What happened

Shares of Weber (WEBR) were sizzling on Tuesday, surging as much as 44.4%. As of 10:59 a.m. ET, the stock was still up 37.3%. The catalyst that sent the grill maker rocketing higher was a buyout offer from its largest shareholder.

So what

Weber announced today that it had received a non-binding proposal from BDT Capital Partners to acquire all the company's outstanding stock that it doesn't already own at $6.25 per share. The offer represented a 24% premium to the stock's closing price on Monday. 

BDT is already Weber's largest shareholder, owning roughly 48% of the outstanding stock, and was a major shareholder prior to the company's initial public offering (IPO). Weber went public last summer, pricing its shares at $14. It ended its first day of trading at $16.50, however, notching a valuation of nearly $5 billion. Since then, its stock has fizzled. 

Sales of outdoor grills exploded during the early days of the pandemic but have since slowed, burdened by tough comps and an increasingly uncertain economy. For its fiscal 2022 third quarter (ended June 30), Weber reported revenue of $528 million, a decline of 21% year over year, while also swinging from a profit to a loss.

The company blamed the worse-than-expected results on rising inflation, supply chain constraints, geopolitical uncertainty, and high fuel prices, coupled with foreign-currency headwinds. As a result, shares have fallen more than 74% from the stock's high late last year.

Now what

Weber's board of directors hasn't yet accepted the offer but has assigned a special committee to review the proposal. It's also worth noting that Weber stock is trading significantly higher than the buyout-offer price, suggesting that investors may believe a competing offer could emerge.

Another factor contributing to the surging stock price may be a short squeeze. As of Sept. 30 (the last day for which data is available), approximately 8.3 million shares were sold short, or approximately 33.5% of the outstanding shares. Short-sellers scrambling to cover their positions may be adding to the demand for the available shares, driving the share price higher.