Friday, 9 December 2011

Mergers & Acquisitions - Week Ending 09/12/11

On Saturday, enterprise software provider SAP purchased cloud-based rival SuccessFactor for $3.4 billion. They believe that their future growth is based largely in cloud computing, with this deal being the first step in the creation of a “powerhouse”. On Monday, the bidder fell 1.95% while the target was boosted 51%, reflecting the large premium offered. Also that day, energy firm Entergy said it would sell its electric transmission unit to ITC Holdings. The proposed deal would take the form of a reverse Morris trust; a transaction method which uses the shareholders as middlemen to avoid taxes. It would make ITC one of the US’ largest power providers. The vendor was up almost 4%, as ITC gained 3.1%. The following day, China Development Bank announced new agreements with 3 private equity firms. The state-owned institution set up an investment oriented subsidiary which will work with KKR, TPG Capital and Permira to help it diversify its holdings. KKR were relatively unchanged by Tuesday’s bell.

The midweek saw JC Penney acquire a 16.6 stake in Martha Stewart Living Omnimedia, an integrated media and merchandising company, for $38.5 million. Both firms have been struggling in recent times, and are hoping that the move will bring good fortune through new ministores and an increased online presence. The department store chain increased 0.6%, while Martha Stewart’s firm rose 33.3%. Also that day, Santander spun off its Colombian unit to Chilean counterpart CorpBanca for $1.225 billion. The Spanish bank is the latest in the Eurozone to divest assets in order to strengthen its balance sheet. The buyer finished 3.2% higher as the seller saw no change. The following day, IBM took over DemandTec, an online enterprise software company for $440 million in an all-cash deal. As with SAP on the weekend, IBM are looking to gain from the projected upswing in cloud computing. The tech giant dropped 1.3% as DemandTec flew up 54% due to the large premium tendered. On Friday, Rogers Communications and BCE, two massive communications companies, purchased Maple Leaf Sports and Entertainment for $1.2 billion. It is believed the firms will be able to provide game coverage of the teams owned by the target, which include the NBA’s Raptors and the Maple Leafs of the NHL. Rogers lost 0.5%, while BCE closed 0.8% higher.