Gander Mountain: Pump Up the Volume

ST. PAUL, Minn. (TheStreet) -- Gander Mountain (GMTN Quote) shares were surging Monday on above-average volume after the company announced it would go private.

Gander Mountain will pay shareholders of less than 30,000 shares about $5.15 a share, a premium of 35% to Friday's closing share price. The company, which sells hunting and outdoor gear, said its two largest shareholders, Gratco LLC and Holiday Stationstores, would fund the cash payment.

To deregister its shares of common stock in accordance with Securities and Exchange Commission rules and regulations, Gander Mountain will reduce its number of beneficial shareholders to below 300 by effecting a 1-for-30,000 reverse stock split. After the split, shareholders with less than one share will receive a cash payment of $5.15 for each share they held prior to the split.

Lately, Gander Mountain shares were surging $1.33, or 34.8%, to $5.15. In the first two hours of trading Monday, more than 448,000 shares changed hands, compared to the stock's 50-day average daily volume of 49,000, according to the Nasdaq's Web site.

Gander Mountain has a 6.1 million-share float with a small short interest float of 14.6% as of Sept. 10, according to Yahoo! Finance. Nearly 75% of the company's shares are held by insiders.

Investor posts on Internet message boards called the announcement "unfair," as the stock has a 52-week high of $6.49. Traders argue that management is instituting the reverse stock split in order to force the deal through, and some speculated whether the action would prompt a lawsuit.

-- Written by Robert Holmes in New York.