Here’s why the Greencross Limited share price exploded today

Credit: Michael Gil

The share price of specialty pet retailer Greencross Limited (ASX: GXL) has soared 30% higher today to trade at $6.02. That compares to a mere 0.1% rise for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

The gains came on the back of an article in The Australian Financial Review this morning which stated that a financial buyer is in the market for a stake in Greencross. The article reported the entity bought shares at $5.79 – a 25% premium to yesterday’s closing price – and is looking to acquire a total interest of “up to 14.99%.”

You can read more about that news, here.

Source: Yahoo! Finance

Source: Yahoo! Finance

Questions have been raised about the company’s strategy recently while there have also been concerns regarding rising levels of competition. That, amongst other factors, led to the company’s share price losing more than half its value since February when the shares peaked at $9.90.

Indeed, today’s enormous gains will come as a major relief for those shareholders, many of whom could look to take their money off the table today. In saying that however, there could be more gains to come if a full takeover offer does eventuate.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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