4 Stocks Staging Big Gaps on Merger News

Dominion will buy SCANA in an all-stock deal worth $7.9 billion

Jan 3, 2018 at 10:29 AM
facebook X logo linkedin


Shares of MoneyGram International, Inc. (NASDAQ:MGI) gapped lower out of the gate this morning, down 9.3% at $12.07, after a U.S. government panel blocked the company's sale to China's Ant Financial. The $1.2 billion deal was scuttled by the Committee on Foreign Investment in the United States (CFIUS), reportedly over national security concerns -- though the committee declined to comment on the ruling. Under the terms of the deal, Ant Financial paid MGI a $30 million termination fee.

Chinese State Media Slams U.S. on MoneyGram Ruling

China-based Ant Financial is controlled by Alibaba Group (NYSE:BABA) CEO Jack Ma, and a report in the state-run Xinhua news agency broadly panned the U.S. decision to block the merger as "protective and isolationist." U.S.-traded BABA shares are shrugging off the news today, with the stock 0.5% higher at $184.54.

Ahead of last night's news, MGI's price action was already reflecting some pessimism that the long-delayed deal would come to fruition. The stock has slumped roughly 33% from its April 2017 highs near $18 per share, with resistance emerging at its 20-day moving average in recent months.

And from a sentiment standpoint, short interest still accounts for a healthy 8.2% of the equity's float, or nearly 7 times MGI's average daily trading volume. That said, the stock was down more than 10% at its early low of $11.90, so short selling is temporarily restricted on MoneyGram.

Dominion Scoops Up Scana in All-Stock Pact

In domestic M&A news, Virginia-based Dominion Energy Inc (NYSE:D) is set to acquire SCANA Corporation (NYSE:SCG) in an all-stock deal worth $7.9 billion (or $14.6 billion, including debt). The offer values SCG at $55.35 per share, representing a premium of more than 42% to last night's close at $38.87.

In early trading, SCG is up 22.2% at $47.50. The shares have gapped above resistance at their 50-day moving average for the first time since early August, though they're still trading well below Dominion's offer price.

Meanwhile, D has tumbled 4% to $77.08, with the utility stock deepening Tuesday's breach of recent support at its 80-day moving average. In light of today's bear gap, the equity's thinly traded options have rarely been more expensive to buy. According to Trade-Alert, 30-day at-the-money implied volatility on Dominion options has bolted to a new 52-week high of 18.1%.

 

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.


Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!

 

 
 
 


 
 

Rainmaker Ads CGI