SandRidge Energy Shares Got Crushed: 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: It was a busy day for SandRidge Energy (NYS: SD) , which announced a major acquisition last night. The market and analysts gave the move a big thumbs-down, which pushed down the stock as much as 14% in trading today.
So what: After the close yesterday, SandRidge announced it was buying Dynamic Offshore Resources for $1.27 billion in a cash and stock deal. The company will pay $680 million in cash and 74 million shares of stock valued at $8.02 per share. That price is already generous with shares trading closer to $7 today.
Now what: The market obviously didn't see this as good news and neither did analysts. Tudor Pickering and Howard Weil both downgraded the stock before trading began today. Management argues that Dynamic's $1.9 billion in proven reserves in oil-rich assets will be a great addition for the company. That may be true long term, but today the seller wins and the buyer loses, a common occurrence when acquisitions take place.
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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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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