The Rumor Mill: This Week’s Merger and Acquisition Rumors

Wall Street officially announced some big deals this week, (See “DONE DEAL! M&A Activity of the Week“), but it also spreads some rumors. Here’s your Cheat Sheet to the top mergers and acquisitions in the rumor mill:

  • After putting itself on the auction block this past December, Emergency Medical Services (NYSE:EMS), which provides health care transportation services — read: ambulances — as well as physician services to health care centers, may have found a buyer: Clayton Dubilier & Rice, a private equity firm which invested in another health care deal — HGI Holdings — in 2010.  The deal will probably come in at about $70 per share, unless a competing bid emerges, likely from Bain Capital.
  • In a radical change from business-as-usual, Siemens (NYSE:SI), the massive electrical engineering company, announced that it will now be the predator in predator-prey:  the company is now mature enough to start buying other companies.  In the past few years, management focused on restructuring, margins, and organic growth.  What kind of acquisitions, you ask?  Siemens is looking to expand its power networks and its solutions for industrial energy efficiency and automation, especially considering it’s sitting on a pile of $20 billion or so in cash.  Hopefully the next move won’t be a repeat of Siemens’ $7 billion takeover of U.S. medical technology group Dade Behring in 2007, which was too expensive and ultimately under delivered.  The question is, who will the targets be?
  • Speaking of exchanges again, Singapore Exchange is a bit closer towards closing its $7.78 billion deal for ASX, the Australian exchange.  Because Australian regulators are concerned that the deal may be against their national interest, the Singapore Exchange has offered to increase the number of Australian board members that will be in the newly combined company.  They also are trying to ice the cake a bit more by offering to keep key staff in Australia and investing in services within the country.  Nevertheless, the bid still requires the approval of a bunch of Australian regulators, many of whom say no way.  All in all, it’s a long road ahead.
  • Trian Capital, the hedge fund owned by billionaire investor Nelson Peltz, offered Family Dollar (NYSE:FDO) a bid between $55 and $60 per share, or $7.6 billion.  This price represents a 25 percent premium to the unaffected share price.  Family Dollar has some issues, namely that it is lagging behind its main competitor, Dollar General (NYSE:DG).  Trian may be a good match, because it has extensive experience in the consumer space, including its investments in Heinz (NYSE:HNZ), Cadbury, Kraft (NYSE:KFT), Tiffany (NYSE:TIF), Kellogg (NYSE:K), and Wendy’s/Arby’s Group (NYSE:WEN).
  • Airgas (NYSE:ARG) will no longer have to deal with overture from Air Products & Chemicals (NYSE:APD): a Delaware court recently ruled that Airgas’ use of a poison pill to defend against the $5.9 billion hostile bid is legitimate.  In other words, corporate boards are permitted to use various methods, including poison pills, to prevent shareholders from voting on a takeover offer if they feel the price is unwarranted.  Airgas wanted $78 per share, but Air Products refused to pay more than $70 per share.  The market certainly thinks Air Products has a better sense of Airgas’ valuation: the stock has been trading in the low-60s.  Air Products initially made the bid when Airgas’ revenues were waning, and raised its bid several times, because it wanted to reenter the U.S. packaged gas business to compete with Praxair (NYSE:PX).  Now it looks like that’s no longer an option!
  • Cumulus Media (NASDAQ:CMLS) is mulling a $37 per share takeover bid for Citadel Broadcasting.  This is a marked change from last year, when Cumulus offered $31 per share, which Citadel promptly rejected.  What changed? Well, for one, Entercom Communications (NYSE:ETM) entered the fray, and started a mild bidding competition with Cumulus.  Cumulus’ offer sounds great, except that it needs to find over $1 billion in cash to finance the deal, which would total over $2.4 billion.  This could come from its advisor, UBS (NYSE:UBS), or from Crestview, a potential private equity partner.
  • Yet ANOTHER exchange operator is thinking about a merger:  NASDAQ OMX Group (NASDAQ:NDAQ) and IntercontinentalExchange (NYSE:ICE) are reportedly in advanced talks.  In this case, keeping up with the Joneses may be necessary, because all of the merger mania in this space will leave those without a partner in the dust, especially in the increasingly competitive environment of alternative trading platforms.
  • Convergys Corp’s (NYSE:CVG) stock price experienced a sudden jolt this past week due to speculation that it could become an attractive takeover target for a private equity firm or tech company.  Convergys was thinking about its strategic alternatives last year, but because its main business, outsourcing customer care and billing, was experiencing low demand as a result of the financial crisis fallout, they weren’t able to get the price they wanted.  Now the company has improved, with an activist shareholder, new CEO, and a recovering business strategy, all of which are pluses for potential acquirers.

Interact: Which deals do you think will get done? Which are just PR from hedge funds and traders? Let us know in the comments below …

Don’t Miss: DONE DEAL! M&A Activity of the Week >>

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