Today’s session has been relatively volatile, with a number of key winners and losers seeing outsized movements this afternoon. One of the biggest winners to the upside today is TripAdvisor (NASDAQ:TRIP), which has surged well over 10% to as high as $26.66 per share today. This big move in TRIP stock comes after the company formally announced the formation of a special committee to review an upcoming “potential transaction.”
Such special committees are typically set up as part of a bidding process for a given company. When an offer is received, there’s usually a window of time where other bidders can submit their offers, with a group of independent directors overseeing the process. In this way, a company can ensure that it’s maximizing value for shareholders and that it will be less likely to be sued as a result of a potential acquisition or takeover.
Let’s dive into who could be bidding for TripAdvisor — and whether the market is correct in pricing a premium into TRIP stock.
Why Is TRIP Stock Surging Today?
TripAdvisor’s committee launch has sparked some renewed interest in the travel company as a potential takeover target. Most notably, the company’s largest shareholder is Liberty Media, an empire run by Greg Maffei. Given the fact that Maffei already holds a controlling stake in the travel company, it’s likely any existing proposal will come from this direction, at least initially.
From here, it will be interesting to see whether other bids pop up and what sort of premium any such takeover offers will provide over and above the stock’s closing price yesterday. Right now, the market thinks there’s at least 10% upside to TRIP stock. However, there’s certainly plenty of speculation and conjecture involved in such a guessing game.
Additionally, TripAdvisor has cautioned investors that a transaction may or may not happen. No decisions have been made so far with regards to whether a potential transaction will be in the best interest of the company and TRIP shareholders. So, we’ll likely have to wait to hear more from the special committee and learn later about what sort of negotiations are going.
For now, though, this stock is clearly in play, having garnered a tremendous amount of interest. I’m planning to keep my eye on TRIP stock and will provide updates as they roll in.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
