<% ' AvantGo:MarketMidday %>DJIA 9253.01 +93.46 (+1.02%) S&P 500 1176.71 +13.16 (+1.13%) Nasdaq 1962.53 +34.32 (+1.78%) Value Line ndx 899.63 +7.76 (+0.87%) 30-Year Bond 100 29/32 +12/32 5.19% Yield<% ' AvantGo:End %>
| This Feature | |
| Related Items | |
|
|
FOOL PLATE SPECIAL
An Investment Opinion
by Warren Gump
AMP Connects with Tyco
<% ' AvantGo:FoolPlate %>Among the many mergers announced this morning, Tyco International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:TYC)") else Response.Write("(NYSE:TYC)") end if %> offered to buy AMP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMP)") else Response.Write("(NYSE: AMP)") end if %> for $51 per share in stock (subject to collar restrictions). This "white knight" offer, which has been approved by the boards of both companies, effectively kills Allied Signal's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALD)") else Response.Write("(NYSE: ALD)") end if %> four-month-old battle to acquire the Pennsylvania-based maker of electrical connectors. The three players in this saga have all been actively traded, with AMP up $2 5/8 to $47 3/4, Allied Signal up $1/4 to $42 1/16, and Tyco down $3 1/16 to $62.
Allied Signal put AMP, the world-wide market leader in its businesses, in play on August 4th when it made an unsolicited $44.50 per share cash offer for the company. This offer was well received by AMP shareholders, who had suffered as poor earnings attributable to the Asian crises knocked their stock down to a five year closing low of $28 5/8 on August 3rd. AMP management was not quite as enthusiastic about the transaction, however, viewing Allied Signal's takeover attempt as a low-ball effort to usurp its independence. Since AMP is headquartered in Pennsylvania, the home of some of the toughest anti-takeover statutes in the nation, a battle was set.
Allied Signal tried to expand AMP's board to 28 members from 11, with the 17 expansion slots filled by Allied Signal nominees. AMP responded by suing for further disclosure about the conflicts of interest these new nominees would have. In addition, AMP attempted to get the Pennsylvania legislature to pass a law that would have delayed shareholder action on Allied Signal's proposal. Finally, AMP offered to buy back 30 million shares (about 14% of the company) for $55 as a "down payment" on the value to be created by the company's "Profit Improvement Plan." The stock repurchase was suspended this morning given the Tyco bid.
AMP shareholders who endured this battle now get to enjoy the sweet rewards of profit. Not only will they receive $51, but they will also be able to defer capital gains taxes if they decide to stay invested in Tyco stock. The big question in my mind is whether the strong anti-takeover provisions of Pennsylvania are good or bad. Certainly, they raise the negotiating power of a target company. In the AMP situation, this has ultimately resulted in shareholders receiving a higher value. For other companies, such as those that are not worldwide market leaders, a white knight suitor is less likely to emerge. Investors could then be stuck with managements whose interests are not fully aligned with those of shareholders.<% ' AvantGo:End %>
<% ' AvantGo:Ups %>Internet portal and software firm Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> was lifted $2 13/16 to $42 after the company confirmed that it is in merger talks with online services conglomerate America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>. Although an agreement has not been reached, the current deal on the table would be a pooling-of-interests by which each Netscape share would be converted into 0.45 of an AOL share. AOL rose $3 5/8 to $88 1/2 and Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %>, which is reportedly mulling a marketing deal for Netscape's e-commerce software, gained $3 7/8 to $71 3/8. For more details, see this morning's Breakfast With the Fool.
Cigarette maker Brooke Group Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGL)") else Response.Write("(NYSE: BGL)") end if %> gained $7 11/16 to $18 11/16 after Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> agreed late Friday to buy the company's L&M, Chesterfield, and Lark cigarette brands for $300 million in cash. Brooke Chairman and CEO Bennett LeBow said the sale will allow the company to focus on its discount and private label cigarette business. Philip Morris rose $1 5/8 to $57 3/8.
Commercial and investment bank Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> climbed $7 1/2 to $84 3/4 after saying it is in "advanced stages of negotiations" with Germany's Deutsche Bank concerning a long-expected merger. The current cash proposal values BT at $8.9 billion, or $93 per share. Other financial services firms were lifted this morning, as well. Donaldson, Lufkin & Jenrette <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLJ)") else Response.Write("(NYSE: DLJ)") end if %> picked up $4 1/4 to $43 7/16, Lehman Brothers Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEH)") else Response.Write("(NYSE: LEH)") end if %> gained $4 13/16 to $50 1/2, Paine Webber <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PWJ)") else Response.Write("(NYSE: PWJ)") end if %> rose $3 1/16 to $41 9/16, and Merrill Lynch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MER)") else Response.Write("(NYSE: MER)") end if %> tacked on $3 1/2 to $75 1/8.
Minimally invasive endoscopy surgical instruments designer Circon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CCON)") else Response.Write("(Nasdaq: CCON)") end if %> jumped $3 7/8 to $14 9/16 after disposable specialty medical products maker Maxxim Medical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAM)") else Response.Write("(NYSE: MAM)") end if %> agreed to buy the company for $205 million in cash and $38 million in assumed debt. Maxim said the deal will add to its earnings, but did not say when it expects the boost to kick in.
Online computer training services provider Computer Literacy <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMPL)") else Response.Write("(Nasdaq: CMPL)") end if %> added another $1 13/16 to $21 3/4 after the company sold 3 million shares in an initial public offering late last week at a price of $10 per share.
