10 Updates

Corporate Takeovers Draw Cheers From Wall Street, For The Most Part

Feb 20 2014, 9:20am CST | by

Merger arbitrageurs used to have an easy calculus. When a big-time corporate takeover was announced they would go long the target, short the acquirer and pick up a few pennies on the dollar for...

Filed under: news

 
 
 

22 weeks ago

Corporate Takeovers Draw Cheers From Wall Street, For The Most Part

Feb 20 2014, 9:20am CST | by

Merger arbitrageurs used to have an easy calculus. When a big-time corporate takeover was announced they would go long the target, short the acquirer and pick up a few pennies on the dollar for their trouble.

These days the trade is going the other way, with corporate buyers being rewarded by Wall Street for having the gumption to use their cash for something beyond dividends and share repurchases. Take the example Wednesday morning, when Signet Jewelers raced higher after agreeing to pony up $1.4 billion for diamond-dealing rival Zale Corporation.

That followed Tuesday’s $25 billion deal between Actavis and Forest Laboratories, which juiced shares of both companies and drew raves from billionaire activist investor Carl Icahn , an agitator for change at Forest.

In January, Google shares rose the day after the company said it would shell out $3.2 billion for Nest Labs, the maker of smart devices for the home.

Rare is the corporate board or management team that wants to go out on a limb, though many would claim to follow the Warren Buffett philosophy of being greedy when others are fearful. The vote of confidence being given to acquirers in the most recent spate of deals is one more reason to expect that some of the hundreds of billions of dollars sitting on corporate balance sheets may be put to use in M&A this year.

Corporate takeovers can often be the equivalent of trades or draft picks in professional sports, meaning that it often takes years to determine whether a deal is a winner or loser. And even with many acquirers rallying on deal news in recent months, positive reception for corporate shopping sprees aren’t universal. Facebook certainly made a splash Wednesday, when it shelled out $19 billion in cash, stock and restricted shares to buy messaging service WhatsApp. But observers expressed reservations over the eye-popping price tag for such a young company. An initial 5% after-hours dip was followed by a decline when trading started Thursday with shares off a bit more than 2% in the first half-hour of trading.

An M&A boom has been something of a white whale for Wall Street in recent years, with predictions for a takeover surge coming like clockwork. This year is off to a decent start on that front, but even a year like 2013, with a nearly uninterrupted bull run, failed to inspire the flood of deals anticipated.

According to a note this week from data provider Dealogic, U.S.-targeted M&A volume tipped the scales at $266 billion through mid-February, the highest level to that point since $278.1 billion in 2000 and 12% ahead of last year’s $234 billion pace.

(There’s a caveat in the Dealogic figures though, as the number includes all targeted M&A volume. So two separate bids for Time Warner Cable — the $69.8 billion offer from Comcast the company agreed to in February and a $62.6 billion bid from John Malone’s Charter Communications announced in January – show up in the figures.)

A long-awaited run of mergers would also come at a time when heavyweight investors have a lot of ammunition. Activists like Icahn are in the middle of a string of mostly-successful pushes for corporate change and are taking on ever-bigger companies, demanding boards pull levers ranging from capital return to breakups to, yes, acquisitions.

Nelson Peltz sent a letter to PepsiCo Wednesday reiterating his desire for the company to split its drinks and beverage business, and in his initial pitch for the move last summer the billionaire said the snacks business should merge with Mondelez.

Elsewhere, Credit Suisse analysts suggested Wednesday that Wal-Mart Stores could “jumpstart” a push to add smaller stores to its roster by shelling out a few billion for Family Dollar.

A rallying stock market breeds an appetite for risk, from investors chasing returns or snapping up newly-issued IPOs and from corporations taking the plunge into dealmaking. Even after a shaky start to 2014, the S&P 500 is down just 1% year-to-date and so long as the companies doing the buying see their stock prices rewarded (for the most part) there will be one less hangup to keep cautious executives from opening their wallets.

