Monday, March 21, 2005

The butler did it ...

and a few others did so too today on what is surely the biggest M & A day in a few months. They all found a buyer.

3 of the deals were multi-billion dollar ones.

Interactive Corp (IACI) today acquired Ask Jeeves (ASKJ) for a small premium. I had bought Ask Jeeves sometime last year at around $18/share and sold at $38/share as I felt it was overvalued. After reaching the mid-40s, the stock pulled back to low-20s. Interactive's offer values Ask Jeeves at around $28/share, well below its recent highs. So, not a hit as such, but not complaining. Who next ? FindWhat (FWHT), Interchange (INCX) now look undervalued.
There are a few other undervalued, but highly speculative search plays like Looksmart, (MAMA).

Medicis (MRX) acquired Inamed (IMDC). Will Mentor (MNT) be next ? Medicis itself looks like a value buy now.

In what is being dubbed the largest private-equity buyout of a tech firm, SunGard Data (SDS) is about to be acquired for around $31/share, a substantial premium over the earlier closing of around $26. I will write more on this when the deal is confirmed, since this will be another hit for me. If this goes through, we are entering a new phase in tech buyouts, considering that the deal will be worth > $10 billion!

There were 5 or so smaller buyouts. One worth noting is an offer for Eidos (EIDSY) from Elevation Partners at $0.96/share, a good premium over its previous close of 0.75. Thankfully, I got out of Eidos with a profit a while ago, having bought at $2.3/share and sold later at $3/share. Game companies are still worth betting on - all the smaller ones will be gobbled soon. Redstone now owns a majority stake in Midway Games (MWY) having consistently bought shares in the open market. Atari (ATAR) is worth looking at too. And after today's disappointing report from Electronic Arts, which by the way is still extremely overvalued, Activision (ATVI), THQ (TQHI) and Jamdat (JMDT) make for juicy targets for a Disney or a Viacom. Watch and buy these on pullbacks, averaging down if needed.


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