Software Companies Rallying After SuccessFactors Takeover
SAP AG (NYSE: SAP) and SuccessFactors, Inc. (NYSE: SFSF) announced on Saturday that SAP's subsidiary, SAP America entered into an agreement to acquire SuccessFactors for $40 per share or $3.4 billion. This acquisition has caused a rally today in the shares of other software companies as well.
Taleo Corporation (NASDAQ: TLEO) that provides on-demand talent management solutions is currently up nearly 20% trading at $39.27 per share. Also, Kenexa Corporation (NASDAQ: KNXA) is up over 13% trading at $28.77 and Concur Technologies (NASDAQ: CNQR) is up nearly 9% trading at $51.
The shares of these companies may be overbought now, as there is no news affecting these companies directly. Hence, the traders should look out for a potential pullback that could provide potential short opportunities
ACTION ITEMS:
Bullish:
- Traders who believe that the acquisition of SuccessFactors is a sign that there will be more M&A activity in the software industry might want to go long the software stocks that are up today. However, It could be a good idea to wait for a pull back though, as the shares of these companies may be overbought.
Bearish:
- Traders who believe that there will not be more takeovers in the software companies should consider shorting some of these companies, as they may pull back after being overbought.
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