CVNA - Car insurer Root skyrockets 40% amid report of takeover offer

2023-06-22 08:35:45 ET

Car insurer Root ( NASDAQ: ROOT ) jumped 40% in premarket trading after a report of a takeover approach on Wednesday sent the shares surging 60%.

Closely held Embedded Insurance has made multiple approaches and offered $19.34 a share for Root ( ROOT ), according to a WSJ report on Wednesday, which cited people familiar with the matter. The offer represents a 222% premium to ROOT's closing price on Tuesday.

Embedded Insurance, run by insurance-technology entrepreneur James Hall, sent Root's ( ROOT ) board a proposal on June 9 after trying to engage in talks since last July, the WSJ said.

"We view a sale at such a significant premium as logical, and note price/NPW multiple would peg ROOT on the higher end of auto insurers, despite plans for continued shrinking + the challenging auto insurance environment," Citi analyst Michael Ward, who has a neutral rating and $5 price target on ROOT, wrote in a note on Wednesday.

Root, which is partly backed by Carvana ( CVNA ), told the WSJ in an emailed statement on Wednesday that the company's board "evaluates how best to deliver shareholder value in accordance with its fiduciary duties."

Root ( ROOT ) short interest is 20%.

More on Root

• Root Asserts Better Loss Ratio Control But Heavy Operating Losses Remain
• Root: Has It Reached Its Bottom?

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