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Here's Why CommerceHub Is Skyrocketing Today

What happened

After the company revealed that it will be acquired by two private equity firms, shares of CommerceHub (NASDAQ: CHUBA) (NASDAQ: CHUBK), which helps retailers and brands compete online, jumped 23% as of 10:45 a.m. EST on Tuesday.

So what

CommerceHub announced today that it has agreed to be purchased by GTCR and Sycamore Partners. The deal values CommerceHub at $1.1 billion.

Other key details are as follows:

  • Shareholders will receive $22.75 in cash per share once it closes.
  • CommerceHub's board of directors has unanimously approved it.
  • The transaction is expected to close in the third quarter of 2018.

CommerceHub founder and CEO Frank Poore had this to share with investors:

Given the news, it isn't hard to figure out why shares are rallying today.

Now what

A handful of law firms have already announced their intention to investigate this deal to find out if the board shopped the company around enough to ensure that it is getting the highest price possible. You could argue that the lawsuits are warranted since the $22.75 buyout price is below the $24.53 at which the shares were trading in August 2017.

However, the board has unanimously approved this transaction, and it probably won't be hard for GTCR and Sycamore Partners to get their hands on the $1.1 billion they need to complete this transaction. That makes the odds pretty slim that the company will receive a higher bid from another buyer.

As a recent CommerceHub shareholder, I was hoping that this company would be able to pump out fast profit growth for years to come, so I'm quite disappointed to learn that it has agreed to be acquired by private equity. However, there's not much that us little guys can do at this point but sit and wait to see if another offer emerges.

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Brian Feroldi owns shares of CommerceHub. The Motley Fool owns shares of CommerceHub. The Motley Fool has a disclosure policy.