Why Georgia Gulf Shares Dropped

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 chemical manufacturer Georgia Gulf (NYS: GGC) fell as much as 11% this morning following news that a rival had dropped its takeover bid for the company.

So what: Petrochemicals manufacturer Westlake Chemicals (NYS: WLK) made two bids for Georgia Gulf -- one for $30 per share, and one higher bid for $35 -- before realizing that walking away from the deal was in both parties' best interests after Georgia Gulf's board failed to show support. Westlake Chemical noted that it will sell its entire stake in Georgia Gulf as market conditions permit. In return, Georgia Gulf's management released a statement today reminding shareholders that its first-quarter results were higher than any other first-quarter results in the past six years.

Now what: It's not surprising to see some of the air lifted out from under Georgia Gulf's shares after the Westlake deal fell through, but Georgia Gulf's management does have a point -- its results have been improving. At just nine times forward earnings, there just might be a nice value to be had here if the stock continues to fall. I'll add Georgia Gulf to My Watchlist for further reference.

Craving more input? Start by adding Georgia Gulf to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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