Why Mattress Firm Holding Corp Stock Skyrocketed Today

By Markets Fool.com

Image source: Mattress Firm Holding Corp

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What:Shares of Mattress Firm Holding Corp. (NASDAQ: MFRM) were up 114.2% Monday after the mattress retailer announced it has agreed to be acquired.

So what:More specifically, Mattress Firm has entered into a definitive agreement to be acquired by South Africa-based household goods and furniture retailer Steinhoff International Holdings for $64 per share in cash. That offer represents atotal equity value for Mattress Firm of approximately$2.4 billion,an enterprise value of approximately$3.8 billion (including net debt), anda 115% premium over Mattress Firm's closing price on Friday.

Now what:The transaction is still subject to regulatory approvals, and is expected to close some time in the third quarter of this year. But in the end, considering the enormous premium the offer represents -- and unless waiting to sell between now and the transaction's close would result in more favorable long-term capital gains tax treatment -- I think Mattress Firm shareholders would be wise to take Monday's profits off the table and put them to work elsewhere.

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Steve Symington 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.