M&A Weekly Recap: Google Buys Frommer’s, Carlyle Group Gets Getty Images
Your cheat sheet to last week’s mergers and acquisitions:
A merger between US Airways Group, Inc. (NYSE:LCC) and AMR Corporation (AAMRQ.PK) seems more likely following the latter’s Chief Executive Tom Horton, saying to the Financial Times that a deal “may be an attractive option” and also that a decision could be only weeks away. The bankrupt carrier is still exploring its options, including other combinations or staying independent.
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Tesoro Corporation (NYSE:TSO) will acquire BP’s Carson, California refinery and ARCO retail operation for approximately $2.5 billion. The buyer anticipates that the transaction will be accretive to earnings in both of the initial two years of operations.
Illinois-based Guggenheim Life is currently the lead bidder for all of Aviva plc’s (NYSE:AV) United States division, in an acquisition that could value the operations at £800 million, which is about £200 million below the previous estimates. The Daily Telegraph said over the weekend that Aviva recently wrote down the value of its subsidiary by some £876 million and might agree to take a further hit, since a sale will free up approximately £2 billion of capital.
Shares of Leap Wireless International, Inc. (NASDAQ:LEAP) moved down on word that Deutsche dumps on the possibility that the company will be purchased merely for its spectrum and other assets. DB calculates that the firm’s assets are worth $4.6 billion, although its debt and obligations come to almost $6.5 billion. Last week, Leap shares were beaten down because of weak earnings, but afterwards rebounded on the prospect of a buyout.
Verint Systems Inc. (NASDAQ:VRNT) purchases Comverse Technology Inc. (NASDAQ:CMVT) through a stock swap subsequent to the completion of the latter’s previously announced distribution of its telecom division along with other assets. The transaction would cancel out CMVT’s majority ownership in and control of VRNT.
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Shares of FSI International, Inc. (NASDAQ:FSII) gain more than half their value Monday on the news that the leading Japanese chip equipment producer Tokyo Electron Ltd (TOELF.PK) will acquire the former for $6.20 per share, or $252.5 million in cash. This price represents a 53 percent bonus to Friday’s close. The purchase is expected to strengthen Tokyo Electron’s wafer surface preparation offerings.
Google Inc. (NASDAQ:GOOG) acquires the travel guide publisher Frommer’s from John Wiley & Sons at an unreported amount, but the buyer is said to not have decided whether to continue publishing Frommer’s titles in print. Google wants to become a major in online travel content and services, and its purchases of ITA Software and Zagat, along with the present purchase, underscores the goal.
Verizon Wireless’ (NYSE:VZ) $3.9 billion purchase of airwaves from a group of cable companies that includes Comcast Corporation (NASDAQ:CMCSA) and Time Warner Inc. (NYSE:TWC) is nearing approval by the Federal Communications Commission and the United States Justice Department, according to the Wall Street Journal. But first, the firms are required to reduce the scope and the length of arrangements that currently allow them to sell each other’s services in deals that ignited worries that they wouldn’t compete for Internet subscribers, a situation in which their fees would remain too high.
Teleflex Inc. (NYSE:TFX) will purchase Singapore-traded LMA International for $276 million, whose acquisition will add a worldwide market leader in laryngeal masks to its line of critical-care and surgical products. LMA has a direct selling presence on four continents, and earned a 2011 revenue of $124 million.
JDS Uniphase Corporation (NASDAQ:JDSU) acquires GenComm, a Korean producer of wireless infrastructure testing gear, for an unreported amount. The buyer already has a distribution arrangement with GenComm that brought $7.5 million in fiscal year 2012 revenue, and has attempted to reduce its exposure to a flat optical component market by reinforcing its telecom testing division, causing it to compete more often with suppliers such as Agilent Technologies, Inc. (NYSE:A) and Ixia (NASDAQ:XXIA).
Google’s (NASDAQ:GOOG) recent pattern in purchasing and developing the mobile/local solutions it requires, as opposed to depending upon third parties, is exhibited in its acquisition of Frommer’s, says Larry Dignan. Apple may partners with Facebook, Yelp, and others, but Google has proprietary offerings that include Zagat, Google+, Google Wallet, and now Frommer’s. Ryan Kim believes that the purchase amounts to evidence that local and travel content are converging, which might be something that YELP and TRIP won’t like.
EMC Corporation (NYSE:EMC) Chief Operations Officer David Goulder confirms that his firm is interested in acquiring security companies, as it has been recently seeking ways through which to decrease its storage hardware exposure. On the company’s shopping list could be richly-valued names like Fortinet, Palo Alto Networks, and Sourcefire, along with less expensive vendors such as IntraLinks, Vasco Data, and Websense. EMC’s second quarter storage software sales increased by 13 percent year-over-year.
