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Posts Tagged ‘mergers and aquisition’

Here is some good market analysis from The Reuters Blog – Dealzone.

“Like SocGen before them, UBS strategists are looking forward to a pickup in M&A next year.

“We expect 2009 to mark the trough in global M&A transactions and for activity to pick up in 2010 and beyond. For FY2010, globally we expect M&A activity in the region of $2.5-2.7trl, an increase of 15% on current annualised run rate for 2009 and close to levels last seen in mid 2004-05. The biggest driver of an increase in activity is likely to be the increase in risk appetite in equity markets and in the boardroom, a return to earnings growth and profitability by World Inc and a backlog of pending asset disposals.”

“Credit conditions are also supportive and we expect private equity and bank lending to pick up at some point next year.”

“We do think investors can take advantage of the growing interest in M&A as the likelihood of deals gets priced into stocks. The average take-out premium historically has been 30-40%, much of which is earned around the announcement of a deal. Merger arbitrage post bid announcement has earned a levered IRR around of 9% this year.”

“Despite a 27% decline in global M&A activity in 2009, deal volumes in Asia remained strong. At the current run rate, 2009 activity in the region will be up on 2008, taking APAC’s share of global M&A to 25%, from 6% in 1995. A meaningful pick-up in global activity in 2010 will require a rebound from trough deal volumes this year in the Americas and Europe.”

Read the full story here.

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“Corporate officers and directors were buying stock when the market hit bottom. What does it say that they’re selling now?”

Here is an article from CNN Money on the topic.

“NEW YORK (Fortune) — Can hundreds of stock-selling insiders be wrong?

The stock market has mounted an historic rally since it hit a low in March. The S&P 500 is up 55%, as U.S. job losses have slowed and credit markets have stabilized.

But against that improving backdrop, one indicator has turned distinctly bearish: Corporate officers and directors have been selling shares at a pace last seen just before the onset of the subprime malaise two years ago.

While a wave of insider selling doesn’t necessarily foretell a stock market downturn, it suggests that those with the first read on business trends don’t believe current stock prices are justified by economic fundamentals.

“It’s not a very complicated story,” said Charles Biderman, who runs market research firm Trim Tabs. “Insiders know better than you and me. If prices are too high, they sell.”

Biderman, who says there were $31 worth of insider stock sales in August for every $1 of insider buys, isn’t the only one who has taken note. Ben Silverman, director of research at the InsiderScore.com web site that tracks trading action, said insiders are selling at their most aggressive clip since the summer of 2007.

Silverman said the “orgy of selling” is noteworthy because corporate insiders were aggressive buyers of the market’s spring dip. The S&P 500 dropped as low as 666 in early March before the recent rally took it back above 1,000.

“That was a great call,” Silverman said. “They were buying when prices were low, so it makes sense to look at what they’re doing now that prices are higher.”

Read the full story here.

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Here is article from USA Today. As the crisis starts to ebb out, the downsizing has produced piles of cash at some companies.

“SAN FRANCISCO — There could be a thaw in the months-long stagnant market for tech mergers and acquisition.

Data-storage companies EMC (EMC) and NetApp are dueling to buy Data Domain for at least $1.8 billion. Last week, chipmaker Intel (INTC) said it would buy testing and development software maker Wind River Systems for $884 million.

The quarter’s big catch was when Oracle (ORCL) snapped up Sun Microsystems for $7.4 billion.

While hardly a buying spree, the uptick could signal a break for what has been a sluggish tech M&A market since the third quarter of last year.

So far, $17.9 billion has been spent on tech mergers in the U.S. in the current quarter — more than the previous two quarters combined, according to market researcher Thomson Reuters.

The activity reflects one byproduct of a sour economy: Big tech companies sitting on piles of cash are willing to spend some of it to aggressively pick up innovative start-ups as well as rivals with customers and market share.

The deals come at a time when venture capital funding is scarce for start-ups and there are scant initial public offerings.

“People historically make their money when they invest consistently, even during downturns,” says Keith Larson, vice president of Intel Capital, the company’s venture-capital arm. The company has said that it will spend $7 billion over two years to build advanced manufacturing facilities in the U.S.

“Almost the worst thing you can do is pull back during a downturn and miss out on buying opportunities,” Larson says. “We have a multiyear road map on the technology side.”

Cisco Systems CEO John Chambers, who has navigated the venerable network-equipment maker through several downturns, has said companies willing to take calculated risks often emerge stronger from recessions.

A few established companies with ample cash reserves this year have bolstered their war chests with the intention of snapping up companies.

Cisco (CSCO), which sold $4 billion in bonds in February, has about $33.5 billion in cash reserves. It acquired Pure Digital Technologies, maker of the popular Flip video camera, for $590 million.

“If you have cash, it is a good time to fortify product lines and fuel growth,” says Cynthia Ringo, managing partner for VC firm DBL Investors.

So far this quarter, there have been 239 deals in the U.S., including the Oracle-Sun blockbuster. In the first three months of this year, there were 313 deals.”

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Steven R. Gerbsman, Principal of Gerbsman Partners, announced today that Gerbsman Partners successfully terminated the executory real estate contracts for two US based life science companies. The venture capital backed companies, executed leases for space in Northern, California. Due to market conditions, both companies made a strategic decision to terminate its corporate space allocation. Faced with potential contingent liabilities in excess of $ 6 million, the companies retained Gerbsman Partners to assist them in the termination of their prohibitive executory real estate contract.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. In the past 72 months, Gerbsman Partners has been involved in maximizing value for 52 Technology, Life Science and Medical Device companies and their Intellectual Property and has restructured/terminated over $780 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.2 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Europe and Israel.

For additional information please visit www.gerbsmanpartners.com

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