MF Global shares surge following tender offer

Shares of MF Global Ltd. surged on Wednesday after the futures and options broker announced a cash tender offer for $210 million in convertible senior notes.

Shares soared 76 cents, or 21.4 percent, to close at $4.32.

After the closing bell Tuesday, MF Global announced a cash tender offer for its 9 percent convertible senior notes due 2038 at a purchase price of $620 per $1,000 of the principal.

It said it would fund the purchases with available cash on hand, which recently grew by $250 million in excess regulatory capital distributed by a regulated subsidiary.

If all the notes are tendered, the offer will reduce the number of diluted shares outstanding by about 20 million shares, the company said. The tender offer will expire at midnight New York time on March 23.

Wall Street analysts were upbeat on the announcement on Wednesday. Foxx-Pitt analyst Edward Ditmire upgraded shares of MG Global to "Outperform" from "In Line" in a client note. He said the offer implies a roughly 20 percent premium to the current market value of the notes, and said the offer would likely be a success.

Separately, UBS analyst Mike Carrier raised his price target to $4 from $3, saying the company continues to make progress on its turnaround plan. However, he said he was still cautious on the stock due to declining volumes, price pressure and other factors and kept his "Neutral" rating.

Shares of MF Global have gained about 75 percent since the start of the year. However, it's lost 88 percent from a year ago.