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"Tree hug" as USAI buying LendingTree

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Barry Diller's USA Interactive (NASDAQ:USAI) $34.18 -2.23% has been on an aggressive merger/acquisition pace in recent months, buying up the remaining shares of Expedia (NASDAQ:EXPE) $65.82 -2.37% and Hotels.com (NASDAQ:ROOM) $81.523 -2.16% it didn't already own as the diversified media and electronic commerce company looks to enlarge its footprint among online consumers. In an attempt to further enlarge that footprint, USAI said it intends to buy LendingTree, Inc. (NASDAQ:TREE) $20.82 +41.72% in a move slated to combine not only travel-related businesses with the consumer, but also offer consumers one-stop shopping for loans, realtors and other credit-related choices in a "tree hugging" deal valued at roughly $734 million in USAI stock.

At Friday's closing prices, LendingTree shareholders will get approximately 0.6199 of USA Interactive stock in exchange for each share they own.

The deal between USAI and TREE also finds gains in other online real estate-oriented company's on speculation that other similar online service providers may be in play to wart off USAI competitions as HomeStore.com (NASDAQ:HOMS) $1.15%, which fetched over $130 per share at its 2000 price peak, and E-Loan (NASDAQ:EELN) $3.67 +11.55% (all-time high of $74.37 just after IPO) find speculative buying.

Economic released today, which had a stronger-than forecasted ISM Services Index reading just above the 50.00 mark at 50.7 and the first economic indicator to really show any type of renewed economic activity since the war in Iraq began, has been partially offset by today's report from employment research firm Challenger, Gray & Christmas, which reported that U.S. firms announced 146,399 planned layoffs in April, which was up 71% from March's 85,396.

It has been a modestly seesawing morning trade with the Dow Industrials (INDU) 8,564 -0.2% seeing a morning high of 8,601.94, then pulling back to a low of 8,511, only to recoup some of those late-morning losses into the 01:00 hour.

The NASDAQ has been today's stalwart indexes with the NASDAQ- Composite (COMPX) 1,517 +0.95% once again within single-digit- points of trading its December relative high of 1,521.44. The narrower NASDAQ-100 Index (NDX.X) 1,150.73 +1.27% is just off its morning high of 1,519.48 and likewise just below its December highs of 1,521.44. A break above these December highs could have further positive psychological impact on investors as it has been a couple of years since a higher low and higher high have been seen from any of the major indexes.

While the major equity indexes have seen a rather mixed trade with the S&P 500 Index (SPX.X) 930.64 +0.06%, just now moving back above the unchanged level, Treasuries have seen a rather mixed trade, but still holding fractional losses ahead of tomorrow's FOMC meeting. Just ahead of tomorrow's FOMC meeting, May Fed Funds Futures (ff03k) 98.785 currently show the market expecting just a 12% chance of a 25 basis point rate cut at tomorrow's meeting, while the June Fed Funds Futures contract (ff03m) 98.825 (unch) hint at a 30% chance of a Fed cut at the June meeting, but off of Thursday's 98.875 trade, which would have had some market participants looking at a 50% chance of a 25 basis point cut at the June meeting.

Sector action among the equities has the Networking Index (NWX.X) 177.64 +5.5% building on gains found at the 11:00-market and this should bode well for a NASDAQ-100 breach of its December relative highs. Networking bellwether Cisco Systems (NASDAQ:CSCO) $15.79 +3.14% has broken above its January relative highs of $15.63 in today's trade ahead of tomorrow's Q3 earnings report after the market's close. Current consensus among analysts is for the company to earn $0.14 per share, compared to year-ago $0.11 per share.

In this weekend's "Ask the Analyst" column we addressed a question from a trader regarding Astrazeneca (NYSE:AZN) $43.40 +4.55%. The stock is on the move today. Unbeknownst to me when trying to answer the trader's question regarding the calculation of the bullish vertical count for the stock, traders cite today's gains coming just ahead of an important FDA ruling regarding the company's Iressa drug for treatment of cancer. Iressa belongs to a new class of anti-cancer drugs known as selective epidermal growth factor receptor (EGFR) inhibitors and is used to treat non-small cell lung cancer (NSCLC). Analysts project peak sales for this drug at approximately $600 million. However, the Wall Street Journal has reported in recent weeks that multiple deaths in Japan thought to be related to Iressa could delay its approval. As such, this weekends further discussion of "assessing risk" in an AZN trade may have been timely.

Jeff Bailey

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