Why GNC Holdings, Inc. Stock Jumped Today

By Markets Fool.com

Image source: GNC Holdings.

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What happened

Shares of GNC Holdings Inc.(NYSE: GNC) were up 11% as of 3:30 p.m. EDT following reports the health and nutrition products retailer is fielding acquisition interest from China.

So what

More specifically, The Wall Street Journalthis morning cited "sources familiar with the situation" as stating GNC has met with "a range of Chinese buyers in recent weeks" to measure their interest in an acquisition that could be worth a total consideration of $4 billion, including debt.

Now what

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Of course, if that's accurate, it seems to indicate these talks are still in their very early stages. And while GNC sports a current market capitalization of $1.45 billion as of this writing, note it also ended last quarter with a balance sheet featuring cash of $48.2 million and long-term debt of $1.59 billion.

With shares of GNC still down more than 30% year to date on the heels of its latest painful earnings report in July, it might be tempting to hold on with the hope of realizing an even greater acquisition premium should the company find a suitable Chinese acquirer. But keeping in mind there's no guarantee the talks will result in actual bids, I think investors would be wise to take today's profits and put their money 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.