Why Apria Stock Is Skyrocketing Today

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What happened

Shares of home healthcare equipment provider Apria (NASDAQ:APR) were skyrocketing 26.2% higher as of 12:05 p.m. ET on Monday. The huge jump came after Owens & Minor (NYSE:OMI) announced plans to acquire Apria for around $1.45 billion.

So what

Owens & Minor offered $37.50 in cash per share for Apria. That’s a 26% premium to the price of Apria’s shares at the market close on Friday, and a 24% premium over Apria’s 30-day volume-weighted average price. It’s also only slightly below the all-time high for the healthcare stock

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The acquisition appears to be good news, therefore, for Apria shareholders. But is it a smart move for Owens & Minor? Probably so.

Owens & Minor bought medical supply distributor Byram Healthcare in 2017. The addition of Apria should be a good fit with Byram’s business. Owens & Minor will be in a stronger position to target the $50 billion home healthcare market.

From a financial perspective, acquiring Apria will be accretive to Owens & Minor’s revenue; adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA); and earnings per share. The deal also diversifies Owens & Minor’s revenue stream. 

Now what

The transaction has already been unanimously approved by the boards of directors of both Owens & Minor and Apria. Two additional key hurdles remain — the approval of Apria’s shareholders and a green light from regulators. However, these hurdles shouldn’t be hard to jump. The companies expect that the acquisition will close during the first half of this year. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.