Thursday January 8, 2009
Navivest

The stock of online brokerage and investor education provider thinkorswim (SWIM), are called higher in pre-market trading after retail broker TD Ameritrade Holding Corporation (AMTD), announced this morning that it will acquire the company in a cash and stock deal worth $606 million.

TD Ameritrade Holding Corporation is offering $3.34 in cash and .398 shares of TD Ameritrade Holding Corporation stock for each thinkorswim share.

Using TD Ameritrade Holding Corporation’s Wednesday closing price of $13.48, the stock portion translates into $5.365 for a total per share price of $8.70. The total cash portion will be $225 million.
TD Ameritrade expects the deal to be accretive, raising fiscal 2010 profits by 3-7%, and by 15% annually, a year after the integration is complete.

According to the companies, thinkorswim is one of the fastest growing online brokerage firms, with unique trading and investor education capabilities.

In the one-year period ending September 30, 2008, thinkorswim generated $380 million in revenue and $87 million in pre-tax income. The company has approximately 87,000 funded retail brokerage accounts, with each placing approximately 176 trades per year, more than $3 billion in client assets and more than 375,000 education graduates.

TD Ameritrade shares are indicated to open at $12.66 -$0.88, while thinkorswim shares are looking to open at $7.95, up $2.30.

Tags: thinkorswim  TD Ameritrade  Mergers  Acquisition

Thursday October 30, 2008
Navivest

Delta Air Lines, Inc. (DAL) and Northwest Airlines, Inc. (NWA) completed their merger yesterday, after they got the go ahead from the justice department. The news that both companies were in merger talks first leaked on February 11, 2008.

Under the all-stock $2.6 billion dollar deal, Northwest Airlines (NWA) is now a wholly owned subsidiary of Delta. The merger creates the world’s largest airline.

Northwest Airlines (NWA) stockholders will receive 1.25 Delta (DAL) shares for each Northwest Airlines (NWA) share they own and based on Delta’s (DAL) closing stock price on Oct. 29, 2008, this exchange ratio works out to $9.99 for each Northwest Airlines (NWA) common share.

Tags: Northwest Airlines  Delta Airlines  Merger

Monday October 27, 2008
Navivest

Telecom services provider CenturyTel Inc. (CTL) announced today that it will acquire EMBARQ Corp. (EQ), in a $5.8 billion deal. If the deal goes through, the combined company would have about 8 million landlines in 33 states.

Under the terms of the agreement, EMBARQ (EQ) shareholders will receive 1.37 CenturyTel (CTL) shares for each share of EMBARQ (EQ) common stock that they own. CenturyTel (CTL) will also assume $5.8 billion of EMBARQ’s (EQ) debt.

With CenturyTel’s (CTL) stock price close of $29.50 on Friday October 24, 2008, this translates into $40.42 in CenturyTel (CTL) stock for each EMBARQ (EQ) share, a 36% premium to EMBARQ’s (EQ) closing price of $29.74 on Friday and 11% over EMBARQ’s (EQ) average closing price over the past thirty trading days.

It is expected that the deal will be accretive to CenturyTel’s (CTL) free cash flow per share in 2010, the first full year following the expected closing in the second quarter of 2009.

CenturyTel’s (CTL) stock price has lost 29% so far this year, while EMBARQ (EQ) shares are off 40%.

Although CenturyTel (CTL) is the acquirer in this deal, EMBARQ (EQ)shareholders will own 66% of the combined entity.

According to the companies, “The transaction is expected to generate synergies of approximately $400 million annually within the first three years of operation. Key drivers of these synergies include reduction of corporate overhead, elimination of duplicate functions, enhanced revenue opportunities and increased operational efficiencies through the adoption of best practices and capabilities from each company.”

CenturyTel (CTL) provides telecom services including high-speed internet, phone service and entertainment service via DISH Network, to rural and small city markets in 25 states.
EMBARQ (CQ) provides the same services in its 18 state markets and is also the main telephone company in Las Vegas. The company used to be the landline arm of Sprint Nextel Corp., which spun it out in 2006.

 Tags: CenturyTel  EMBARQ  Mergers

Wednesday October 22, 2008
Navivest

Samsung, which on August 9, 2008, made a $26 unsolicited offer to acquire Sandisk (SNDK) for $26 a share, retracted its offer yesterday, one day after Sandisk (SNDK) posted its third quarter 2008 earnings results.

Sandisk (SNDK) had on September 15, 2008, already rejected the offer in a letter to Samsung that reflected “the board’s unanimous conclusion that the proposal is inadequate in multiple respects and not in the best interests of SanDisk’s stockholders.”

According to Sandisk (SNDK), both companies had had several meetings before Samsung made public the offer, and on one such meeting on May 22, 2008, “Samsung had expressed a willingness to pay a significant cash premium over the then $28.75 price of SanDisk’s shares.”

