Takeover Rumors Recap: Week of May 12

Includes: AET, BG, CG, CS, HUM, SKM, TDS, UNH, VM
by: Greg Wilder

It has been an eventful week for rumors.

The week started off with rumors supposedly coming from Credit Suisse (NYSE:CS) on Monday that the Carolina Group (CG) would receive a bid from Reynolds American Inc (NYSE:RAI). This takeover rumor, combined with the quarterly dividend announcement on Friday, May 9, was primarily responsible for the climb in CG from $69.20 to $74.01 on Monday and Tuesday.

Tuesday saw many takeover rumors as well. WellCare Health Plans Inc (NYSE:WCG) has received a significant amount of takeover speculation over the past two weeks. On Wednesday, May 7, rumors circulated that WCG had been entertaining third-party interest from UnitedHealth Group (NYSE:UNH), Aetna (NYSE:AET), and Humana (NYSE:HUM). On Monday, May 12, rumor had it that WellCare had received a $67 per share bid from UnitedHealth. This same rumor circulated around trading desks yet again on Friday, May 16, but at the price of $72 per share. WCG has steadily risen throughout the week, from $47.11 to over $51 per share on Friday. Since Wednesday, May 7, the stock has risen from $44.00 on takeover speculation.

On Tuesday, May 13, CrunchGear reported on a rumored merger between Helio (owned by SK Telecom (NYSE:SKM)) and Virgin Mobile (VM). They had initially reported the rumors on Thursday, May 8, and they reported yet again on Wednesday, May 14, when SK Telecom came out and spoke about the VM and Helio merger rumors. Reuters also picked up on this merger chatter on May 14, citing SK Telecom saying that, "(SK Telecom) is currently exploring strategic opportunities for Helio and has engaged in preliminary discussions with Virgin Mobile USA with respect to such an opportunity."

That same day, Virgin Mobile's stock (VM) rose from $3.04 to $3.37 on the merger chatter and the company's comments.

On Wednesday, May 14, a rumor circulated that Carlos Slim was preparing a bid for Bunge Limited (NYSE:BG) at $155 per share.

On Thursday, we saw the beginnings of a short squeeze on Telephone and Data Systems (NYSE:TDS) that ran from $43 to $52 partway through Friday. Institutions own a significant portion of the company, and short sellers began to feel pressure to cover their positions as the stock climbed back to February levels. We have even heard that the stock could hit $60 per share on this squeeze.

We will see what rumors circulate next week.