Please ensure Javascript is enabled for purposes of website accessibility Is Falling, But an M&A Bid Is Lifting This Small Nasdaq Stock Thursday

By Dan Caplinger – Dec 23, 2021 at 9:15AM

Key Points

  • Markets looked ready to move slightly higher Thursday morning.
  • shares fell on news that Tencent will spinoff most of its stake in the company.
  • A combination in the healthcare diagnostics industry sent another less-known Nasdaq stock higher.

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Find out why the stock market could see more gains.

The mood on Wall Street has improved recently, and the holiday cheer appeared ready to continue on Thursday morning. As of 8:15 a.m. ET, futures contracts on the Nasdaq Composite (^IXIC 0.31%) were up about a quarter percent, adding to gains over the past couple of days.

Chinese stocks have been particularly volatile in 2021, and this morning, (JD 0.55%) is seeing a significant downward move resulting from what many investors see as a vote of no confidence in the company's prospects. However, another Nasdaq stock in the healthcare industry is getting a nice boost as it announces a potential takeover bid. Below, you'll see more on why JD is losing ground, and then you'll learn which Nasdaq stock is picking up some ground.

Tencent spins off JD stake

Shares of were down more than 6% in premarket trading Thursday morning. The Chinese online electronics and general merchandise seller is coming under selling pressure as a result of a move by one of its major shareholders.

Person looking at laptop and holding smartphone.

Image source: Getty Images.

Internet industry giant Tencent Holdings (OTC: TCEH.Y) announced that it would spinoff the lion's share  of its stock to Tencent shareholders. For every 21 Tencent shares investors own, they'll receive one share of The total value of the stake to go to Tencent shareholders is roughly $16 billion.

Tencent first invested in about seven years ago, as part of its broader strategy to make investments in potential high-growth companies. The latest decision reflects Tencent's belief that has matured to the point at which it can handle its own capital needs to foster future growth initiatives.

However, investors are concerned that Tencent shareholders receiving stock will simply treat it as found money and sell the shares. That seems to be what's sending the price lower, and that trend could last at least until the spinoff transaction actually goes through.

Quidel makes a move on Ortho

Elsewhere, shares of Ortho Clinical Diagnostics Holdings (OCDX) moved higher, rising almost 8% in premarket trading. The in vitro diagnostics specialist got a buyout offer from industry peer Quidel (QDEL), and investors are excited about the potential for expansion that the combination could bring.

Quidel is offering to buy Ortho for roughly $6 billion, in a deal that will pay Ortho shareholders $24.68 per share in cash. The two companies hope to close the deal within the first half of 2022.

The two companies see a number of benefits from combining forces. Quidel and Ortho have complementary products in the diagnostic instruments and assay area, creating cross-selling opportunities for each company's customers. Quidel believes that the combination will produce about $90 million in annual cost-related synergies within three years of completing the deal. Moreover, bringing together the two companies' product pipelines and research capabilities should help accelerate growth.

Ortho just went public in early 2021, so shareholders haven't had much chance to reap the rewards of the company's success. It'll be interesting to see how Quidel is able to capitalize on the opportunity if its acquisition of Ortho moves forward, especially given the attention that the would-be acquirer has gotten because of its presence in the COVID-19 testing industry.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns and recommends, Quidel, and Tencent Holdings. The Motley Fool has a disclosure policy.

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