Sunday, December 24, 2006

Hit #137 (Praecis)

Praecis Pharmaceuticals (PRCS) is being bought by Glaxo SmithKline for around $55 million in cash, valuing the shares at $5, an eye-popping 151% premium over the previous day's close of $1.99, but still a discount of 33% to my buy price of $7.4 a few months ago.

There is more to come as big pharma goes about trying to replenish pipelines. The premiums have in general been stunning, but we could see crazier valuations.

Two other eventual buyout targets that I have recently opened positions in, mostly due to insider buying activity - Dendreon (DNDN) and Javelin Pharmaceuticals (JAV).

Previous hit - @Road (#136)

Sunday, December 10, 2006

Hit #136 (@Road)

Trimble Navigation (TRMB) is buying @Road (ARDI) for $7.5/share in a part-cash/part-stock transaction valuing the company at $496 million. The offer represents a premium of 139% over my average cost per share of $3.14.

Trimble, Garmin, Ituran and Navteq are long term winners in the GPS growth story, which is still in its early stages. Of these, Ituran (ITRN) and Navteq (NVT) look attractive at current price levels.

Also worth looking at are related players like MapInfo (MAPS), Motient (MNCP), SiRF (SIRF), LoJack (LOJN), GlobalStar (GSAT) and KVH Industries (KVHI).

Earlier this year Lowrance Electronics (LEIX), another GPS systems manufacturer, was acquired by Simrad Yachting of Norway. KVH Industries also makes for a perfect target for Simrad.

I own LoJack, KVH, Navteq and SiRF shares, with Navteq being a very recent addition on a sharp pullback. I am looking to add more LoJack and KVH shares.

Previous hit - Docucorp (#135)

Hit #135 (Docucorp)

Docucorp (DOCC) is being acquired by Skywire Software for $127 million in cash, amounting to $10/share. The offer is a discount of 9.1% to my average cost per share of $11.

Docucorp is being sold for less than what it would get in a competitive auction, and needless to say the buyer is getting a good deal.

As I mentioned previously when Stellent was bought out, very few players in this field now remain public. Companies like Mobius (MOBI), Interwoven (IWOV) and Omtool (OMTL) will all cease to be independent companies soon.

Previous hit - Agere (#134)

Hit #134 (Agere)

Agere (AGR) is being acquired by LSI Logic in a stock-deal valuing Agere shares at around $22.8, a premium of 106% to my average cost per share of $11.04.

The value of the deal has gone down a bit since the announcement as LSI shares pulled back. While the price paid may be high, the combination will be a strong player in a number of markets, and will be in a position to compete against the likes of Marvell (MRVL).

Marvell shares themselves have gotten cheap over the last few weeks, and I have opened a small position since I see a potential for a management-led buyout.

Previous hit - Mellon Financial (#133)

Hit #133 (Mellon)

Mellon Financial (MEL) is being bought by Bank of New York (BK) in a deal valuing Mellon shares at around $42. The offer price represents a premium of 52.1% over my average cost per share of $27.6. I will be holding onto the shares in the new company, and will be looking to add when possible.

This particular combination has been rumored to be in the works for a long time now, since Bank of New York had tried unsuccessfully to buy Mellon in the past. The deal has been welcomed broadly, with shares of both companies surging ahead post-announcement. Then again, what is not to like, except for the new name Bank of New York Mellon!

The combined entity will have a big share of the asset custodian / management market. Any sharp pullback will be a good time to accumulate the new company's shares for long-term investors.

Previous hit - Rita Medical (#132)

Sunday, December 03, 2006

Hit #132 (Rita Medical)

Rita Medical Systems (RITA) is being acquired by AngioDynamics for around $220 million. The actual terms of the deal are a bit complicated, but Rita shareholders will get around $4.7 per share in stock and cash. The offer is a small discount of 4.3% to my average cost of $4.91.

I have been holding Rita shares for a long time now. While a better price would be definitely welcome, the fact that Rita shareholders will get mostly AngioDynamics shares is a positive as AngioDynamics itself seems to be undervalued given its takeover appeal down the road.

Previous hit - Clear Channel (#131)