Why Diamond Hill Stock Soared Today
Key Points
Diamond Hill is set to be acquired at a substantial premium to its recent trading range.
The deal includes a 35-day "go-shop" clause during which Diamond Hill can solicit competing bids.
Shares of Diamond Hill Investment Group (NASDAQ: DHIL) leaped 44% on Thursday after the asset manager struck a deal to be acquired by First Eagle Investments for $473 million.
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Diamond Hill's investment team is slated to stay on board
Under the terms of the deal, First Eagle will purchase all of Diamond Hill's outstanding stock for $175 per share in cash. That's a premium of more than 49% compared to Diamond Hill's closing stock price on Dec. 10.
"This partnership is a testament to the strength and resilience of our business and delivers immediate value to our shareholders," Diamond Hill CEO Heather Brilliant said in a press release. "Joining First Eagle, whose 160-year history reflects a deep commitment to client outcomes, will position Diamond Hill for continued success over the long term."
Privately owned First Eagle, which had roughly $176 billion in assets under management (AUM) as of Sept. 30, wants to add Diamond Hill's value-focused equity and fixed-income products to its stable of investment offerings.
Diamond Hill's portfolio management team is expected to remain in place following the merger, with no changes to its investment strategy.
"We will continue to apply the same disciplined approach and investment philosophy our clients rely on today, now supported by First Eagle's expanded capabilities, resources, and distribution network," Diamond Hill portfolio managers Austin Hawley and Henry Song said.
A superior acquisition offer could still materialize
The deal is projected to close by the third quarter of 2026, subject to shareholder and regulatory approval.
The merger agreement includes a 35-day "go-shop" period, during which Diamond Hill may solicit competing purchase offers from other potential suitors through Jan 14.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Diamond Hill Investment Group. The Motley Fool has a disclosure policy.