Friday, February 23, 2007

More deal news

A few updates to earlier deals and notes on deals where one or more of my holdings were involved but not as the target.
  • Converium (CHR) rebuffed an advance from Scor. Converium shares have almost doubled since I bought them hoping for a buyout. I will be holding onto them since I believe that Scor is not done wooing. Scor shares may themselves have a decent upside from here.
  • Keane (KEA) (Hit #143) is being hit with lawsuits challenging the takeover. I suspect that a higher offer may be coming. If I had a penny for every such sellout where owners pocketed the proceeds without worrying much for ordinary shareholders ... well, I wouldn't be blogging at this time!
  • Meanwhile, Warner Music Group (WMG) is still trying to buy EMI. The two were earlier involved in an interesting bid deadlock. I own Warner shares, and I believe they are a good value right now. The combine should also be a stronger force.
  • Aegon raised its cash offer for Clark (CLK) shares to $17.21/share. I marked it as a hit earlier. This new higher offer now makes for a total gain of 18.3% over my average cost of $14.55.
  • Winston Hotels (WXH) was acquired for around $400 million in a cash deal this week. I did not own any shares, but I had mentioned it twice in the past - here and here. The cash I received from Jameson Inns (Hit #67) went into Lodgian (LGN) and ILX Resorts (ILX). Lodgian has already announced that it is looking at strategic alternatives, which is usually just another phrase for we are seeking a buyer. ILX still looks attractively valued.
  • Sirius (SIRI) and XM Satellite Radio (XMSR) announced their, by now rumored for long enough to almost be real, merger. It will still be a hard one for regulators to approve. Having traded both shares for short-term gains in the past, I had bought into Sirius again after their recent slump. I think that the combined merger makes sense as the cost reduction potential is very high if executed well. Shares of the combined entity are worth buying and holding for the really long run. Satellite radio on its own is doomed to fail inspite of the quality of content. But when that content is combined with online radio, reception on handheld/undocked devices, Tivo-like recording on those devices, and integrated GPS/traffic/add-on location services, they can survive and thrive. One satellite radio player to watch is Worldspace (WRSP), which is growing its customer base in India quite rapidly. The company's financial backers' connections were under a cloud, and that may explain the low price/volume and apparent lack of interest. But this could be a very good buy right now when no one wants it.
  • Chrysler, currently part of Daimler Chrysler (DCX) is likely going its own way. GM is a possible buyer, but that could only make things really bad for GM. I have owned DaimlerChrysler shares for a long time. If Chrysler is sold, Daimler likely will not have any reason to remain listed in the US. Latest reports indicate that private equity groups are also eyeing Chrysler. If that means a higher cash offer, I am all for it!
  • Smith & Wollensky (SWRG) and 21st Century (TW), both of which have received offers that are being considered, are inching up steadily. Investors are expecting the offers to be raised substantially. I am hoping that they (and I) will not be disappointed.
  • Docucorp is going for the lower bid and rejecting the slightly higher bid from Ebix. That means I will be losing money after all in this deal.
  • The buyout bid for Lesco from Deere has already received opposition from one party, Hawkshaw Capital. I am all for a higher bid especially since someone like Deere can surely afford it.
  • Jupitermedia (JUPM) last week confirmed that it is in talks with Getty Images about a buyout. I have mentioned Juiptermedia in the past and had bought a few recently after a sharp pullback. The stock had started to recover, and got a further boost on confirmation of buyout interest. Waiting for the formal bid to mark this as a hit.
  • Dow Chemical (DOW) is supposedly the target of a private equity buyout bid that will make it the largest buyout, ever after adjusting for inflation, ever! I hold a few shares, bought mainly as a dividend/long-term play during the depths of 2002/2003. The bid rumors are from a British newspaper known for things other than business reporting, so this story needs to be taken with a large grain of salt.
  • TXU is being bought by private equity groups in a another record-setting buyout. While I am surprised this particular takeover interest, I have mentioned that utilities could see a surge in merger activity due to deregulation and that Buffett may be looking at some as well. KeySpan was acquired not too long ago by National Grid.


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