Why GeoEye's Shares Popped

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 commercial satellite image provider GeoEye jumped 10% briefly today after investors approved its merger with DigitalGlobe .

So what: The government had been looking into antitrust issues with the merger because it would leave the U.S. with one commercial satellite imaging company. But with the loss of some military contracts, it was apparent that two separate companies couldn't survive, so the deal will go through.

Now what: For each shares of GeoEye, investors were offered 1.137 shares of DigitalGlobe stock and $4.10, $20.27 in cash, or 1.425 shares of DigitalGlobe. Since DigitalGlobe's shares have soared since the deal was announced, all investors should choose the share option, because this maximizes profits in the merger. Both stocks are up after the announcement, but until the merged company turns a profit, I would be a little leery of buying in as a new investor.

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The article Why GeoEye's Shares Popped originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool recommends GeoEye. 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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