Samsung withdrew the offer in a letter to Sandisk (SNDK), in which Samsung CEO Lee Yoon-woo wrote that “Your surprise announcements of a quarter billion dollar operating loss, a hurried renegotiation of your relationship with Toshiba and major job losses across your organisation all point to a considerable increase in your risk profile and a material deterioration in value, both on a stand-alone basis as well as to Samsung,”

The relationship with Toshiba that Samsung referenced is an October 20, 2008 announced agreement in which Sandisk (SNDK) will sell 30% of its stake in a manufacturing joint venture that it has with Toshiba, to Toshiba, while continuing to be equal partners in the remaining 70%.

According to Sandisk (SNDK), it expects to “receive cash and reduce equipment lease obligations by approximately $1 billion through this transaction.”

Despite the withdrawal of its buyout offer however, there is still a chance that Samsung could come back to the negotiating table, as one reason it probably wants to buy Sandisk (SNDK) is because it currently pays hundreds of millions of dollars in royalty payments annually to Sandisk (SNDK).

Analysts estimate that Samsung is responsible for 90% of SanDisk’s (SNDK) royalty income and forecasts for SanDisk’s (SNDK) 2008 royalty income are $405 million, which would mean this year alone, Samsung has to fork over $364 million.

So this could possibly be a ploy to put pressure on SanDisk’s (SNDK) stock, which might then cause shareholders to start pushing for a deal with Samsung.

SanDisk’s (SNDK) shares closed at $14.76 on Tuesday, October 21, 2008.

 
Tags: SanDisk  Samsung

According to the New York Times, Morgan Stanley (MS) is considering a merger with Wachovia Bank (WB). The paper is reporting that Wachovia (WB) approached Morgan Stanley’s (MS) CEO John Mack, and very preliminary talks are now underway.

Both companies are under tremendous pressure, as their stocks have been beaten down in the wake of the credit crisis, the Lehman (LEH) bankruptcy and the takeover of AIG (AIG) by the government.

Companies typically worry about their stock price as a general course of business, but this time there is an added sense of concern. The meltdown of Bear Stearns started with a rapid decline of that company’s stock. Then credit default swaps, which are used to insure against default of a company’s debt, for Bear Stearns debt rose dramatically in price and this is seen as a sign that a company is now very risky and has diminishing chances of paying off those debts. A company in that position is also seen as having little chance of survival. The same is now happening to other banks and Wall Street firms.

When this happens, it has a tendency to become a self-fulfilling prophecy. As concerns as to whether a company can pay of its debt grows, customers may start pulling money while trading partners stop doing business with the company so as not to take on undue risks. This then leads to failure. With Morgan Stanley (MS) and Wachovia (WB) now in that boat, they are looking for ways to stay alive and shore up investor confidence.

Morgan Stanley (MS) shares are down a further 8% in after hours trading on the news, while Wachovia (WB) is up 3%.

Tags: Morgan Stanley  Wachovia  Merger

It seems the long pending merger deal between XM Satellite Radio and Sirius Satellite Radio is now a go. Commissioners at the FCC have reached an agreement to approve the merger. The FCC has taken thirteen months to go over the deal to date.

Commissioner Deborah Taylor Tate will cast the deciding vote once certain deals are work out. For that vote, the companies will have to pay the FCC $20 million to settle fines that were incurred for tower locations and equipment power limits violations.  Other conditions the company will need to meet, are capacity set asides for public service and minority programming and pricing guarantees.

FCC Commissioner John Adelstein, is now coming out in favor of the XM/Sirius Merger IF the companies are willing to meet certain conditions. Adelstein who earlier, looked like he would vote against the deal, is now willing to support the merger if XM and Sirius are willing to meet certain conditions. 

They would have to institute a six-year cap on their pricing, and make twenty-five percent of their capacity available for public-interest and minority programming.

A possible XM Sirius Merger has been in the works for sixteen months now. The companies announced their interest in a tie-up back in February 2007, but as the only two players in the sattelite radio biz, the merger was of concern to the government. They have now potentially gained an ally that could help them get the deal approved.

xmsiriussirius xm mergermerger

Well the rest of the 44% stake that it already does not own. Roche, which happens to be Switzerland’s largest drugmaker, is offering $43.7 billion for that 44% stake, to gain complete access to Genentech’s (DNA) cancer drugs. The $43.7 billion dollars, translates into $89 per share for each Genentech share, an 8.8% premium to the Friday 07/18/08 closing price of $81.82.

Genentech (DNA) has already proven to be a worthwhile investment for Roche, as the drug maker has provided Roche with its best-selling cancer drugs Avastin, Herceptin and Rituxan. 

Drug related stocks might have quite a week this week. Israeli generic drug maker Teva Pharmaceuticals (TEVA) last week, offered over $7 billion for Barr (BRL) and now Roche is offering to buy out Genentech DNA).

 rochegenentechDNAbarr teva