Mergers Just the Tip of the Iceberg
The last few Mondays have been reminiscent of the good ole’ days when I would wake up extra early to begin the week and find out if any of my stocks were being bought by a competitor. I have not any “big wins” so far, but did have two small positions that were bought in the last month. Marvel Entertainment (MVL) spiked 25% on 8/31 and Affiliated Computer Services (ACS) jumped 14% today.
Today was the most impressive Merger Monday of the year for me as a number of high profile deals were announced and several names flew under the radar. The Xerox (XRX)/ACS deal which came in at about $6.4 billion was the headline grabber. Abbott Laboratories (ABT) said it would pay $6.6 billion for the pharmaceutical unit of Belgium’s Solvay. Johnson & Johnson (JNJ - I own some) bought 18.1% of biotech firm Crucell (CRXL) for $442 million. CRXL fell 6.5% on the news and JNJ rose 1%.
Smaller deals that you may not have seen on your financial news network include Aspect Medical Systems (ASPM), which is being acquired by Covidien (COV) for $12.00/share. The deal is only $210 million, but shareholders of ASPM enjoyed a 55% rally today. ASPM makes medical devices that monitor brain activity and had revenue of $99 million in 2008. As far as the small medical device makers and biotech firms are concerned - I expect MANY MORE deals in the coming year.
Possibly the most impressive merger news of the day involved an auto parts/chemical firm - GenTek (GETI). The deal includes a division of private-equity firm American Securities taking GETI private at $38/share. The stock closed the session up 40% at $37.77/share. What makes this so impressive? The fact it involved a private-equity firm and not a peer or competitor looking to expand their business. This is the reason I feel M&A activity is just beginning to take off. Private equity has not become a player yet; once they do the days of Merger Mania Mondays will be back along with many sleepless Sunday nights as I pace in anticipation of the next big deal! | 
