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 twitter 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%.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners