Why EnergySolutions 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 EnergySolutions jumped as much as 12.8% today, on news of a buyout of the struggling company.

So what: Energy Capital Partners has agreed to buy the company for $3.75 per share, for a total deal of $1.1 billion. Two months ago, the company said it would have to sell assets to cut debt, and this was another way out for the board.

Now what: Usually, buyouts come with a larger premium than 9%, and investors have bid shares past the offer price during trading today. This usually means that they are expecting someone to come in with a better offer. That's a risky bet and, with little upside when the deal goes through, I would cash in my chips today.

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The article Why EnergySolutions Shares Jumped originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of EnergySolutions. 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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