Merger And Acquisition Recap - Part I

by: The Value Investor

This will I will run you through the most important mergers and acquisitions for the week of May 21 till May 25.

Ultra Clean Holdings (UCTT) has signed a merger agreement with American Integration Technologies LLC. Both companies are suppliers of critical systems to the semiconductor capital equipment, medical, energy, industrial and aerospace industries. UCTT will pay approximately $74 million in cash and $25 million in stock for a total consideration of $99 million for the company. The transaction is expected to close by the end of the coming month. Shares of Ultra Clean hardly moved on the back of the sizable acquisition (Ultra Clean has a market capitalization of roughly $150 million)

Eaton Corporation (ETN) has announced a merger agreement, or actually an acquisition, of Cooper Industries (CBE). Under the agreement shareholders of Cooper will receive $39.15 in cash and 0.77479 shares in Eaton. The offer, which values Cooper at $72, represents a 29% premium for the company. The "merger" agreement will create a $21 billion powerhouse focused on power and electrical markets. Shares of Cooper quickly jumped towards the offer price while Eaton's share price hardly moved on the back of the $11.8 billion deal.

Nordson Corporation (NDSN) announced a $200 million acquisition of EDI holdings (Extrusion Die Industries). The manufacturer of testing and inspection equipment will buy the Wisconsin slot coating and flat polymer extrusion company in a transaction which is expected to close in the third quarter. Shares of Nordson jumped up on the back of the news and a strong third quarter guidance issued by the company.

General Cable (NYSE:BGC) announced to acquire Alcan Cable in an all cash transaction valuing the business at $185 million. General Cable will finance the acquisition of the wire and cable business, which currently is in hands of Rio Tinto PLC, from its revolving credit facility. The transaction of Alcan Cable is expected to close in the second half of the 2012 and will add about $650-$700 million in annual revenues to General Cable's $1.4 billion business.

DaVita (DVA) the provider of kidney care services throughout the country will merge with HealthCare Partners, the operator of medical and physicians networks. Shares in DaVita quickly jumped from levels of $80 to peak at $85 before settling back to the $83 level. DaVita will pay $4.42 billion for HealthCare Partners, $3.66 billion in cash and the remainder in stock. The rationale behind the deal is to provide healthcare in a more integrated manner which should be more pleasant for patients while simultaneously lower healthcare costs. Analysts are generally positive about the deal which is expected to close in the fourth quarter of the year.

SAP AG (SAP) announced the acquisition of Ariba (NASDAQ:ARBA), the cloud-based business provider. SAP will pay $45 per share for the company, paying a 20% premium compared to the close of the day before the deal was made public. SAP values the business provider at $4.5 billion, or roughly 10 times its 2011 annual revenue of $444 million. Ariba will be integrated in SAP's North American business unit. Shares of German based SAP hardly reacted to the news as the acquisition is relatively small for SAP which reported annual sales of 13.7 billion Euro in 2011.

Oracle (ORCL) has entered into an agreement to acquire Vitrue. The acquisition would help the company's customers to increase customer engagement and improve the effectiveness and efficiency of their media and customer services efforts. Rumors surface on the internet that Oracle paid $300 million for the cloud-based social platform.

Last week was a particular busy week regarding merger and acquisition activity. The deals listed above entailed a total deal size of roughly $22 billion driven by the large deal between Eaton and Cooper Industries. Furthermore DaVita and SAP announced rather large deals making it an interesting week for dealmakers across the country.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.