Friday, 28 October 2011

Mergers & Acquisitions - Week Ending 28/10/11


On Monday, it was announced that toy titan Mattel would purchase preschool game manufacturer HIT Entertainment for $680 million. This move will add names such as ‘Thomas the Tank Engine’ and ‘Bob the Builder’ to Mattel’s large portfolio of children’s brands. The buyer was up 2.1%. Sara Lee Corporation sold the majority of its North American foodservice and beverage units to The J.M. Smucker Company for $350 million. The two firms are expected to establish a working relationship based upon liquid coffee innovation. The consumer giants company was down 0.7%. In healthcare, Cigna bought HealthSpring for $3.8 billion in cash. This deal looks to capitalise on an ever-aging US demographic; adding 340,000 Medicare Advantage customers to Cigna. The target was boosted 33.7%, reflecting the large premium being paid, as Cigna gained 1.4%. Oracle said that they would buy RightNow Technologies, which provides customer service software, for $1.43 billion. This is part of the company’s strategy to expand its cloud-computing services. The tech powerhouse increased by 2.3%, while RightNow grew by 19.4% due to the premium offered. It was revealed in after hours trading that Morgan Stanley would become the latest Wall Street firm to divest its mortgage servicing company; selling ‘Saxon Mortgage Services’ to Ocwen Financial for $59 million. The following day, the vendor dropped 3.7% as the bidder hit a 4.2% rally. 

On Thursday, Ericsson brought its two decades in the cellphone market to an end when their stake in Sony Ericsson was acquired by their partner Sony for $1.5 billion. The joint venture had been struggling for most of its existence, facing stiff competition from the likes of Nokia and Apple, eventually only managing to break even. The markets reacted with positive sentiment to the split; the seller was up 9.2%, while the Japanese electronics firm gained 6.5%. Coca Cola purchased Great Plains Coca Cola Bottling for $380 million; the latest in a string of independent bottler acquisitions that they hope will cut production costs. The beverage giant closed 1.6% higher. Later that day, The Walt Disney Company took hold of a 49 percent stake in ‘Seven TV’, a Russian broadcaster, for around $300 million. This move will allow them to circulate a Russian equivalent of the ‘The Disney Channel’ in one of the world’s fastest growing economies. The worldwide entertainment company grew 3.1%. The following day, two Chinese automakers agreed to take over troubled car manufacturer Saab for a total of $240 million. Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade are hopeful that their funding will help the Scandinavian company become competitive once again, should the Chinese regulators allow the deal. Swedish Automobile, Saab’s parent company, was 20.5% lower by the bell.