Follow @SchaeferStreet

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat w ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken int ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin H ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last month. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mu ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 millio ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 2 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Dam ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Wireless cooling: Magnets to keep your fridge cool
New York, July 29 (IANS) Magnets may soon act as wireless cooling agents for your refrigerators, laptops and other devices if a theory propounded by researchers at Massachusetts Institute of Technology in the US finds application.
 
 
Human-induced water vapour next climate threat
New York, July 29 (IANS) The rising levels of water vapour in the upper troposphere - a key amplifier of global warming - owing to greenhouse gases will intensify climate change impacts over the next decades, scientists said.
 
 
In changing times, women find losing virginity enjoyable
London, July 29 (IANS) Did you feel guilty after having sex for the first time? Take heart as young women today are actually "enjoying losing their virginity" compared to earlier days.
 
 
Cool flames in space to lead better engines on Earth
Washington, July 29 (IANS) A new space experiment can change the way humans travel. In a series of trials on board the International Space Station (ISS), researchers have discovered a type of cool-burning flames that could lead to cleaner, more efficient engines for cars.
 
 
 

Latest from the Network

Sharadha fails to qualify for women's 100m finals
Glasgow, July 29 (IANS) Indian athlete Narayana Sharadha failed to qualify for the women's 100 metres final at the Commonwealth Games here. The 27-year-old Chennai-born finished sixth out of seven competitors in the...
Read more on Sport Balla
 
Cleanliness, punctuality Modi's mantra: Chinese daily
Beijing, July 29 (IANS) New vigour is sweeping through Indian government offices after Narendra Modi became the prime minister with ministers conducting surprise checks to see if bureaucrats are in their seats in time...
Read more on Politics Balla
 
MH17 investigators fail to reach crash site
Canberra, July 29 (IANS) Australian and Dutch investigators have failed for a third consecutive day to reach the MH17 crash site because of fierce fighting between Ukrainian troops and pro-Russian separatists,...
Read more on Politics Balla
 
Indian nurses now caught in Libyan conflict
New Delhi, July 29 (IANS) In a near replay of the incidents in Iraq, a large number of Indian nurses are caught amid spiralling violence in Libya, where rival militias seek to control the capital's international...
Read more on Politics Balla
 
Audrina Patridge splits from boyfriend
Audrina Patridge has split from her boyfriend. The reality TV star and Australian BMX rider Corey Bohan have split for good after five years of dating and though they have parted ways previously, insiders don't believe...
Read more on Celebrity Balla
 
Robert Downey Jr. excited to shop for baby
Robert Downey Jr. can't wait to go shopping for his baby daughter. The 49-year-old actor and wife Susan Levin will welcome a little girl into the world in November and he is planning to shower the latest edition to his...
Read more on Celebrity Balla
 
Joe Manganiello struggled to understand Sofia's Colombian family
Joe Manganiello found it difficult to understand Sofia Vergara's Colombian family when she introduced them over the weekend. The 'Modern Family' actress and the 'True Blood' star, who started dating earlier this month,...
Read more on Celebrity Balla
 
Amy Lee gives birth to baby boy
Amy Lee has given birth to a baby boy called Jack Lion. The Evanescence singer and her therapist husband Josh Hartzler have welcomed their first child into the world and showed off the first picture of the little boy on...
Read more on Celebrity Balla
 
Wireless cooling: Magnets to keep your fridge cool
New York, July 29 (IANS) Magnets may soon act as wireless cooling agents for your refrigerators, laptops and other devices if a theory propounded by researchers at Massachusetts Institute of Technology in the US finds...
Read more on Apple Balla
 
Pakistan celebrates Eid-ul-Fitr
Islamabad, July 29 (IANS) Eid-ul-Fitr was celebrated across Pakistan Tuesday, media reports said. The largest Eid congregation here was held at the Faisal Mosque, Geo News reported. In Rawalpindi, the main...
Read more on Politics Balla