Why Georgia Gulf's Shares Jumped


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 Georgia Gulf (NYS: GGC) jumped as much as 18% today after it was announced the company would merge with a division of PPG Industries (NYS: PPG) .

So what: PPG is spinning off its commodity chemicals business, which will then merge with Georgia Gulf. The company will pay $900 million in cash to PPG, assume $95 million in debt, have $87 million in minority interest, and give shareholders $1.0 billion in Georgia Gulf shares. Both companies have risen on news of the merger.

Now what: The companies say there are $115 million in synergies in the first two years of this complimentary acquisition. The combined company will have about $5 billion in revenue and a stronger strategic position. Mergers rarely save the money, but for now investors are cheering the deal. I'm a little concerned about the debt Georgia Gulf will need to take on and for now I'd prefer to wait for a pullback to jump into shares.

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

The article Why Georgia Gulf's Shares Jumped originally appeared on Fool.com.

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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