.jpg)
.jpg)
.JPG)
M&A May Juice 2007, Too
By Ian Cooper
2006 was witness to 31,825 M&A deals (valued at more than $4 trillion) thanks in part of a significant rise in our major U.S. indices. We see no reason to believe that 2007 won’t be as stellar, too. In the first week of January 2007, some $6 billion in deals were already announced. And we’re not the only ones who think 2007 will be a grand year for M&A. According to The New York Times, Abby Joseph Cohen “expects merger activity to keep rolling in the New Year, thanks in part to the Federal Reserve’s halt in raising interest rates.”
Here’s a taste of what’s happening in the world of M&A as we speak…
State Street Corporation just inked a definitive agreement to buy Investors Financial Services for about $4.5 billion in stock. That gives Investors Financial shareholders a 38% premium to Friday’s $46.95 closing price.
Triad Hospitals just announced it would be bought out for $4.7 billion and the assumption of $1.7 billion in debt, which values Triad at $50.25, a 16% premium over Friday’s $43.27 close. And Lear just announced that a group affiliated with Carl Icahn approached it with a $2.61 billion offer, which values the company at $36. And Mills Corporation just received a $1.56 billion offer from Simon Property Group and a hedge fund.
We’re also looking for more merger speculation in the airline industry. Sure, US Airways and Delta Air Lines’ deal looks to be off. And sure, Northwest Airlines’ CEO just reiterated the company’s desire to exit bankruptcy as a stand-alone airline. But merger speculation in this industry never seems to die.
And then there’s the horse race for Equity Office Properties. When Blackstone struck a deal to buy Equity Office Properties (EOP) in November 2006 for $48.50 a share in cash, or $36 billion, including the assumption of debt, no one expected for Vornado’s consortium to counter bid with $52 a share. And both want EOP bad, considering that EOP owns or has stake in some 543 office buildings “at a time when rents are rising and vacancy rates are falling,” according to Bloomberg.com. And we can’t say we see a near-term end to the race. But that all depends on if Vornado comes back with a counteroffer versus Blackstone, which just upped the ante by about $2 billion to more than $38 billion. The new offer of $54 now turns up the pressure on Vornado to come back with an even higher bid.
That was on January 26, 2007. As of today, Vornado has put in a revised bid of $23.24 billion for Equity Office Properties, and even promised to pay that money up front “to address concerns about the speed and certainty of its offer,” according to the Associated Press. The ball is now in Blackstone’s court.
Take care,
Ian L. Cooper, Editor, Early Alert Trader