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

Why Sonus Networks, Inc. Fell 12% in May

What happened

Shares of Sonus Networks (NASDAQ: SONS) fell 12.1% in May 2017, according to data from S&P Global Market Intelligence.

So what

The networked communications specialist was sailing along with the market for the first three weeks of May. Then the company announced a merger with privately held sector peer GENBAND, and share prices fell more than 13% over the next two days.

Image source: Getty Images.

Now what

The deal is expected to close in the second half of 2017, unlocking more than $40 million in annual cost synergies and an immediate boost to Sonus' bottom-line earnings. At the same time, the all-stock agreement will also dilute the holdings of current Sonus shareholders by roughly 50%. The combined company looks like a stronger competitor than either of its halves could be on its own, and might even attract buyout offers from large telecoms or cable companies.

Buying in at today's low prices makes a lot of sense to me, because the upcoming dilution has already been priced into Sonus shares.

10 stocks we like better than Sonus Networks
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 Sonus Networks 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

Anders Bylund 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.