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Root, in which Carvana (NYSE:CVNA) has a minority stake, saw its stock rose as much as 35% in pre-market trading. Shares closed at $9.62 on Wednesday after gaining almost 60%. The stock is now indicated to open at $13 apiece on the back of a fresh pre-market rally.
According to WSJ, Embedded Insurance has been attempting to engage in negotiations to buy Root since July last year. The insurer then sent a proposal to acquire the startup on June 9.
Root shares collapsed in recent years after going public in 2020. The IPO valued the company at over $6 billion.
Based on yesterday’s closing price, Root is valued at $137.5 million.
Wells Fargo analysts said the reported price represents a “significant premium.”
“We believe ROOT should accept this offer given the upside it would provide to the unaffected stock price and the time it would take for ROOT to realize this value in the public markets,” the analysts said in a note.
