Friday, 17 June 2011

Mergers & Acquisitions - Week Ending 17/06/11


Over the weekend, it was revealed that there would be a $3.2 billion merger in the insurance market between Transatlantic Holdings and Allied World Assurance. On Monday, Transatlantic’s share price was boosted by the 16% premium being offered to their shareholders; it closed up 9.5%, while Allied World Assurance fell 4.5%. Horizon Acquisitions purchased APR Energy, a temporary power provider, for $855 million. This had only a marginal effect on the investment vehicle’s stock price. VF Corporation purchased shoemaker Wrangler for around $2 billion in an all cash deal. This was met extremely positively on the markets, with the apparel holding company’s price up 10%. Wendys sold the Arby’s chain to Roark Capital Group in a deal worth $430 million. Wendy’s was up almost 1%, having offloaded a considerable amount of Arby’s debt on the private equity firm. It was announced that Honeywell International would purchase EMS Technologies for $506 million in an all cash deal. The technology giant was up 0.5% while the wireless solutions provider jumped 32%, just 1% short of the premium being offered. Also that day, in the healthcare sector, Aetna said it would buy Genworth Financial’s Medicare unit for $290 million. Genworth closed up 1.4%, while Aetna was down 0.26%.
On Tuesday, it was announced that Avis Budget Group would buy Avis Europe for $1 billion. This news boosted both car rental companies; Avis Europe’s price jumped by a massive 58%, reflecting the generous premium tendered by the buyer. Avis Budget was up 7.6%. In telecoms, Ericsson purchased Telcordia for $1.15 billion. The Swedish communications major was up 2.3% by market close. The following day, SunPower investors voted to support a $1.3 billion takeover by Total SA. Shares in SunPower fell almost 15% following the announcement, despite the premium offered by the French oil firm. Shares in Total fell 1.5%.
Thursday also saw action in the energy sector; Itochu Corporation, a Japanese conglomerate, said that it would acquire 20% of a Columbian coal venture operated by Drummond Company in a deal worth $1.5 billion. Shares in Itochu were down 2.4%. Energy Transfer Equity said it would absorb Southern Union Company for about $4.2 billion worth of stock, which will create one of the country’s largest natural gas companies. The buyer’s stock rose by 8.2%, while Sothern Union rose by 17.5%, mirroring the premium being paid. Also that day, Capital One Financial purchased ING Groep’s US online banking unit for $9 billion as part of efforts to create a national banking franchise. Shares in Capital One were trading almost 2.4% higher, while ING Groep’s price was relatively unaffected. On Friday, Reynolds Group announced a takeover of Graham Packaging worth $4.5 billion. This followed word that Silgan Holdings would not be challenging the latest offer made by the subsidiary of New Zealand’s Rank Group. The container manufacturer ended the week down 2%, whilst the Rank Group’s stock fell almost 1%.