Gmarket deal should close in June; Supervalu fears overblown; Charlotte Russe may thwart sale

By Cristal Cody

Tupelo, Miss., April 17 - eBay Inc.'s $1.2 billion acquisition of Korean online marketplace Gmarket Inc. should close by the end of June, an analyst said Friday.

The companies expect the deal announced on Thursday to close in the second quarter of 2009.

In other situations, fears of a bankruptcy filing by Supervalu Inc. are overdone, an analyst said Friday.

Also on Friday, a market source said the store turnaround plan underway by new management at Charlotte Russe Holding, Inc. could put a stop to the sale of the clothing retailer.

Moving to Wall Street, stocks rose on Friday, with one market source noting that consumer sentiment is improving, if only slightly.

"We may be closer to the end of this recession than most economists are forecasting," Bill O'Grady, chief market strategist with Confluence Investment Management LLC, said Friday.

The Dow Jones Industrial Average rose 5.90 points, or 0.07%, to close at 8,131.33.

The Standard & Poor's 500 index increased by 4.30 points, or 0.50%, to 869.60. The Nasdaq Composite index gained 2.63 points, or 0.16%, to finish at 1,673.07.

Gmarket buyout

Gmarket's buyout must receive final approval from South Korea's Fair Trade Commission.

San Jose, Calif.-based eBay offered $24.00 a share in cash for Gmarket's outstanding stock and American Depositary Shares, which represents a 20.2% premium to the stock's closing price of $19.96 on Wednesday.

"In our view, eBay's offer for Gmarket is fair," an analyst said Friday. "We believe that [the Korean agency] is likely to approve the transaction given that it had already conditionally approved eBay acquiring a controlling stake in Gmarket in September 2008."

Shares of eBay fell 2 cents, or 0.14%, to close at $14.39 on Friday, while Gmarket's stock lost a cent, or 0.04%, to end at $23.78.

Supervalu bankruptcy fears

Supervalu shares closed up 46 cents, or 3.22%, at $14.76 on Friday ahead of fourth-quarter results to be released on Thursday.

While shares have fallen off their 52-week high of $35.91 on bankruptcy fears, Robert Summers, an analyst with Pali Research, said Friday in a research note that the grocery retailer isn't down for the count yet.

"While we believe concerns over bankruptcy are overdone, we acknowledge that the company faces intense challenges in regards to price positioning, merger integration, and competitive positioning," he said. "However, liquidity concerns that have been circulating are misplaced in our view."

The Eden Prairie, Minn.-based grocery retailer operates stores under brands that include Albertsons, Bristol Farms and Save-A-Lot.

Charlotte Russe turnaround

On Thursday, Charlotte Russe executives said the company's sale process is underway after KarpReilly LLC dropped its fight to elect three board members.

The first bids are due this month.

"It is difficult to speculate on the likelihood of a deal or the valuation," a market source said Friday. "The more progress that is made on the turnaround, the less likely a deal becomes in our view as far greater value could be unleashed for shareholders under a turnaround scenario."

KarpReilly withdrew its nominations on Thursday after proxy advisory firms RiskMetrics Group, Inc. and Glass, Lewis & Co. recommended investors support all of Charlotte Russe's director nominees.

RiskMetrics noted in its report that the board had taken appropriate action to review strategic alternatives for the San Diego-based retailer's turnaround plan, which includes moving to higher-end clothing lines.

KarpReilly founder Allan Karp offered about $200 million to buy Charlotte Russe last year, but the board turned the offer down in favor of pursuing the new growth plans.

Shares of Charlotte Russe rose 25 cents, or 2.10%, to close Friday at $12.18.

Mentioned in this article:

Charlotte Russe Holding, Inc. Nasdaq: CHIC

eBay Inc. Nasdaq: EBAY

Gmarket Inc. Nasdaq: GMKT

Supervalu Inc. NYSE: SVU

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