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 Varian Semiconductor
So what: The all-cash deal values Varian shares at $63 per share and represents a whopping 55% premium to its closing price on Tuesday. Applied Materials is paying about 14 times Varian's EBITDA, a bit pricey based on recent deals, but with the move giving Applied Materials direct access to the high-growth smartphone space, management believes Varian is well worth the price.
Now what: Varian's upside is obviously limited at this point, but Applied Materials might be worth considering. Given its cash-generating prowess, Applied Materials should be able to pay down the deal-related debt in relatively short order, so the move won't stress its financial position all that much. And while management may have paid too full of a price for Varian, Applied Materials' growth prospects have surely improved.
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