Friday, 24 February 2012

Mergers & Acquisitions - Week Ending 02/24/12

On Monday, construction firm URS purchased rival Flint Energy Services for $1.25 billion. This will greatly increase URS's offerings to energy companies as they continue to expand their shale operations. The bidder was up 0.9% as the target was boosted 66%, reflecting the large premium offered. The following day saw action in utilities, as Fortis acquired CH Energy for $1 billion in an all-cash deal. This will allow the Canadian firm to enter the electricity and gas distribution market in the US. The buyer lost 1.4% while CH Energy gained 12.7%. CME Group doubled its stake in the Dubai Mercantile Exchange to 50 percent for an undisclosed amount. This will aid the DME in increasing the power of the Oman oil futures contract. The financial group dropped 1.3%. BCG Capital purchased the majority of Grubb & Ellis’ assets following their bankruptcy. The financial brokerage hopes that this deal will allow it to successfully diversify into real estate. The seller plummeted 55.7%. Also that day, Wells Fargo took over BNP Paribas’ North American loan unit, worth around $9.5 billion. This news sees the US bank continue to grow as BNP look to meet strenuous European capital requirements. Wells Fargo and the French bank were down 1.2% and 2.8% respectively.

The midweek saw Shell buy Cove Energy for $1.6 billion. This will allow the buyer to grow its East African natural gas operations. The oil and gas giant was relatively unchanged while Cove closed 23.6% higher, mirroring the premium paid. The following day, Citigroup said that it would divest its 10 percent stake in HDFC, a large Indian mortgage lender, worth approximately $2 billion. A desire to bolster its capital reserves is among possible motives. The financial conglomerate was up 1% on the news as HDFC lost 3.6%. On Friday, El Paso Corporation spun off its production and exploration units to a consortium of investors including Apollo Global Management for $7.1 billion. This news, which follows Kinder Morgan’s takeover of the seller, is the latest in what is considered the North American gas boom, much of which is built on shale formations and a process known as ‘fracking’. By the bell, the energy firm and Apollo had gained 1.5% and 1.7% respectively.