December's roller-coaster moves in the stock market have been hard to stomach, but at least investors have gotten periodic relief from sharp drops. It appeared that Tuesday would provide a bounce from recent declines, based on premarket futures market activity. As of 8:45 a.m. ET, Dow Jones Industrial Average (^DJI 0.40%) futures were up 280 points to 35,093. S&P 500 (^GSPC 1.02%) futures climbed 40 points to 4,598, and Nasdaq Composite (^IXIC 2.02%) futures picked up 167 points to 15,788.
A couple of stocks made more significant moves higher in response to some strategic transactions that could have dramatic impacts on their businesses. Citrix Systems (CTXS) became the latest subject of market chatter about being a possible acquisition target, while Embraer (ERJ 3.96%) decided to have a key high-growth subsidiary go public. Here's what you need to know.
Citrix gets attention
Shares of Citrix Systems were up almost 9% in premarket trading on Tuesday morning. The cloud computing and virtualization technology specialist has been out of favor for a while now, but investors are excited about the possibility that a couple of buyers might be interested in the company.
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Institutional investors Elliott Management and Vista Equity Partners could be looking to buy out Citrix, according to reports from multiple sources. Elliott had already expressed its interest in Citrix by taking a 10% stake in the company, likely with an eye toward trying to take steps to unlock value after the cloud computing business failed to take full advantage of opportunities over the past two years from the COVID-19 pandemic.
It's easy to understand why private equity players might be interested in Citrix. The stock price has fallen by more than 40% just since April and is even further from its all-time highs back in early 2020. With so much interest in remote access as part of broader digital transformation efforts, Citrix could benefit from long-term secular trends if it can execute more effectively.
Reports suggest that any talks are in early stages, and so there's no certainty that anything will come of this. However, Citrix shareholders are hungry for good news after seeing big stock price drops and a general lack of confidence.
Embraer's flying
Moving even higher was Embraer, whose stock climbed 16% in premarket trading. The aerospace company announced plans that have shareholders excited about a new opportunity.
Embraer announced that it had entered into an agreement to bring its Eve electric vertical take-off and landing vehicle business public through a business combination with a special purpose acquisition company (SPAC). Zanite Acquisition (ZNTE) will exchange shares of its SPAC stock for a portion of the ownership interest that Embraer has in Eve. Upon completion of the deal, Zanite will change its name to Eve Holding.
Following the SPAC deal, Embraer will own about 82% of Eve Holding, preserving its potential rewards from the business going forward. However, Eve Holding will have substantial amounts of cash available from the money the SPAC raised at its own initial public offering, and that could help Eve go through research and development more quickly.
Embraer stock had jumped back in June on rumors that this deal could happen. Now, investors seem pleased that the SPAC and Embraer have come to agreeable terms, and it'll be interesting to see how much attention Eve gets when investors can buy its stock directly.
