Merger And Acquisition Recap - Part V

 |  Includes: BEAV, FNF, JAX, LBTYA, MSFT
by: The Value Investor

This week I will discuss the most important merger and acquisition announcements for the week of June 25th - June 29th. With summer holidays approaching the number and size of the announced deals was rather moderate compared to recent weeks.

Microsoft (MSFT) the software company announced the acquisition of the business social network Yammer in a deal valuing the company at $1.2 billion. The deal provides Microsoft with social networking tools which it can integrate into existing products for its corporate customers. Some 200,000 customers use the social network internally within their company. Yammer which was founded in 2008, creates file-sharing tools and currently has about 4 million corporate customers, 20% of which pay for upgrades and premium services. As recent as February of this year the company raised $85 million at a $500 million valuation. Shares of Microsoft traded largely unchanged over the last week as the acquisition price of $1.2 billion is just a little dent in Microsoft's $257 billion market value. The timing of the deal might leave some investors wondering after Microsoft announced $9 billion in cumulative losses in its internet division.

Fidelity National Financial (FNF) the provider of title insurance and mortgage services announced the acquisition of J. Alexander (JAX). The deal values J. Alexander, which operates 33 traditional American restaurants in a range of Southern States, at $72 million. The company will be part of the American Blue Ribbon Holding subsidiary of Fidelity National Financial which currently owns 674 restaurants. The deal values J. Alexander at $12 per share, or $3 in cash and one share in the Blue Ribbon Holding subsidiary. Currently shares in J. Alexander have already risen 82% year to date to $11.36 per share. CEO Stout of J. Alexander recommends the deal to its current shareholders. Shares in Fidelity National Financial reacted positively on the announcement trading 21% higher so far this year.

BE Aerospace (BEAV) the manufacturer of cabin interiors for commercial aircrafts and business jets announced a $251 million acquisition of German-based Interturbine. Interturbine which currently is privately-owned, supplies lubricants, hydraulic fluids and interior products for aircrafts. Earlier in January this year, BE Aerospace already acquired supply chain manager UFC Aerospace for $400 million. The deal is expected to close in the fourth quarter of 2012 and be accretive to earnings by 2014. The acquisition which will be paid in cash will add about $110 million in annual revenues according to analysts at BB&T Capital Markets. Shares in BE Aerospace rose 2.5% over the last week as investors appreciate the bolt-on acquisition which will increase its annual revenues of $2.5 billion by about 5%. Investors were positively surprised that the company was ready for yet another acquisition after the sizable addition of UFC Aerospace earlier this year.

Liberty Global (LBTYA) the provider of video, broadband internet and telephone services announced that the company and Searchlight Capital Partners would acquire OneLink Communications in a deal valued at $585 million. CEO Fries of Liberty Global comments on the deal pointing out that the deal will make Liberty the leading provider of cable services in Puerto Rico. Combined with OneLink's operations, Liberty Global will provide 700,000 homes with their services, generating about $300 million in annual revenues. The deal values OneLink Communications at 6.3 times 2012's operating cash flows. The newly created entity will be 60% owned by Liberty Global with the remainder of shares owned by Searchlight.

Last week was a reasonably active week in terms of activity levels and deal size. The total announced deal size in the sample above came in around $2 billion. Acquisitions have been relatively small this week after some larger deals in recent weeks.

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