Why Darling International Shares Jumped
Aug 23rd 2013 1:58PM
Updated Aug 23rd 2013 2:00PM
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 Darling International were looking sweeter today, gaining as much as 15% after acquiring the Rothsay rendering business from Maple Leaf Foods for $614 million.
So what: The food-waste recycling company will purchase the rendering and biodiesel segment from Maple Leaf as the Canadian food processor has divested from a number of assets as it struggles to turn a profit. The rendering business is a high-margin unit, which recycles animal byproducts into items including oils and soaps, and its acquisition will make Darling North America's largest provider of rendering and recycling services. Rothsay is the industry leader in Canada. Darling plans to fund the purchase under borrowings from a present credit facility.
Now what: No closing date was announced for the deal as it is subject to approval from the Canadian Competition Bureau, but analysts expect the division to change hands by the end of the year. Shares of Maple Leaf jumped 9% on the deal as well, which will shore up its balance sheet. Rothsay should fit in easily with Darling's businesses, which are divided into rendering and baking, and adding its advantage over the competition in rendering can only help. Shares hit a new all-time high on the news.
You're not a moron. You know that the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
The article Why Darling International Shares Jumped originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Darling International. The Motley Fool owns shares of Darling International. 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.