Why Century Aluminum's Shares Jumped
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 Century Aluminum jumped 13% today after the company announced an acquisition.
So what: The company is buying the Sebree aluminum smelter for about $61 million in cash from a subsidiary of Rio Tinto Alcan. Century will assume $71 million in working capital and won't be liable for historical environmental liabilities at the plant.
Now what: This is an extremely low-cost acquisition and will add about 205,000 metric tons of aluminum capacity to the company. Management didn't make any predictions as to the impact on revenue or earnings but the assumed working capital makes this a very low risk acquisition. If Century Aluminum can live up to expectations over the next year I think the stock has room to run higher, fueled by this latest acquisition.
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The article Why Century Aluminum's Shares Jumped originally appeared on Fool.com.Motley Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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. The Motley Fool has a disclosure policy.