eBay's (EBAY) Sale of MercadoLibre (MELI) Shares 'Makes Sense'; Slight Overhang Will Linger - Cowen
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Analyst Thomas Champion said,
The prospectus contained preliminary 3Q results that are mostly in line with our estimates.
The analyst continued,
MELI shares were indicating -6% in after hours trading and we expect this offering to be an overhang until the distribution is completed. However, the sale makes sense in our view given: (1) MELI shares have had a strong run of late, +60% YTD; and (2) at current prices, eBay could gross ~$1BN from the transaction (less post-tax) which could then be returned to shareholders via the buyback or used for other investment or M&A. eBay (EBAY, Market Perform, $31.50) shares were +2% after hours. We wrote about the possibility of an eBay sale in our initiation report this past April.
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