Mergers and Acquisitions: Deals and Rumors of the Day
Now that the economy is healing and cash is flush, mergers and acquisitions are reaching exciting levels. Here’s Wall St. Cheat Sheet’s guide to yesterday’s M&A activity.
1) Seagate Technology (NASDAQ:STX) will acquire Samsung Electronics’ (005930.KS) hard-disk-drive business for $1.38 billion, which will help the latter shed non-core assets and focus on displays and solar cells. This is an important move for Seagate, as the industry is becoming fiercely competitive as consolidation takes hold. Samsung will be able to keep a 9.6 percent stake in its hard-drive business, and will give Seagate access to NAND flash memory devices, which is a valuable piece of intellectual property. However, the success of this deal hinges on the ability of hard drives to compete with smart devices which don’t use that type of data storage.
2) Wal-Mart (NYSE:WMT) is really with it: the company decided to buy Kosmix, a social media start-up, for an undisclosed amount of money. They probably paid more than is rational, given that we are in the midst of a social media frenzy. Kosmix filters information by topic from websites, Twitter messages, and other sources in real time, which will benefit Wal-Mart in the realms of e-commerce.
The Nasdaq OMX Group (NASDAQ:NDAQ) and ICE (NYSE:ICE) are not giving up: they just announced a few more enticements to try to get NYSE Euronext (NYSE:NYX) to agree to an acquisition. First, Nasdaq would be willing to pay a $350 reverse break-up fee should regulators fail to approve the deal. Note that yesterday, we learned that NYSE was hoping for something in the $2 billion range—big disconnect there! Nasdaq and ICE have also obtained financing from a consortium including Bank of America (NYSE:BAC) and UBS (NYSE:UBS). Finally, Nasdaq and ICE are serious, and submitted a merger contract.
The Jones Group (NYSE:JNY), which owns Nine West and Jones New York, will be making a bid for Jimmy Choo, which makes those stilettos over which women salivate. The price tag could be upwards of $814 million.
British Business Secretary Vince Cable is thinking about merging Northern Rock with Lloyds Banking Group (NYSE:LYG) branches, a suggestion released in a report by the Independent Commission on Banking last week. The European Commission is requiring Lloyds to sell many of its branches to increase banking competition anyway, so this could be a feasible solution.
Federal-Mogul (NASDAQ:FDML), the formerly bankrupt auto parts manufacturer owned by Carl Icahn, isn’t faring too well in its auction process. Apollo Global Management (APO) and the Carlyle Group submitted offers at the end of March, but aren’t too keen on the multiples they may be expected to pay, particularly as the company’s stock has rebounded as of late.
Blackboard (NASDAQ:BBBB), an educational software company, has received unsolicited takeover bids and as a result, decided to hire Barclays Capital (NYSE:BCS) as its adviser. Blackboard is pretty familiar to most college students, as it provides educators with communication and teaching tools for their students, cementing the end of true snow days.