Why AVX Corporation Stock Just Jumped 35%

What happened

Shares of AVX Corporation (NYSE: AVX) took off like a rocket in Wednesday trading after it was revealed that Japanese electronics conglomerate Kyocera Corporation (OTC: KYOCF) wants to acquire it.

Kyocera already owns approximately 72% of AVX stock and now wants to buy the remainder. Shares of AVX, which makes electronic components for the automotive, telecom, and semiconductor industries, are up 34.7% as of 10 a.m. EST.

Wall painting of a big fish chasing a smaller fish.

Image source: Getty Images.

So what

AVX itself hasn't yet commented on the development, but this morning, Kyocera published a press release advising that it has proposed to AVX's board buying the 28% of AVX shares it doesn't yet own, paying AVX shareholders $19.50 per share for their stock.

Kyocera noted in its release that such a price would represent "a 29.7% premium over the closing price as of November 26, 2019" -- but AVX stock is already up more than that.

Now what

So how should investors interpret this? The higher-than-bid price AVX shares now fetch indicates that the market is anticipating either a rejection of Kyocera's bid (and a higher bid to follow) or else a competing bid from some other acquirer (likewise at a price higher than Kyocera has bid).

Either way, even up 35% already, it looks like these shares might have more room to run.

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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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