Mergers & Acquisitions
Hostess Brands Shutdown Halted as Company Asks for Bonuses
WellPoint (NYSE: WLP) Rides the Obamacare Profit Wave Even Higher
The $4.9 billion deal would make the Indianapolis-based company the top private manager of Medicaid benefits.
The strategic move underscores WellPoint's bid to shore up its Medicaid business following the recent Supreme Court decision upholding Obamacare. The combined company will have a Medicaid business presence in 19 states, the largest in the nation.
The transaction is expected to close in early 2013. Under the terms of the all-cash deal, WellPoint will pay a lofty $92 a share for all outstanding shares of Amerigroup, a nearly 43% premium to the company's closing price prior to announcement.
WellPoint CEO Angela F. Braly said in a statement, "We believe that this combination will create an industry in the government sector serving Medicaid and Medicare enrollees. This is an opportunity to capitalize on the strengths of both companies to better serve our members and position our companies for future growth as the health insurance industry changes."
WellPoint has been on a buying spree of late. In May, the company purchased contact lens retailer 1-800-Contacts, and last year it picked up CareMore, a provider of managed care for the elderly.
Biotech Stock ETFs: How to Ride the Surge in Biotech Mergers & Acquisitions
Innovations in biotechnology are evolving at the speed of light.
In fact, astonishing advancements in biotech have transformed the way we practice medicine. Leading-edge biotech products and breakthroughs are literally saving thousands of lives every day.
Needless to say, biotech stocks can be strong medicine for investors, too.
For instance, the Nasdaq Biotechnology Index rose 457% from the end of August 1998 to the end of February 2000. Going back even further to the early 1990s, biotech stocks have soared by 1,347%.
Think about it… for biotech investors every $10,000 invested turned into nearly $140,000.
The good news for investors is that after slumping during the recession, biotech stocks are making a comeback. In the first quarter of 2012 alone, the Nasdaq Biotech Index gained 18.2%
And conditions are setting up for even better gains in the future.
What the Glencore Xstrata Deal Means for the Global Mining Industry
The Glencore Xstrata deal, an all-share merger creating a $90 billion global mining industry powerhouse, would be the sector's biggest and could trigger the busiest year for M&A activity.
The companies announced the deal today (Tuesday) following Glencore's offer last week. Glencore would pay $41 billion for the rest of Xstrata's shares (Glencore already has a 34% stake).
Glencore International is the world's largest publicly traded commodities supplier, and Xstrata is the world's fourth-largest metals and mining company. A Glencore Xstrata deal would create a company rivaling global mining industry leaders BHP Billiton Ltd (NYSE ADR: BHP) and Rio Tinto Plc (NYSE ADR: RIO).
"Glencore being such a dominant trader and marketer of commodities, and Xstrata being such a strong operator of difficult assets, I think it creates enormous value," Prasad Patkar from Platypus Asset Management Ltd. told Bloomberg News. "On one end you have great mining expertise, on the other you've got great marketing expertise. Two and two together should make five."
The new combined entity would be more diversified than other global commodities players, with copper and coal being its biggest earnings drivers. It would be the world's biggest coal exporter for power plants and the top integrated zinc producer.
The new mining industry giant also will go on the hunt for smaller businesses, and encourage other powerful players to do the same.
Cash-Rich Companies Share the Wealth with Trillion-Dollar M&A Activity in 2011
Mergers and acquisitions, or M&A activity, so far in 2011 has been a driving force in the stock market's positive performance.
In fact, global M&A activity in the first quarter topped $799.8 billion, the most since 2007's pre-crash frenzy, according to a recent report in Forbes magazine.
MergerInvesting.com, which tracks the M&A market, says 130 deals have either already been closed in 2011 or are currently pending. And, while the total number of global deals is down slightly from the same period in 2010, the actual value of the deals is up more than 55% (with deals involving U.S. companies accounting for 49.6% of that total – a 117% jump from 2010).
Looking forward, most M&A analysts now predict more than $3 trillion in takeover activity for all of 2011.
Stock Exchange Mergers: The Real Story
Stock exchange mergers are all the rage these days.
The deals are the latest in a consolidation cycle among exchange operators that has accelerated over the past decade. In 2010, Singapore Exchange Ltd. (PINK: SPXCY) agreed to an $8.3 billion takeover of Australia's ASX Ltd (PINK: ASXF) to create Asia's fourth-largest stock exchange. And IntercontinentalExchange Inc. (NYSE: ICE) purchased the Britain-based Climate Exchange PLC (PINK: CXCHY) that same year for $597 million.
So I would not be at all surprised to see other bourses follow up with stock exchange mergers of their own.
CME Group Inc. (Nasdaq: CME) and Nasdaq OMX Group Inc. (Nasdaq: NDAQ) still haven't ruled out a potential counteroffer for NYSE. And some analysts speculate that the Nasdaq could be the first U.S. stock exchange to tie-up with an Asian partner.
Indeed, for the exchanges themselves, there appear unlimited possibilities of expansion, mostly in the derivatives market.
But the sad truth is that the only thing individual investors are likely to get out of all of this activity is a sneaky increase in fees.
Deutsche Boerse/NYSE Mega-Merger More About Derivatives Than Stocks
The merger yesterday (Tuesday) of Germany's Deutsche Boerse AG and NYSE Euronext Group (NYSE: NYX) will create the world's largest financial exchange. But most observers feel the deal is being driven more by the exploding market in derivatives and other exotic instruments than good old-fashioned stock trading.
While the $9.53 billion all-stock deal creates the world's largest trader of equities, it's the chance to exp
and the combined entity's presence in derivatives markets that held the real appeal, according to most observers.
Under the terms of the deal, Deutsche Boerse shareholders will control 60% of the new company, with NYSE shareholders owning 40%. One Deutsche Boerse share will be exchanged for one share of the new company's stock, while each share of NYSE Euronext will be swapped for 0.47 share of new company stock, The Wall Street Journal reported.
AOL Inc. (NYSE: AOL) Snags Huffington Post To Strengthen Pursuit of Online Media Content Crown
AOL will pay $315 million for the popular site that was co-founded in 2005 by Arianna Huffington. The Huffington Post is privately owned by co-founder Huffington, Chairman Kenneth Lerer and a group of investors.
Huffington will serve as president and editor-in-chief of a new Huffington Post Media Group that will integrate content between AOL and The Huffington Post, covering news, technology, social media and other topics.
"The acquisition of The Huffington Post will create a next-generation American media company with global reach that combines content, community, and social experiences for consumers," Tim Armstrong, AOL's chief executive officer, said in a statement. "People navigate the Web by brand and The Huffington Post is one of the best content brands on the Internet."
Ensco, Pride Combine to Create the World's Second Largest Offshore Driller
Ensco PLC (NYSE: ESV), a U.K.-based energy company, announced yesterday (Monday) that it agreed to buy Pride International Inc. (NYSE: PDE), for $7.3 billion in cash and stock in a deal that will create the world's second-largest offshore driller.
The transaction represents a further transformation of the U.S. offshore drilling industry, which is still struggling to recover from last year's explosion of Transocean Ltd.'s (NYSE: RIG) Deepwater Horizon drilling rig, which killed 11 workers and spewed roughly 4.8 million gallons of crude into the Gulf of Mexico. Transocean, based in Vernier, Switzerland, is the world's largest offshore driller.
Ensco will pay $41.60 a share for Texas-based Pride, a 21% premium to its closing price on Friday. The purchase would be the largest for Ensco, and is the second-largest acquisition of a U.S. oil services company in the last year.