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Why Ferro Corporation's Shares Popped 15% Late Friday

By Travis Hoium - May 6, 2016 at 4:32PM

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Could a buyout of this materials company be in the cards?

Image source: Ferro.

What: Shares of specialty materials company Ferro Corporation (FOE) jumped 15% in late trading Friday after it was reported that the company is exploring a sale.

So what: The Wall Street Journal and Reuters are reporting that investment bank Lazard has been hired to look into selling Ferro Corporation. If they are correct, a second round of bids has already been received, indicating that there's at least some interest. But at this point, we don't know if there will be a deal and at what price.  

Now what: Speculating on buyouts is risky business, and if nothing materializes, Ferro's shares could lose everything they gained today and more. But if you see value in the business, a buyout could provide further upside. I just wouldn't buy on speculation alone.

At this point, it's probably a matter of time before management has to say whether a sale is possible. Until it comments, this is a pop I am staying away from.

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