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58.com +5.7%; Morgan Stanley sees big Ganji.com deal synergies

Apr. 16, 2015 2:39 PM ET58.com Inc. (WUBA) StockWUBABy: Eric Jhonsa, SA News Editor
  • "We believe potentially a large portion of their ad budget can be saved if a merger takes place ... In addition there could be more cost savings from other expense items," says Morgan Stanley following an FT report stating 58.com (NYSE:WUBA) is close to announcing a merger with online classifieds rival Ganji.com.
  • MS, which has maintained an Underweight rating on 58.com also sees revenue synergies, given 58 and Ganji are respectively stronger in different verticals and regions - in particular, it highlights Ganji's job and automotive listing strength. However, the firm cautions Chinese antitrust regulators could reject the deal. The FT stated (without elaborating) a deal will likely involve two stages in order soothe antitrust concerns.
  • 58.com skyrocketed on Tuesday following the merger report, and gave back a portion of its gains yesterday. Shares are up 33% from Monday's close.

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