Pharmaceutical Product Development Shares Soared: What You Need to Know

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 Pharmaceutical Product Development (NAS: PPDI) skyrocketed 25% Monday after The Carlyle Group and Hellman & Friedman LP agreed to buy the health-care research specialist for $3.8 billion.

So what: The all-cash deal values PPD at $33.25 per share, representing about a 30% premium to Friday's closing price. The acquisition comes just a few months after INC Research's $232 million purchase of rival Kendle International, suggesting that the big money sees plenty of opportunity within the health-care outsourcing space.

Now what: When you make 25% in one morning, taking at least some dough off the table seems like the prudent thing to do. While PPD may now solicit competing proposals for a 30-day "go-shop" period, holding out for a dramatically better offer seems a bit risky. After all, with quality names in the sector like Parexel (NAS: PRXL) and Covance (NYS: CVD) still available at decent prices, you should have plenty of places to roll your bet over.

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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of PPD. 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 Fool's disclosure policy always gets a perfect score.

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