Shares of coal producer Walter Energy, Inc. (NYSE:WLT) rebound following a tweet by Doug Kass which speculated that Xstrata Plc (XSRAF.PK, XSRAY.PK) could be mulling an approximate $47.50 per share bid for the company.
The Carlyle Group (NYSE:CG) and the management of Getty Images will jointly acquire Getty Images from Hellman & Friedman for $3.3 billion in a transaction that should close in the current year.
Shares of Physicians Formula Holdings, Inc. (NASDAQ:FACE) pop on the news that it will be purchased at $4.25 per share in cash by Swander Pace Capital. The acquisition price is 15 percent above Tuesday’s closing at $3.68, and the total amount of the deal should come to about $65 million.
Global Payments Inc. (NYSE:GPN) will buy private equity Accelerated Payment Technologies from Great Hill Partners for the amount of $413 million. The acquired firm supplies payment systems to small- to medium-sized merchants, while Global Payments processes the majority of its transactions under their current relationship.
GlaxoSmithKline (NYSE:GSK) will divest 25 older drugs marketed in Australia to South Africa’s Aspen Pharmacare for £172 million as a part of its strategy to sell off non-core treatments. The transaction will follow three divestitures within GSK’s non-prescription unit over the past several months.
International Business Machines Corporation (NYSE:IBM) purchases Texas Memory Systems, which produces high-end flash memory hardware, in a transaction of which the financials were not reported. TMS offers standalone systems that rival Violin Memory, XtremIO, and PCI-Express modules for servers, which compete with solutions by OCZ Technology Group Inc. (NASDAQ:OCZ), Fusion-io Inc. (NYSE:FIO), and STEC. This acquisition represents an attempt by IBM to revamp a storage business that has experienced slumping sales.
Cnooc Limited (NYSE:CEO) is apparently learning from its failed attempt with its 2005 offer for Unocal, and is taking a smarter tack in its attempt to purchase Nexen, Inc. (NYSE:NXY); observers are more optimistic that it will succeed this time. Conditions are said to be different now, “especially since everybody needs the kinds of long-term patient capital China provides.” Nexen’s lack of name recognition in the United States and in Canada is thought to be helpful as well.
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Electronic Arts Inc. (NASDAQ:EA) is quietly looking at a sale with firms that include KKR and Providence Equity Partners, say sources, and chatter has it that it would accept a bid of $20 per share. In the meantime, Take-Two Interactive Software, Inc. (NASDAQ:TTWO), which at one time rejected an offer from EA, sees its shares move up Thursday, along with EA’s archrival Activision Blizzard, Inc. (NASDAQ:ATVI).
Barrick Gold Corporation (NYSE:ABX) affirms that it wants to divest its 74 percent investment in Tanzania-focused African Barrick Gold, reporting that it is in preliminary discussions with China National Gold concerning the matter. If China National is able to obtain more than 30 percent of the voting rights in ABG, it would then be required to make a full takeover bid.
Shares of Venoco, Inc. (NYSE:VQ) soar Thursday on word that advanced financing discussions toward its going-private agreement with Chief Executive Timothy Marquez are going forward. The firm has not yet set a completion date of the financing, nor a closing date for the merger, although the transactions are expected to close before Sept. 14th.
Florida-based BankUnited, Inc. (NYSE:BKU) receives bid of approximately $25 per share from Toronto-Dominion Bank (NYSE:TD) and BB&T Corporation (NYSE:BBT) according to The New York Post, although the company is said to not be in formal talks. However, the offers remain below BankUnited’s Thursday close of $25.70 and also its asking price of between $27 and $29.
Fair Isaac Corporation (NYSE:FICO) purchases the risk-management software company Adeptra for $115 million in cash. This transaction should allow Fair Isaac a wider array of offerings of business and management services; the firm is known for its creation of the FICO credit score.
Boardwalk Pipeline Partners LP (NYSE:BWP) and Boardwalk Pipelines Holding, which is a division of the former’s general partner, Loews Corporation (NYSE:L), are creating a joint venture to purchase pipeline company PL Midstream for $625 million. The acquisition is from the closely held PL Logistics, which marks the joint venture’s entrance into the natural gas liquids sector. The venture split will be defined by Boardwalk Partners owning 33 percent, Boardwalk Holding 67 percent.
China National Gold’s possible purchase of the African Barrick Gold Corporation (NYSE:ABX) represents the most recent in a series of attempts by China’s producers to meet a supply shortfall, as the country’s output of gold is 360 tons per year, but it uses 800 tons during the same period. China might not be proud to admit that the imports arise from a tech deficiency; foreign technology allows drilling some three times deeper than can be currently done in China.
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