There's another buyout in the Rule Breakers scorecard.
Bare Escentuals (NASDAQ:BARE), the maker of mineral-based cosmetics, is being acquired in a $1.7 billion deal. Japan's Shiseido will pay $18.20 a share in the all-cash transaction, a healthy 43% premium to last night's close.
This isn't too shabby for a stock that was trading as low as $2.45 back in March.
Sarah Goddard recommended Bare Escentuals to Motley Fool Rule Breakers two summers ago.
"Bare Escentuals defined a niche, built it, and then took on the mainstream as the world's first, largest, and most recognized maker of all-natural mineral makeup," she wrote at the time. "Bare Escentuals stacks up well against other cosmetics companies, with higher growth and operating margins."
One of the bittersweet benefits of investing in disruptive speedsters is that they are prime prey for larger companies. Whether it's a mature acquirer looking to jump-start its growth or simply a worried behemoth with a "kill it in the crib" mentality, small growth stocks that are redefining industries are often taken out at healthy premiums.
Bare Escentuals isn't the first active recommendation in the growth-stock newsletter service to be snapped up, of course.
- Microsoft (NASDAQ:MSFT) bought aQuantive in a whopping $6.6 billion deal.
- CBS (NYSE:CBS) beefed up its dot-com foothold with CNET Networks.
- ProFlowers.com parent Provide Commerce was clipped by Liberty Media Interactive (NASDAQ:LINTA).
- eBay (NASDAQ:EBAY) expanded overseas when it bid on South Korea's Gmarket.
- Illinois Tool Works (NYSE:ITW) took to Click Commerce.
- Bankrate generated "interest" from eventual buyer Apax Partners.
None of this means that investors should buy into disruptive growth stocks with expectations of a buyout at higher prices. That is not a reasonable Plan A. Investors need to find stocks that will appreciate on their own merits. If an industry bigwig or private-equity firm comes around to seeing it the same way at a higher price point down the road, that's just exit-strategy icing on the cake.
Bare Escentuals was attractive to Goddard when she saw the brand's breakthrough and appealing cosmetics selling briskly at Sephora, Ulta, and QVC. Global cosmetics giant Shiseido is just coming around -- fashionably late, as most buyouts are -- with the ladle to scoop out the gravy.
Do you own any stocks that you think are buyout bait? Make your case in the comments box below.
