Major benchmarks were mixed on Thursday in another earnings-heavy session. But while many notable moves were indeed related to new quarterly reports, mergers and acquisitions news offered some of the market's most stunning pops.
Yum China might be acquired
Shares of Yum China jumped 10.8% in the wake of a report (may require subscription) by The Information claiming the holding company of brands including KFC and Pizza Hut in China may be an acquisition target.
The Information's sources say that Hillhouse Capital Group, together with a consortium of other investors, is in talks to acquire Yum China. Shares of the China-based fast-food giant were down more than 30% from their 52-week high set early this year -- including a more-than-6% drop last week after one analyst mused the company was facing multiple headwinds from steep competition, a complicated menu, and challenges boosting margins despite healthy same-store sales.
With over 8,100 restaurant locations in the country and a market capitalization of $14.5 billion as of this writing, the deal certainly won't be small. But it's hardly surprising to see some opportunistic investors considering a take-out bid today.
SUPERVALU is being acquired
SUPERVALU stock skyrocketed 65.4% after the grocery wholesaler agreed to be acquired by United Natural Foods (NYSE:UNFI) for $32.50 per share in cash -- a more-than-67% premium from yesterday's closing price -- for an enterprise value of $2.9 billion including debt.
SUPERVALU CEO Mark Gross noted that the deal offers a "substantial premium" for investors, adding that he believes "this transaction is the best and natural next step for our stockholders, customers and employees" following the company's multiyear strategic transformation.
United Natural Foods, for its part, will fund the transaction through mostly debt, with committed financing already in place from Goldman Sachs. The deal has also been approved by both companies' boards of directors, but still needs regulatory and shareholder approval. Assuming all goes as planned, it should close in the fourth quarter of this year.
AMD renders a stunning quarterly beat
Finally, shares of Advanced Micro Devices popped 14.3% following the semiconductor company's announcement of significantly better-than-expected second-quarter results. AMD's quarterly revenue grew 53% year over year to $1.76 billion, led by a 64% increase in computing and graphics segment sales to $1.09 billion. That translated to adjusted net income of $156 million, or $0.14 per share, swinging from a loss of $0.01 per share in the same year-ago period. Analysts, on average, would have settled for earnings of $0.13 per share on revenue of $1.72 billion.
CEO Dr. Lisa Su called it an "outstanding quarter," noting that net income was at its highest level in seven years and adding that -- with the "continued execution of [AMD's] product roadmaps" -- the company remains poised to "drive market share gains and profitable growth" going forward.