Yahoo! Sells Alibaba Stake; DaVita, HealthCare in $4.4 Billion Deal

Arthi Gupta
21 May, 2012
New York City

U.S. indexes gained on the merger announcements. Alibaba agreed to repurchase partial Yahoo! stake for $7.1 billion. DaVita agreed to acquire HealthCare Partners for $4.42 billion. China-based Wanda agreed to buy AMC Entertainment for $2.6 billion and Eaton Corp agreed to buy Cooper Industries.

[R]9:15 AM New York – U.S. indexes gained on the merger announcement. Alibaba agreed to repurchase partial Yahoo! stake for $7.1 billion. DaVita agreed to acquire HealthCare Partners for $4.42 billion. China-based Wanda agreed to buy AMC Entertainment for $2.6 billion.[/R]

U.S. and global indexes inched higher after G-8 leaders reaffirmed their support for Greece and urged the nation to stay in the euro zone.

After the weekend meeting leaders urged Greece to stay in the currency union and said the nation must respect its financial commitment to lenders. German Chancellor Angela Merkel showed willingness to offer more growth measures but cautioned that Europe cannot spend its way out of the current debt crisis.

This week, investors are awaiting reports on housing sales, durable goods orders, and the weekly jobless claims.

Yahoo! Sells Alibaba Stake

Yahoo!, Inc. agreed to sell back half of its 40% stake to Alibaba.com Ltd., the Chinese e-commerce firm in a cash and stock deal valued at about $7.1 billion. The consideration for the 20% stake will include at least $6.3 billion in cash and up to $800 million in newly-issued Alibaba preferred stock.

Yahoo acquired about a 40% stake in Alibaba in 2005 in exchange of its Chinese operation and $1 billion.

DaVita to Acquire HealthCare Partners

DaVita Inc., a provider of kidney care services agreed to acquire HealthCare Partners, LLC, the operator of medical groups and physician networks for about $4.42 billion in a cash and stock deal.

The companies expect to close the transaction early in the fourth quarter of this year.

The purchase price consists of $3.66 billion in cash and nearly 9.38 million shares of DaVita common stock. The shares had a value of $758 million based on the closing price of DaVita''s stock on May 18.

Wanda Buys AMC Entertainment

China-based Dalian Wanda Group Co., Ltd. signed a merger and acquisition agreement with AMC Entertainment to create the world''s largest cinema owner.

The transaction is valued at about $2.6 billion. Furthermore, Wanda promises to input not more than $500 million for AMC operation after the merger.

The Wanda Group pays $3.1 billion in total for the deal.

Northrop Signs Deal with NATO

Northrop Grumman Corporation signed a $1.7 billion or €1.2 billion contract for NATO''s Alliance Ground Surveillance system. The contract includes the purchase as well as initial operation and maintenance of five Global Hawk unmanned aircraft and transportable ground stations.

First Niagara Completes HSBC Branch Acquisition

First Niagara Financial Group, Inc. completed its acquisition of the New York state and Connecticut branches from HSBC Bank USA, N.A. for around $0.9 billion.

After the purchase, the bank will have more than 200 locations across New York and an expanded presence in Fairfield County, Connecticut.

Man Group to Acquire FRM Holdings

The UK based Man Group Plc agreed to acquire the entire issued share capital of Jersey-based hedge fund research and investment specialist FRM Holdings Ltd. with $8 billion under management.

Barclays Intends to Sell BlackRock Stake

Barclays Bank PLC intends to sell its entire stake in BlackRock, Inc. by way of a registered offering and a partial buyback by its founder. The bank is preparing to meet the new and tighter capital requirements under the Basel III guidelines.

Barclays will sell its entire 19.6% stake of approximately 35.2 million shares in BlackRock worth $6.1 billion or £3.8 billion through an underwritten public secondary offering.

BlackRock agreed to repurchase up to $1 billion of its stock from Barclays on the condition of completion of the offering.

Earnings Review

Campbell Soup Company ((CPB)), the soup maker said third quarter net sales edged higher 1% to $1.82 billion from $1.81 billion in the prior-year quarter. Net earnings in the quarter fell 5.3% to $177 million or 55 cents per diluted share compared to net earnings of $187 million or 57 cents per share last year.

Lowe''s Companies, Inc. ((LOW)), the home improvement retailer reported first quarter sales increased 7.9% to $13.2 billion from $12.2 billion a year ago. Comparable store sales increased 2.6%, with U.S. business growing 2.7%.

Net earnings in the quarter grew 14.3% to $527 million over the same period a year ago. Diluted earnings per share increased to 43 cents from 34 cents in the first quarter of 2011.

Tech Data Corp. ((TECD)), wholesale distributor of technology products said first quarter net sales declined 7% to $5.9 billion from $6.33 billion in the prior-year quarter. Net profit in the quarter climbed 6% to $51.7 million or $1.24 per diluted share compared to net profit of $48.7 million or $1.03 per share a year ago.

Tidewater Inc. ((TDW)), the oil industry workboat and compression services provider said fourth quarter revenues increased 14% to $289.4 million from $253.99 million a year ago. Net earnings in the quarter surged 180% to $33.6 million or 66 cents per diluted share compared to net earnings of $12.02 million or 23 cents per share in the prior year.

For fiscal year ended March 31, 2012, net earnings were $87.4 million or $1.70 per common share, on revenues of $1,067.0 million.