Friday, 27 July 2012

Mergers & Acquisitions - Week Ending 07/27/12


Over the weekend, it was announced that NRG Energy would buy GenOn Energy for $1.7 billion. The move, which will create one of America’s largest power generation firms, is an attempt by the firms to survive in the face of falling electricity prices. NRG was up 8% while the target was boosted 26%, exceeding the premium offered. Monday saw action in transport, as Genessee & Wyoming purchased RailAmerica for $1.4 billion. The buyer is expecting this to increase their EPS by 10 percent. G&W and RailAmerica gained 0.6% and 9.8% respectively. United Technologies sold its Rocketdyne unit to GenCorp for $550 million. This comes as UTC looks to refocus on its core businesses. The seller dropped 1.3% while the defense and aerospace manufacturer jumped over 12%. Peet’s Coffee & Tea was acquired by Joh. A. Benckiser for $974 million. The conglomerate believes in Peet’s core values, as well as its long term growth prospects. The beverage company was elevated almost 28%, mirroring the premium offered. Dreamworks Animation absorbed Classic Media for $155 million. Through the deal, Dreamworks will add many popular family entertainment franchises to its portfolio. The entertainment company lost 0.4%. Later that day, VMware bought Nicira for $1.05 billion. With this deal, the software visualization firm steps into server visualization, a field with high growth forecasted. The buyer was down 0.4% on Tuesday.

The midweek saw MGN Gas Networks taken over by a consortium of Li Ka-shing’s companies for $1 billion. Mr Li believes that adding this to his complimentary businesses may help return the British gas firm to profitability. The markets didn’t agree as two of the bidders, Cheung Kong Holdings and Power Assets Holdings, fell 0.9% and 1.8% respectively. Shell announced oil and gas production sharing contracts with CNOOC and CNPC; two Chinese energy firms. The fields at the center of these deals are in West Africa and Changbei, China, respectively. The fight continues to meet China’s ever-increasing energy needs. The oil and gas firm closed 0.9% higher. Also that day, United Technologies divested its pumps and compressors unit Hamilton Sunstrand to BC Partners and the Carlyle Group for $3.46 billion. This is the latest in a string of non-core spin-offs to fund its takeover of Goodrich. Carlyle and the building systems and aerospace supplier gained 1.2% and 0.4% respectively. On Friday, Apple acquired AuthenTec, a mobile security group, for $356 million. An increase in software attacks on iOS has followed the recent surge in popularity, and Apple is now looking to bolster its security. The tech giant was up 1.8% while AuthenTec spiked over 66%, exceeding the premium offered.