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Why Lattice Semiconductor Corporation Pulled Back Today

By Daniel Sparks – Mar 1, 2016 at 12:32PM

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Are buyout rumors driving volatility in the stock price?

L-ASC10 BREAKOUT BOARD BY LATTICE SEMICONDUCTOR. IMAGE SOURCE: LATTICE SEMICONDUCTOR.

What: Chip maker Lattice Semiconductor (LSCC 6.53%) shares fell as much as 16.7% Tuesday morning but are trading about 8% lower at the time of this writing. The stock's decline follows rumors that the company is exploring a deal to be acquired by a Chinese company.

So what: The company "is exploring a sale that has attracted interest from a prospective Chinese buyer, according to people familiar with the matter," Reuters reported recently.

The company is working with investment bankers at Morgan Stanley to review proposals from potential buyers, according to Reuters.

Lattice has previously been identified by analysts as a good candidate for an acquisition during the high volume of consolidation occurring in the semiconductor industry recently, giving this news some substance. 

Some investors may be worried the buyout price may not offer a premium to the stock's market price, hence the decline in the stock price. But it's not clear that this ongoing speculation is the cause of the volatility. So, it's also possible the move may not be related to any particular news.

Now what: Investors can keep an eye on buyout rumors if they feel inclined. But there's no reason to adjust any investment thesis until details of potential deals are public and can be analyzed.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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