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Early Edge: 99 Cents Only Stores, Dollar Thrifty, JinkoSolar, and Goldman Sachs

NDN and DTG reported merger-and-acquisition news, JKS reopened a shuttered production facility, and GS was hit with a negative note from Citigroup

by 10/11/2011 9:25:40 AM
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Checking out a few of today's hot stocks on the move, we've got a confirmed buyout deal for 99 Cents Only Stores (NDN), a plan to remain independent for Dollar Thrifty Automotive Group, Inc. (DTG), resumed production at an offline production facility for JinkoSolar Holding Co., Ltd. (JKS), and a third-quarter loss warning for Goldman Sachs Group, Inc. (GS).

99 Cents Only Stores

Bright and early this morning, word hit the Street that 99 Cents Only Stores (NDN - 20.49) has consented to be acquired by affiliates of Ares Management and Canada Pension Plan Investment Board for $22 per share in cash -- a premium of 7.4% to Monday's close at $20.49, and a 32% premium over NDN's March 10 close at $16.68, just before the proposed buyout was first disclosed.

NDN price chartThe deal is valued at approximately $1.6 billion. The transaction is expected to be completed during the first quarter of 2012, subject to customary closing conditions -- including a shareholder vote.

NDN has gained 4.6% in pre-market trading, adding to its year-to-date gain of 28.5%. Since March 2009, the equity's uptrend has been highlighted by support at its rising 10-month and 20-month moving averages.

Apparently, at least a few speculators were bracing for the NDN buyout to fall through. In the front-month series, the out-of-the-money October 20 strike is home to peak put open interest of 1,210 contracts.

Dollar Thrifty Automotive

In other M&A news, Dollar Thrifty Automotive Group, Inc. (DTG - 60.40) announced today that it hasn't received any acceptable takeover offers, and plans to continue on as an independent company. For more than a year, DTG has been the target of competing bids from Avis Budget (CAR) and Hertz Global (HTZ) -- though the former abandoned its buyout quest last month.

"Having received no acceptable offer after conducting an unprecedentedly open process with clearly articulated requirements, it is time for us to move forward on a stand-alone basis," explained CEO Scott L. Thompson. In that spirit, DTG said its board has approved a $400 million stock buyback program.

DTG has dipped 1.5% ahead of the bell, but there's actually quite a bit of pessimism priced into the shares already. Short interest accounts for no less than 22.3% of the stock's float, and options players have expressed a clear preference for bearish bets in recent weeks. During the past 10 days, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 4.63 puts for every call on DTG. This put/call ratio rests in the 97th percentile of its annual range, as traders have rarely purchased puts over calls at a faster clip.

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