What: Shares of automotive parts manufacturer Remy International surged as much as 42% as of the time of this writing on the news that BorgWarner will acquire the company.
So What: This is pretty much a text book case of the company's shares jumping to what its acquirer say its worth. BorgWarner will purchase all of Remy International's shares outstanding for $950 million in cash, which values each share of Remy at $29.50. And, surprise surprise, shares have jumped right to within a few cents of that range.
According to BorgWarner, the acquisition of Remy will help the company be more competitive in the automotive space, particularly in the electrification trend of vehicles. Remy's electric motors and starters are key components of hybrid and electric vehicles, which are components of the faster growing segments in the automotive industry today
Now What: Now that we know a company plans to acquire Remy, and the price for that acquisition is set, there isn't really any reason to buy shares of Remy in hopes of gaining anything from this acquisition. That being said, the parts manufactured by Remy will make for a compelling addition to BorgWarner's other offerings and should help to make up for some of the recent troubles that almost all automotive parts manufacturers have had selling to international markets as of late.
The article Why Shares of Remy International are up 42% Today originally appeared on Fool.com.
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