Why Warner Chilcott's Shares Popped

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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 Ireland-based pharmaceutical company Warner Chilcott (NAS: WCRX) were soaring today, gaining as much as 13% in intraday trading.

So what:The Times of London reported that German pharma giant Bayer may be getting ready to buy Warner Chilcott for $32 per share. With shares still trading at less than $20 after today's jump, there's obvious reason why investors would be excited about this rumor. Today's rumors follow closely on a Reuters' report from earlier in the week that claimed Bayer "is close to making a multi-billion euro acquisition to bolster its health care division."


Now what: Are the rumors about Bayer going shopping for acquisitions true? And, if they are, is Warner Chilcott really the target? If the answer to both turns out to be "yes" and the rumored buyout price proves on target, it would be a big boon to current shareholders.

But should investors be betting on these rumors being true? From the perspective of this stodgy Fool, investing is about buying businesses to become an owner, not speculating on rumors. So you can probably guess how I'd answer that question.

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At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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