Three Large Global Merger Deals, U.S. Tech Stocks Selloff Continues

Nichole Harper
07 Apr, 2014
New York City

U.S. stocks extended losses for the third day and three large merger deals were announced in India, U.S. and Europe. The market correction continues across many sectors led by 15% losses in high flying Internet stocks. Investors are anticipating 16 IPOs to be completed this week.

[R]11:00 AM New York – U.S. stocks extended losses for the third day and three large merger deals were announced in India, U.S. and Europe. The market correction continues across many sectors led by 15% losses in high flying Internet stocks. Investors are anticipating 16 IPOs to be completed this week.[/R]

Three large merger deals in U.S., Europe and India dominated Monday news as traders focused on highflying tech stocks.

Switzerland based Holcim Ltd and France based Lafarge SA agreed to merge and form the world’s largest cement maker with revenues of $40 billion.

The construction recession in Europe has forced consolidation in the cement industry. The two companies will plan to sell assets with 5 billion euros in revenues to win regulatory approvals.

Holcim will offer one share for each share held in Lafarge SA.

India Sun Pharmaceutical Industries Limited agreed to buy generic drugmaker Ranbaxy Laboratories Ltd for about $3.2 billion.

Under the terms, shareholders of Ranbaxy will get 0.8 shares of Sun Pharma. The deal is expected to close by end of this year and is the sixth large purchase by Sun in as many years.

Japan based Daiichi Sankyo Co agreed to sell its 63% stake in Ranbaxy in exchange of 9% stake in the merged Sun Pharma.

Daiichi paid 61% more for Ranbaxy and the India based generic drugs maker faced production problems and U.S. regulatory inquiries that has hurt profitability of the company.

Ireland based Mallinckrodt PLC agreed to acquire Questcor Pharmaceuticals for $5.2 billion and diversify its business.

Questcor stock holders will receive $30 a share in cash and 0.897 Mallinckrodt stock for each stock held totaling $86.10 per Questcor. The entire transaction is valued at $5.6 billion.

After the deal, Mallinckrodt will control 50.5% and former Questcor shareholders will control the remaining 49.5% in the merged company.

Mallinckrodt PLC ((MNK)) stock declined 3.2% to $60.48 and Questcor ((QCOR)) soared 17.1% to $79.39.

Tech Stocks Lead U.S. Indexes Lower

U.S. stocks extended losses for the third day in a row and world markets followed lower.

High flying tech stocks led the decline and the tech heavy Nasdaq Composite index opened lower after a near 2.7% plunge on Friday.

S&P 500 index declined 4.71 or 0.25% to 1,860.38 and the Nasdaq Composite Index eased 5.96 or 0.14% to 4,121.76.

World Markets

Markets in Asia closed lower following weak market conditions in New York in Friday’s trading.

Nikkei index declined 1.7% to 14,809 and the Hang Seng Index eased 0.6% to 22,377 and the Sensex index in Mumbai declined 0.1% to 22,343.

Market indexes in Europe generally closed lower following the early weakness in New York.

FTSE 100 index declined 0.9% to 6,633 and CAC 40 index in Paris eased 0.5% to 4,460. The DAX index in Germany rose 0.4% to 9,277.

Lafarge SA increased 5.4% in Paris trading and Holcim added 7% in Zurich trading and two companies have a combined market cap of $50 billion.

U.S. Stocks in Review

Ahead of earnings, tech stocks and the Internet stocks took a dive for the third day in a row.

Amazon.com, Inc ((AMZN)) declined 0.4% after falling 15% on Friday to trade at $320.71. Apple Inc ((AAPL)) declined 0.9% to $527.16 and Yahoo Inc dropped 1.3% to $33.80.

Facebook Inc opened lower 0.4% but climbed to trade up 0.4%, Twitter reversed earlier losses to trade higher 2.2% and Priceline Group Inc declined 0.6% to 1,170.45.

Tesla Motors Inc decreased 0.8% to $210.71

Sears Holdings Corp ((SHLD)) led the losers in trading with a loss of 17.5% to $41.41 after the company completed the spinoff of Land’s End.