Motley Fool
0
All posts from Motley Fool
Motley Fool in Motley Fool,

Why Bankrate Stock Surged 10% Today

What happened

Shares of financial information provider Bankrate (NYSE: RATE) jumped more than 10% this morning before retracting to score an 8.2% gain as of 1:10 p.m. EDT.

So what

Everything old is new again and Bankrate -- which went private in the midst of the financial crisis in 2009, then onto the public markets six years ago, in June 2011 -- is leaving the public markets again.

Last time around, it was private equity firm Apax Partners that took Bankrate private in a $571 million deal. This time, "digital consumer choice platform" Red Ventures will be anteing up more than twice that sum -- $1.4 billion -- to take over Bankrate. The all-cash deal will see Red Ventures shell out $14 per share for Bankrate, a 31% premium over what the stock has averaged over the past three months, but only about 9% more than Bankrate shares were fetching at the end of last week.

Worse news for shareholders: Bankrate will be acquired for a price below its market cap of six years ago.

Image source: Getty Images.

Now what

Commenting on the acquisition, Red Ventures CEO Ric Elias said that the addition of Bankrate to its portfolio of services "will create a scaled and diversified digital platform of consumer marketplaces" and help to "leverage [Red Ventures'] technology, strategic partnerships and digital expertise."

Red Ventures, however, is privately owned, so investors will have little opportunity to profit from whatever benefits come out of this merger. Today, they're best advised to just take what money is on offer, and find a better place to reinvest it.

10 stocks we like better than Bankrate
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Bankrate wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 5, 2017

Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.