Tudou Holdings Ltd. (TUDO), China’s second-largest video website, had its biggest ever surge to a record high in U.S. trading after bigger competitor Youku Inc. (YOKU) said it planned to buy the company in a $1 billion stock deal.
American depositary receipts of Tudou soared 153 percent to $39 by 9:55 a.m. in New York, after earlier jumping as much as 178 percent to $42.81. It’s the biggest gain and price reached since the stock started trading in August last year, data compiled by Bloomberg show. Each ADR represents four common shares in Tudou.
Youku, owner of China’s biggest online video website, plans to acquire Tudou in a stock swap deal, the two companies said in a joint statement today. Holders of Tudou’s ADRs will receive 1.595 ADRs of Youku for each Tudou ADR they own, they said. Based on Youku’s March 9 closing price, the deal values Tudou at $39.89 a share.
ADRs of Beijing-based Youku added 21 percent to $30.17, poised for the highest close since Aug. 3.
Eric Wen, an analyst at Mirae Asset Securities Hong Kong Ltd. raised his 12-month price target for Youku to $35.50 from $31.50 today. Wen recommends investors buy the shares.
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