Consumer Stocks Ending Mixed; Ku6 Media Surging After Chinese Entrepreneur Takes Direct Stake

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Consumer stocks were mixed Tuesday with shares of consumer staples companies in the S&P 500 declining less than 0.1% while shares of consumer discretionary firms in the S&P 500 were ahead over 1.4%.

In company news, American depository shares of Ku6 Media ( KUTV ) rallied as much as 75% on Tuesday after a Chinese entrepreneur increased his direct stake in the online video company and agreed to provide at least $10 million in new equity or debt financing to the firm.

ADS were up 51.4% in late trade at $3.18 per ADS, earlier climbing as high as $3.68 each. Each ADS is equal to 100 shares of KUTV common stock and have a 52-week range of 98 cents to $3.90 apiece.

Under terms of the deal, Xu Xudong, the founder of Sky Profit Ltd. - an online social media platform for voice, text and video - and a majority owner of Shanda Media, agreed to buy nearly 1.94 billion KUTV shares now owned by Shanda. Following the transaction, XU will own a 41% direct interest in KUTV while Shanda's stake would slip to about 29.5% with around 1.39 billion shares.

The price Xu will pay will be based KUTV's share price during the seven market sessions immediately preceding the deal closing, currently slated for April 30.

At Monday's closing price of $2.10 per ADS, Xu would pay around $41 million for his 1.94 billion shares, rising to around $61 million at the stock's late afternoon price around $3.20 per ADS.

XU also agreed to work with the KUTV board to add two new directors and to raise at least another $10 million in debt or equity funding for the company by Oct. 30. The companies also indicated a possible deal in the future where KUTV could acquire Sky Profit, according to a regulatory filing today.

In other sector news,

(+) MPEL, Macau casino shares rise after local authorities report a 13.1% jump in March wagering over the prior-year period. Over the first three months of 2014, gambling revenues were up 19.8% over Q1 levels last year.

(-) EVRY, Posts surprise Q4 net loss of $14.3 mln, or $0.70 per share, down from a $1.1 mln profit in the year-ago period. Excluding items, it recorded a $0.05 per share loss, trailing estimates looking for EPS of $0.31.



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This article appears in: Investing , Commodities

Referenced Stocks: KUTV

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