What: Shares of industrial parts maker Blount International Inc (NYSE: BLT) exploded 85% higher after agreeing to a buyout.
So what: American Securities, LLC, and P2 Capital Parners, LLC, agreed to buy Blount International for $855 million, including assumed debt. The deal will pay shareholders $10.00 per share, an 86% premium from Wednesday's closing price.
Blount has a 50-day "go-shop" period when it can seek a higher bid, but given the premium the company is getting, that might be a stretch for potential buyers.
Now what: The buyout price is still well below Blount's 52-week high of $17.97, but short-term, it's a great bounce for shareholders. Clearly expectations had gotten so low in recent months that management and private equity buyers thought more value could be generated without the scrutiny of a public company. Today would be a great time to take some risk off the table given the stock's trading within pennies of the buyout price, because the only upside potential is a better offer, and the downside risk is a deal falling through and shares potentially dropping to where they were yesterday.