Thomas & Betts 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 electrical components specialist Thomas & Betts (NYS: TNB) surged 23% Monday after Swiss engineering giant ABB (NYS: ABB) agreed to acquire it for $3.9 billion.
So what: The deal values Thomas & Betts at $72 per share and represents a 24% premium over its closing price Friday. ABB is making the move to expand its U.S. electrical equipment presence amid recovering industrial demand, but judging from its own stock's 3% drop, Mr. Market isn't exactly thrilled about the price being paid.
Now what: While Thomas & Betts is likely all popped out, ABB might be worth looking into. "We have a pretty small presence in U.S. low voltage, with about $240 million (per year) so far, so obviously [this acquisition] is completely changing the game for us," said ABB CFO Michel Demare. In fact, management estimates that the deal will open up a potential market of roughly $24 billion for its highly profitable low-voltage products, which should give long-term investors good reason to dig in.
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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of ABB. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.
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