Why rue21 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.
So what: The all-cash deal values rue21 at $42 per share, and represents a 23% premium to its closing price on Wednesday. The news is right in line with the recent trend of cash-rich private equity firms looking to dive into the fashion retail space, suggesting that there's more upside in the sector than Mr. Market is currently discounting.
Now what: The deal is expected to close by the end of the year. "This transaction will allow us to focus on achieving our long-term objectives, including growing our business to over 1,700 stores in the U.S. and successfully implementing new initiatives such as e-commerce and rueMan," said rue21 Chairman and CEO Bob Fisch. So, while rue21 may now solicit competing bids for a 30-day "go-shop" period, holding out for a dramatically better offer seems a bit risky.
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The article Why rue21 Shares Popped originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.