Why Warnaco Shares Skyrocketed

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 apparel distributor Warnaco Group (NYS: WRC) soared 38% today, after larger peer PVH (NYS: PVH) offered to acquire it for about $2.9 billion.

So what: The cash-and-stock deal values Warnaco at roughly $68.43 per share -- $51.75 in cash, and a portion of PVH's stock -- and represents a healthy 34% premium over its closing price on Friday. PVH is making the move to solidify control of the prestigious Calvin Klein brand -- Warnaco sells Calvin Klein jeans and underwear under a license -- and judging by its own stock's 17% surge today, Wall Street seems thrilled with the price being paid to do it.

Now what: The deal should close early next year and is expected be accretive to PVH earnings in the first full year after that. According to PVH Chairman and CEO Emanuel Chirico:

So, while Warnaco shares are likely all popped out, PVH's newly bolstered global scale might be a driver of market-topping gains going forward.

Interested in more info on Warnaco?Add it to your watchlist.

The article Why Warnaco Shares Skyrocketed originally appeared on Fool.com.

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