Why TRW Automotive Holdings Corp. Stock Jumped

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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 TRW Automotive Holdings Corp.  were revving higher today, gaining as much as 12% after confirming it had received a buyout offer.

So what: The auto-parts supplier did not reveal who the potential acquirer nor did it attach a dollar figure to the press release acknowledging the offer, but according to Bloombergthe interested party is German auto supplier ZF Freidrichshafen AG. In its statement, TRW only said that it had received a "preliminary, non-binding proposal" to purchase the company, and that it had retained Goldman Sachs as an advisor on the matter. 

Now what: In a separate statement, ZF acknowledged the two companies are in talks, but did not provide any further information. Stocks almost always surge on prospects of a buyout offer as the acquirer tends to offer to pay a premium to take over the target, often of 20% or more over the current share price. There isn't enough information available to speculate on a price tag for the deal or if it will go through, but shares could easily move higher as more details emerge about the possible acquisition.

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The article Why TRW Automotive Holdings Corp. Stock Jumped originally appeared on Fool.com.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs. 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.

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