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The writer is a long term value investor (over 10 years experience) seeking both value in long and short ideas. Besides stock positions, the writer likes to work with options to enhance the risk/return profile of the ideas. Disclaimer: This article provides opinions and information, but does not... More
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  • Merger And Acquisition Recap - Part III 0 comments
    Jun 12, 2012 9:49 AM | about stocks: CRM, LH, MTOX, NDSN, SBUX, UHS, WD

    This week I will run you through the most important mergers and acquisitions for the week of June 4th till June the 8th.

    Walker & Dunlop (WD) entered into an agreement to acquire CWCapital LLC which is currently owned by Fortress Investment Group. Walker & Dunlop will pay $220 million for the company. The acquisition will be financed with $80 million in cash and $140 million in stock. The deal will create one of the "largest commercial real estate lenders in the United States." Walker expects to close the deal between 90 and 120 days, depending on regulatory approval. Shares of Walker jumped over 7% on the back of the deal on Friday, narrowing year to date losses to 4%.

    Salesforce.com (CRM) agreed to acquire Buddy Media, the social media marketing platform in a deal valuing the company at $689 million. The acquisition, which is expected to close in the third quarter of this year will be financed with $467 million in cash and $222 million in equity and option grants in Salesfore.com. The acquisition of Buddy is the latest in a string of acquisitions of Salesfore.com which has acquired 20 companies since 2006. Salesforce's acquisition strategy of acquiring small promising companies before they go public highlights the company's greater tolerance for risk. Shareholders applaud the deal as shares have returned 34% year to date already.

    Laboratory Corp of America (LH) the clinical laboratory company announced that it will acquire MEDTOX (MTOX) for $27 per share, in a deal valuing the diagnostics company at $241 million. The purchase price of $27 per share represents a 37% premium compared to the close on the day before the announcement. The board of MEDTOX unanimously approved and recommended the deal to its shareholders. The deal is expected to close in the third quarter of 2012. Shareholders in MEDTOX have almost seen the value of their holdings double in 2012, with shares returning 90% year to date.

    Universal Health Services (UHS) the operator of hospitals and health centers entered into an agreement to acquire Ascend Health Corporation in a deal valuing the company at $517 million. UHS will pay $500 million in cash and assume $17 million in Ascend's debt. Ascend has psychiatric facilities in Texas, Arizona, Utah, Oregon and Washington. The addition of Ascend represents a sizable acquisition for UHS which has a market capitalization of $3.8 billion. Shares of UHS returned 6% this week, outperforming the wider market.

    Starbucks (SBUX) the roaster and marketer of coffee announced to acquire privately held bakery chain La Boulange in a deal valuing the company at $100 million. Starbucks plans to roll out La Boulange's pastries in its retail outlets in the coming years. The company hopes to aggressively grow its current $1.5 billion sales in food items in the United States. The acquisition is expected to be closed in the fourth quarter of 2012 and dilute earnings per share by $0.02 in the second half of 2012.

    Nordson (NDSN) the manufacturer of dispensing, testing, inspection and surface preparation equipment announced to acquire Xaloy Superior Holdings. Nordson will pay $200 million for Xaloy, the manufacturer of melt delivery components for the global plastic processing industry. Nordson will finance the acquisition from its current credit facilities. Both companies expect to close the deal in the third quarter of this year.

    Activity levels in the merger and acquisition market picked up in the recent week. The number of acquisitions picked up slightly and the total announced deal size is about $2 billion. In general, most acquisitions in the sample above have been nice little additions to the company's operations.

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

    Themes: quick-picks-lists Stocks: CRM, LH, MTOX, NDSN, SBUX, UHS, WD
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