Stocks rose sharply Wednesday as investors were cheered by billionaire investor Kirk Kerkorian’s bid to more than double his stake in struggling automaker General Motors Corp.
The Dow Jones Industrial Average closed up 127.69, or 1.2 percent, at 10,384.64, largely thanks to the 18.1 percent rise in GM’s share price. The Standard & Poor’s 500 Index gained 14.48, or 1.3 percent, to 1,175.65. The Nasdaq Composite Index rose 29.16, or 1.5 percent, to 1,962.23.
Kerkorian’s investment company, Beverly Hills-based Tracinda Corp., offered to buy a large minority stake of 8.8 percent in General Motors at a premium to the automaker’s depressed stock price. Beverly Hills-based Tracinda offered $868 million for as many as 28 million GM shares at $31 each, which would raise its holdings in the Detroit-based automaker to 50 million shares. The $31-a-share offer represents a 13.4 percent premium over GM shares’ closing price Tuesday of $27.77.
Among local companies, United Online Inc. gained 34.8 percent to $11.94 after the stock of the Woodland Hills-based owner of discount Internet providers NetZero and Juno was raised to “outperform” from “market perform” by analyst Safa Rashtchy at Piper Jaffray & Co. The company also forecast second-quarter revenue that exceeded analysts’ expectations. Second-quarter revenue is expected to be $130 million to $132 million, above the $128.8 million average estimate of analysts surveyed by Thomson Financial.
On the down side, Magnetek Inc. plunged 44.7 percent to $2.19 after the L.A.-based maker of digital power products said it had been ordered to pay $23.4 million to end an inventor’s lawsuit over electronic ballasts used in fluorescent lamps. Equity analysts worried that the company might be forced to reorganize under bankruptcy protection, even though Magnetek said it had resources to satisfy the award.
Tekelec lost 10.8 percent to $12.56 after the Calabasas-based telecommunications products company’s stock was downgraded to “accumulate” from “buy” by analyst Troy Jensen at ThinkEquity Partners.
And Specialty Laboratories Inc. fell 12.5 percent to $7.12 after the Valencia-based clinical reference laboratory’s stock was downgraded to “market perform” from “outperform” by analyst William B. Bonello at Wachovia Securities, due to operational and leadership issues.
The company announced late Tuesday that Chief Financial Officer Kevin Sayer will step down, effective May 16, to pursue other opportunities. In February, the company saw other staff departures as Douglas S. Harrington resigned as chief executive and Richard E. Belluzzo resigned as chairman within four days of one another. A search for a new CEO is still under way.