NEW YORK (TheStreet) -- Shares of Sapient Corp. (SAPE) are surging this morning, up 42% to $24.60 in pre-market trade, after it was reported that Publicis Group (PUBGY) agreed to pay $3.7 billion for the global services company, moving the third-largest advertising company deeper into digital offerings and the U.S. as it moves past a failed merger with Omnicom Group (OMC) , Bloomberg reports.
Sapient stockholders will receive $25 in cash for each share, the companies said today, a 44% premium to Sapient's closing price last Friday.
Publicis is paying 19.2 times Sapient's earnings before interest, taxes, depreciation and amortization. That compares with a multiple of 14.5 times for similar targets over the past five years, according to Bloomberg data.
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TheStreet Ratings team rates SAPIENT CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate SAPIENT CORP (SAPE) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."