UPDATE: Jefferies Downgrades Spreadtrum Communications on Tsinghua Unigroup Merger Announcement
In a report published Monday, Jefferies analyst Ken Hui downgraded Spreadtrum Communications (NASDAQ: SPRD) from Buy to Hold, but raised the price target from $28.50 to $31.00.
In the report, Jefferies noted, “We continue to expect SPRD to close the transaction to be acquired by Tsinghua Unigroup, despite near-term business deterioration. We do not expect Tsinghua to raise the offer further. We revise up our PT to $31, matching the raised offer price. With only 3% upside, we downgrade SPRD to Hold from Buy. SPRD announced earlier that it had entered into a definitive merger agreement with Tsinghua at an offer price raised to $31 from $28.5 per ADS. While SPRD's board of directors unanimously approved the merger agreement, the transaction is subject to approval by the shareholders of SPRD, and antitrust and other regulatory approvals. The raised offer price implies 12x our estimated 2013 earnings, which is consistent with our prior upside scenario with respect to the acquisition. We maintain our view that the transaction will likely close, and do not expect Tsinghua to further raise the offer.”
Spreadtrum Communications closed on Friday at $30.00.
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