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 funeral-home operator Stewart Enterprises soared 34% today, after larger rival Service Corp. International agreed to acquire it in a deal worth about $1.4 billion.
So what: The all-cash deal values Stewart at $13.25 per share and represents a 36% premium to its closing price on Tuesday. Service Corp. is making the move to expand its reach in the highly fragmented North American death-care space, and judging by its own stock's 8% pop today, Mr. Market is quite pleased with the price it's paying to do it.
Now what: The combined company is expected to have pro forma revenue of roughly $3 billion and generate about $60 million in annual cost savings.
"Stewart Enterprises has compiled an impressive portfolio of high quality funeral homes and cemeteries across North America," said Service Corp. CEO Tom Ryan. "We are extremely excited by the prospect of working alongside the Stewart associates and continuing to build on their success."
So while Stewart shares are probably all popped out at this point, Service Corp.'s newly bolstered scale might be a strong driver of outsized gains going forward.
Interested in more info on Stewart?Add it to your watchlist. How about Service Corp.?Add it, too.
The article Why Stewart Enterprises Shares Looked Alive originally appeared on Fool.com.
Fool contributor Brian Pacampara and The Motley Fool have no position in any of the stocks mentioned. 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.