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 TRI Pointe Homes jumped as much as 15.7% today after announcing the acquisition of Weyerhaeuser's residential real estate unit.
So what: TRI Pointe Homes will pay $2.7 billion for the company in a transaction that will result in Weyerhaeuser shareholders taking a majority stake in TRI Pointe. In all, Weyerhaeuser shareholders will get 130 million shares of TRI Pointe Homes, taking 08.5% of the company and receive about $700 million in cash.
Now what: Management said the deal will be accretive, meaning it will add to earnings immediately. There's no doubt this will give the company a larger scale, but only time will tell if that will translate into higher earnings. I don't think this is worth paying up for, and the 5% gain at the end of the day is probably more reasonable given the merger.
Another growth stock for years to come
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2013." To find out which stock it is and read our in-depth report, simply click here. It's free!
The article Why TRI Pointe Homes Shares Jumped originally appeared on Fool.com.Fool contributor Travis Hoium 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.