Ecolab Division to be Purchased by Zep and 4 Stocks Boasting 52-Week Highs

Coventry Health Care (NYSE:CVH) and WellCare (NYSE:WCG), competitors of Centene (NYSE:CNC), both of which provide services linked to Medicaid, might experience gains in patient numbers, as the latter reports that it has terminated its Medicaid contract with the state of Kentucky. The firm says that it has the right to make this move under its contract with the state, and it anticipates the termination of the deal arrangement, effective July 5th of next year, adding that it has filed a “formal dispute” for damages incurred under the contract. Centene expects the recording of a pre-tax premium deficiency reserve, ranging between $60 million and $70 million related to the state operations in the quarter ended September 30th. Peter Costa at Wells Fargo noted to investors on Wednesday that the company’s earnings had been squeezed by very high medical costs in Kentucky, and its exit from the contract should mitigate the negative earnings impact that being in the state has had on its earnings. At the same time, Centene’s decision could cause its more expensive Medicaid recipients to move to plans offered by Coventry and WellCare. Wells keeps its Outperform on Centene and Coventry, and a Market Perform on WellCare. Coventry shares closed down 0.32 percent on the day at $43.61, and have traded in a 52-week range of $27.72 to $43.90.

Cymer’s (NASDAQ:CYMI) outstanding shares will all be bought by ASML Holding (NASDAQ:ASML), under a definitive agreement, in a cash-and-stock transaction currently valued at €1.95 billion. ASML is purchasing Cymer in order to step up the development of Extreme Ultraviolet, or EUV, semiconductor lithography tech. The two firms have worked closely together for more a year, and this move marks the natural process of their existing cooperation in developing EUV technology. The transaction will entitle each Cymer shareholder to receive $20 in cash and a fixed ratio of 1.1502 ASML ordinary shares to each Cymer share. The total price represents a windfall of 61 percent over Cymer’s 30-day volume-weighted average price, or VWAP, and 52 percent over its 90-day VWAP, using ASML’s VWAP for the comparable period ending October 16th. The deal should close in the first half of next year and is subject to the usual closing conditions. Subtracting the non-cash purchase price accounting adjustments, the acquisition should be accretive to ASML’s earnings per share in the second year post-closing. Shares closed up 49.38 percent on the day at $71.45, having been traded in a 52-week range of $39.24 to $62.40.

Ecolab’s (NYSE:ECL) division Ecolab Vehicle Care, will have its entire assets acquired by Zep (NYSE:ZEP), for a price of around $120 million, in a transaction that should close later in calendar 2012. Sales and adjusted earnings for the unit for the trailing 12 months ending June 30th were about $66 million and $13 million, respectively. The buyer will fund its purchase by using existing debt capacity. Further, Zep is subject to a transition services agreement during a period of up to 12 months through which Ecolab will continue to supply it certain services. The firm expects that this acquisition will be modestly accretive to earnings in fiscal 2013, and when the assets are effectively joined with it, additional synergies ranging between $1.5 million and $2 million are expected yearly. Ecolab shares closed up 0.9 percent on the day at $69.40, and have traded in a 52-week range of $52.21 to $68.96.

HSBC Holdings (NYSE:HBC): Banks in the United Kingdom may no longer be permitted to reduce their capital reserves, if doing so fails to boost lending in the stalling economy or negatively impacts financial stability, says the Financial Services Authority, according to Reuters. Shares closed up 0.73 percent on the day at $49.64, having been traded in a 52-week range of $35.72 to $49.42.

Horizon Bancorp (NASDAQ:HBNC) shares closed up 0.83 percent at $29.03, and have been traded in a 52-week range of $16.2333 to $29.00.

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