Pentair Shares Jumped: 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 Pentair (NYS: PNR) jumped 14% today when the company announced it would combine its business with part of Tyco (NYS: TYC)

So what: The new company will contain Pentair and Tyco's flow control business, making a dominant force in the industry. The company will be 52.5% owned by Tyco shareholders and 47.5% owned by Pentair shareholders.

Now what: The market is reacting to a potentially strong partnership that will retain the Pentair name. Tyco is in the process of breaking itself up and this is a piece of that strategy. The all-stock deal won't be a drain on Pentair's balance sheet and it could be a boon to earnings. Pentair thinks the deal could add $0.40 per share to earnings in 2013 and $5 per share by 2015, so this may be a great buying opportunity.

Interested in more info on Pentair? Add it to your watchlist byclicking here.

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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