trade only slightly below the agreed acquisition price. As a result -- and keeping in mind the deal has yet to close -- if I were an Ann shareholder I would have no problem with taking profits and putting my money to work elsewhere.