Why Boise Shares Skyrocketed

Before you go, we thought you'd like these...
Before you go close icon

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 packaging and paper products company Boise soared 26% today after larger rival Packaging Corp. of America agreed to acquire it for $1.27 billion.

So what: The transaction values Boise at $12.55 per share and represents a juicy 26% premium to its closing price on Friday. Packaging Corp. is making the move to increase its container board capacity in order to support growth, and judging by its own stock's 7% jump today, Wall Street is pleased with the price management is paying to do it.

Now what: The deal -- which is expected to close in the fourth quarter -- will boost Packaging Corp.'s containerboard capacity from 2.6 million tons to 3.7 million tons and should increase its corrugated products volume by roughly 30%."The acquisition is an excellent fit, both geographically and strategically, with unique and substantial synergies," said Packaging Corp. Chairman  Paul Stecko. "The combined company is expected to generate strong financial results and strong cash flow which will be used to pay down debt as well as to continue to return value to our shareholders." So while Boise is likely all popped out at this point, Packaging Corp.'s newly bolstered capacity and growth prospects might be worth looking into. 

More Stocks to Consider
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article Why Boise Shares Skyrocketed originally appeared on Fool.com.

Fool contributor Brian Pacampara 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading