During the holiday-shortened week that saw moderate merger and acquisition activities, companies from various sectors, including pharma, healthcare, energy and technology, revealed key decisions of combination.
Japanese drug maker Shionogi & Co., Ltd. revealed a $1.1-billion agreement to purchase Sciele Pharma. With increasing research and development costs as well as price cuts imposed in Japan, the purchase will help Shionogi expand its reach in the U.S.
Coca-Cola Co. said Wednesday that it intends to buy juice maker China Huiyuan Juice Group Ltd. in a $2.4 billion cash deal. China is a booming market for the beverage company and purchase of the well-known domestic brand is expected to further brighten its prospects in that country.
Other companies that revealed M&A-related decisions include Chesapeake Energy Corp., International Shipholding Corp., Teradyne, Inc., Eagle Test Systems Inc., Open Text Corp., Captaris Inc. and Assurant Inc.
Shionogi to acquire Sciele Pharma
Monday, Sciele Pharma, Inc. (SCRX) revealed a definitive agreement to be acquired by Japanese pharmaceutical manufacturer Shionogi & Co., Ltd. (SGIOF.PK) for $31 per share or about $1.1 billion. The deal is expected to close in the fourth quarter of 2008.
The offer price marks a premium of 57.1% to Sciele's closing price on August 29, the last trading day before the deal was made known. Following the news, the company's stock surged to its 6-year-high Tuesday to $30.73 before closing at $30.68.
RBC Capital Markets raised its rating on the stock to "Sector Perform" from "Underperform," and lifted the price target to $31 from $17. Analysts at Roth Capital downgraded Sciele Pharma stock Wednesday to "Hold" from "buy" and raised the target price to $31 from $28.
The deal will help Shionogi expand in the U.S. market through gaining Sciele's sales force. The company said there would be no job cuts.
Chesapeake Energy to sell 25% of Fayetteville Shale assets
Natural gas producer Chesapeake Energy Corp. (CHK) Tuesday revealed an agreement to sell a 25% interest in its Fayetteville Shale assets in Arkansas for $1.9 billion to BP America Inc., a unit of BP Plc (BP,BP.L), Europe's second-largest oil company.
Chesapeake shares declined around 3% in the pre-market activity on the New York Stock Exchange. The stock closed the regular trade at $45.24, below the previous close of $48.40. BP shares closed at $$54.01, down from August 29 close of $57.63.
The transaction price consists of $1.1 billion in cash at closing and another $800 million during the remainder of 2008 and in 2009 through funding Chesapeake's remaining 75% share of drilling and completion expenditures until the $800 million obligation is met. The deal is expected to close later this month.
Though shale deposits are hard to access, the high prices for gas prices are making drilling from shale deposits profitable.
International Shipholding to be bought by Liberty Shipping Group
Shipping company International Shipholding Corp. (ISH) Tuesday said it received a $25.75 per share all cash purchase offer from Liberty Shipping Group LLC. The deal value totals $308 million.
The announcement sent International Shipholding's stock nearly 18%, up $3.56, to $23.81 per share. This was the stock's highest rise since 1988. The stock closed the session at $23.73.
The offer represents a 27% premium over the closing price of International Shipholding's stock price on August 29, the last trading day prior to public disclosure of the proposal. The company is a major car-truck carrier.
Teradyne to buy Eagle Test Systems
Tuesday, automatic test equipment manufacturer Teradyne, Inc. (TER) said it agreed to acquire its peer Eagle Test Systems Inc. (EGLT) for $15.65 per share or about $250 million in cash. The offer price marks a 10.4% premium to Eagle Test stock's closing price on August 29.
In pre-market trading Tuesday, Eagle Test shares surged $1.07 or 7.5% to $15.25. The stock closed the day's trade at $15.32, up from the previous close of $14.18. However, Teradyne shares dropped 2.2% to $9.12 in pre-market trading and closed the regular trade at $ 9.31, below the previous close of $9.33.
The deal is expected to close in the fourth quarter of 2008. The deal will help Teradyne expand its semiconductor testing business.
Coca-Cola offers to buy China Huiyuan Juice Group
Soft drinks maker Coca-Cola Co. (KO) Wednesday made an acquisition offer to China Huiyuan Juice Group Ltd., the largest privately-owned juice producer in China, for $2.4 billion in cash.
Coca-Cola shares closed Wednesday's regular trade at $51.66, down from the previous close of $51.96, on 11.22 million shares.
On a per share basis, the offer represents HK$12.20 per share, which is nearly three times equivalent to China Huiyuan's closing stock price of HK$4.14 Friday. The company is a well known domestic brand in China.
China Huiyuan has a 10.3% share in China's fruit and vegetable juice market, closely followed by Coca-Cola having a 9.7% share. China Huiyuan has a 43% control over the country's pure-juice market. China is the global software giant's fourth-largest market.
The deal may face regulatory hurdles due to the government dominance over corporate structure as well as opposition at home towards foreign companies.
Thursday, Deutsche Bank reiterated Coca-Cola stock with a "Buy" rating, while lowering its price target to $64 from $65. The brokerage reduced its 2008 earnings per share estimate to $3.09 from $3.10 and its 2009 estimate to $3.34 from $3.38.
Analyst Marc Greenberg lowered his estimates based on the Hui Yuan acquisition. The analyst believes that in the long-term the purchase would be beneficial, despite the high initial cost of the deal. However, near-term, the analyst's flat to slightly down currency impact next year is conservative against a weighted global basket that continues to provide a 2% tailwind.
Open Text to buy Captaris
Thursday, business software maker Open Text Corp. (OTC.TO) revealed an agreement to buy document management software maker Captaris Inc. (CAPA) for $4.80 per share or about $131 million in cash.
Open Text shares closed Thursday's regular trade at $35.79, down from the previous close of $37.64, on 195,400 shares. Captaris shares surged on the buyout news and closed the day's trade at $4.67, up from the previous close of $3.74.
The offer price marks a 28% premium to Captaris' closing stock price Wednesday. The deal, which will enable Open Text strengthen its Enterprise Content Management business, is expected to close by the end of 2008.
Friday, analysts at B Riley & Co downgraded Captaris shares to "Neutral" from "Buy".
Assurant to buy GE Warranty Management Group
Thursday, insurance services provider Assurant Inc. (AIZ) said it was buying the Warranty Management Group business of GE Consumer & Industrial, a unit of General Electric (GE), for $140 million in cash.
GE closed Thursday's regular trade at $27.70, lower than the previous close of $28.57. AIZ shares ended the session at $56.98, lower than Wednesday's close of $58.40, on 933,200 shares.
Assurant will pay GE $140 million in cash for the sale, transfer and conveyance of assets, while assuming certain liabilities. GE will pay Assurant $115 million in cash for the assumption of certain obligations.
The deal is scheduled for completion in the third quarter. It is expected to be earnings accretive to Assurant in 2009.
Zimmer Holdings to buy Abbott's spinal unit
Reconstructive orthopaedic implants maker Zimmer Holdings Inc. (ZMH) Thursday said it agreed to buy Abbott Spine business from Abbott Laboratories (ABT) for about $360 million in cash.
Zimmer shares closed Thursday's regular trade at $68.41, down from the previous close of $71.39, on 2.24 million shares. Abbot stock closed the session Thursday at $56.57, lower than Wednesday's close of $57.93.
The acquisition, expected to close in the fourth quarter of 2008, will help Zimmer expand its line of spinal medical devices.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.