JD.com is down, but merger and acquisition bid lifts this tiny Nasdaq stock on Thursday
The mood on Wall Street has recently improved and the holiday cheer looked set to continue Thursday morning. Beginning at 8:15 a.m.ET, futures contracts on the Nasdaq Composite (NASDAQINDEX: ^ IXIC) rose about a quarter of a percent, adding to the gains over the past two days.
Chinese stocks have been particularly volatile in 2021, and this morning, JD.com (NASDAQ: JD) sees a significant drop resulting from what many investors see as a vote of no confidence in the company’s prospects. However, another Nasdaq healthcare stock is getting a boost by announcing a potential takeover bid. Below, you’ll learn more about why JD is losing ground, and then you’ll find out which Nasdaq stock is gaining ground.
Tencent sells its stake in JD
JD.com shares were down more than 6% in pre-market Thursday morning. The Chinese online seller of electronics and general merchandise is under selling pressure following a move by one of its major shareholders.
internet industry giant Tencent Holdings (OTC: TCEH.Y) has announced that it will cede the lion’s share of its JD.com shares to Tencent shareholders. For every 21 Tencent shares held by investors, they will receive one JD.com share. The total value of JD.com’s stake accruing to Tencent shareholders is approximately $ 16 billion.
Tencent first invested in JD.com about seven years ago, as part of its broader strategy of investing in potential high-growth companies. The latest move reflects Tencent’s belief that JD.com has matured to the point where it can manage its own capital needs to support future growth initiatives.
However, investors are concerned that Tencent shareholders receiving JD.com shares will simply treat them like found money and sell the shares. This seems to be what drives the price down, and this trend could last at least until the end of the derivative trade.
Quidel takes a step on Ortho
Elsewhere, shares of Ortho Clinical Diagnostics Fund (NASDAQ: OCDX) increased, increasing by almost 8% in pre-market trade. In vitro diagnostic specialist secures takeover offer from industry peer Quidel (NASDAQ: QDEL), and investors are excited about the potential for expansion the combination could bring.
Quidel is offering to buy Ortho for about $ 6 billion, in a deal that will pay Ortho shareholders $ 24.68 per share in cash. The two companies hope to close the deal in the first half of 2022.
Both companies see a number of advantages in combining their strengths. Quidel and Ortho have complementary products in the field of diagnostic instruments and testing, creating cross-selling opportunities for customers of each company. Quidel believes the combination will generate approximately $ 90 million in annual cost synergies within three years of closing. In addition, the combination of the product pipelines and research capabilities of the two companies is expected to help accelerate growth.
Ortho just went public in early 2021, so shareholders haven’t had much of a chance to reap the rewards of the company’s success. It will be interesting to see how Quidel is able to capitalize on the opportunity if its acquisition of Ortho continues, especially given the attention the prospective acquirer has garnered due to its presence in the COVID testing industry. -19.
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