The stock market has bounced sharply from its lows last month, and the gains looked poised to continue on Tuesday morning. Even with rising interest rates, the ongoing war in Ukraine, and uncertainty about the coming earnings season, investors nevertheless appear to believe that stocks represent the best balance of risk and reward. As of 8:15 a.m. ET, futures on the Dow Jones Industrial Average (^DJI -0.65%) were up 187 points to 35,040, while S&P 500 (^GSPC -1.20%) futures had gained 25 points to 4,593 and Nasdaq Composite (^IXIC -1.79%) futures had risen 98 points to 15,083.
A couple of stocks did even better, rising more than 20% in premarket trading on Tuesday morning. For media ratings giant Nielsen Holdings (NLSN), the move came as the company became the latest to follow a growing trend. Meanwhile, tiny biotech company IGM Biosciences (IGMS 2.73%) had some great news that had both investors and patients excited about what the future will bring.
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Nielsen gets great ratings from private equity buyers
Shares of Nielsen Holdings were up 22% in Tuesday's premarket session. The company announced a deal that will involve it going private, becoming the latest in a string of companies to agree to have their shares taken off the public markets.
Nielsen's deal came from a private equity group led by Elliott Investment Management affiliate Evergreen Coast Capital and Brookfield Business Partners. The agreement values Nielsen at $16 billion and would pay shareholders $28 per Nielsen share in cash. That price is 10% higher than a previous proposal that the private equity group had made, and it's 60% above where Nielsen traded before rumors about a potential buyout began to circulate.
The move comes at a critical time for Nielsen. With traditional television and radio broadcast distribution having given way to streaming on-demand services, Nielsen has had to adapt in order to maintain its importance in tracking consumer behavior. Evergreen and Elliott noted that having made initial investments in Nielsen several years ago, they believe the billions of dollars in new investment will give the media tracking company a chance to make its own digital transformation more effectively.
For investors, the private equity purchase signals a broader belief among institutional investors that the recent downturn in the stock market has opened up opportunities for picking up value stocks on the cheap. Nielsen likely won't be the last company to find itself the target of acquisition bids.
IGM grabs a big partnership
Meanwhile, shares of IGM Biosciences got an even bigger bump higher, rising 35%. The biotech company's quarterly results didn't have much to offer given its clinical-stage status, but news of an important partnership lifted investors' hopes about the immunoglobulin-M specialist's future prospects.
IGM announced that it had entered into a worldwide collaboration agreement with Sanofi (SNY 0.68%). The pair will use IGM's proprietary antibody technology platform to seek out potential treatments in the areas of oncology, autoimmune diseases, and inflammation.
The financial rewards for IGM could be extensive. The company will get $150 million in upfront cash from Sanofi as part of the deal, and the two partners have agreed on milestones related to development, regulatory approval, and commercial success that could add up to more than $6 billion. In addition, IGM would receive a 50/50 split of profits in certain major markets for cancer treatments and a tiered royalty payment for autoimmune and inflammation treatments. Sanofi might also invest $100 million in IGM stock to cement the relationship further.
IGM's stock has struggled in recent years, losing more than 80% of its value before its most recent bounce. Again, Sanofi appears to see value after that plunge, and as IGM keeps working through its pipeline of candidate treatments, it'll be interesting to see how they pan out.