Home improvement products retailer Lowe's Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %> moved up $1 5/16 to $40 7/8 after agreeing to buy Eagle Hardware & Garden <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EAGL)") else Response.Write("(Nasdaq: EAGL)") end if %> in a pooling of interest stock swap valued at about $1 billion. Lowe's said Eagle's 32 stores in the western U.S. will bolster its proposed expansion into that region, which will consist of the rollout of 100 new Lowe's stores over the next three to four years. Eagle added $1/2 to $28.
Natural gas and electric utility Cilcorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CER)") else Response.Write("(NYSE: CER)") end if %> surged $7 5/8 to $61 1/16 after international power plant operator AES Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AES)") else Response.Write("(NYSE: AES)") end if %> agreed to buy the company for about $885 million, or $65 per share.
Aerospace and industrial products supplier Coltec Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COT)") else Response.Write("(NYSE: COT)") end if %> jumped $1 15/16 to $19 7/8 after agreeing to merge with aircraft systems and industrial and consumer products maker B.F. Goodrich Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GR)") else Response.Write("(NYSE: GR)") end if %> in a stock swap valued at $20.13 per Coltec share, or $2.2 billion including assumed debt.
Individual and group disability insurer Provident Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PVT)") else Response.Write("(NYSE: PVT)") end if %> moved up $3 to $36 3/8 after agreeing to merge with rival Unum Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UNM)") else Response.Write("(NYSE: UNM)") end if %> in a stock swap valued at about $5 billion. Under the deal, each Provident share will be exchanged for 0.73 of a share of the newly created entity, which will do business as UnumProvident.
Mutual fund manager and Cash-King Portfolio holding T. Rowe Price Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TROW)") else Response.Write("(Nasdaq: TROW)") end if %> gained $3 7/8 to $39 1/8 after Morgan Stanley Dean Witter raised its rating to "outperform" from "neutral." Fellow fund firm Franklin Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEN)") else Response.Write("(NYSE: BEN)") end if %> received a similar upgrade, sending its shares up $4 1/2 to $45.
Biopharmaceutical company Oxigene Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXGN)") else Response.Write("(Nasdaq: OXGN)") end if %> jumped $3 1/8 to $11 1/16 after researchers at the University of Florida announced the results of a study showing that the company's Combretastatin cancer drug "increased significantly" the tumor cell killing effects of radiation when the two therapies were used together to treat solid tumors in animals. Combretastatin is currently in Phase I trials in the U.S. and the U.K. in patients with advanced cancer, the company said.<% ' AvantGo:End %>
<% ' AvantGo:Downs %>Bank holding company Republic Bancshares <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: REPB)") else Response.Write("(Nasdaq: REPB)") end if %> fell $2 3/8 to $13 7/8 following its announcement that it expects to report operating losses in Q4 and full-year 1998 because loan sales won't cover expenses at its mortgage banking operation, which it will reorganize. Republic expects Q4 losses of between $0.96 and $1.26 per share, compared with current Wall Street projections of a $0.13 per share loss, and full-year losses of between $0.11 and $0.43 per share, compared with analysts' estimated $1.17 per share profit.
Several oil stocks slipped this morning as oil prices fell. Among the movers, contract driller Atwood Oceanics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ATW)") else Response.Write("(NYSE: ATW)") end if %> sank $1 5/16 to $22 3/8 while Transocean Offshore <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RIG)") else Response.Write("(NYSE: RIG)") end if %> lost $1 13/16 to $28 1/2; offshore service vessel operator Tidewater <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDW)") else Response.Write("(NYSE: TDW)") end if %> shed $1 1/2 to $25 7/16; and oil exploration and production company Triton Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OIL)") else Response.Write("(NYSE: OIL)") end if %> was drilled $3/4 to $9 15/16.
The American depositary receipts of Hoechst AG <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HOE)") else Response.Write("(NYSE: HOE)") end if %> and Rhone-Poulenc SA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RP)") else Response.Write("(NYSE: RP)") end if %> retreated this morning -- Hoechst's $1 to $46 11/16 and Rhone-Poulenc's $1 1/4 to $50 11/16 -- on reports that a German newspaper will say the companies are "fine-tuning" a merger-of-equals transaction that would form a global pharmaceutical and agricultural products giant. Rumors of such a deal have circulated for weeks.
Bookselling giant Barnes & Noble <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BKS)") else Response.Write("(NYSE: BKS)") end if %> shelved $1 5/16 to $27 11/16 after J.P. Morgan cut its rating on the company to "long-term buy" from "buy."
Temporary employment services firm Manpower Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAN)") else Response.Write("(NYSE: MAN)") end if %> laid off $1 1/4 to $24 after it released the results of a national survey in which 23% of respondents expect to increase staffing in Q1, down from 24% last year. Morgan Stanley Dean Witter cut Manpower to "neutral" from "outperform" this morning.
Electronic display developer Planar Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PLNR)") else Response.Write("(Nasdaq: PLNR)") end if %> dove $1 3/8 to $8 1/8 after it said full-year 1999 net income is expected to be "substantially below its previous expectations" because of industry-wide sales weakness. The company believes the drag on earnings will be felt most early in the year, primarily in Q1. Four analysts surveyed by First Call currently expect EPS of $0.20 in Q1 and $0.92 for the year.
Electronic connectors manufacturer PCD Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PCDI)") else Response.Write("(Nasdaq: PCDI)") end if %> dropped $2 to $11 on Friday's news that it expects Q4 earnings to fall below analysts' $0.23 per share figure. The company currently expects to report EPS of between $0.13 and $0.16. "Although the semiconductor industry has reported the first signs of recovery," said CEO John Dwight Jr., "we believe that caution on the part of our customers has contributed to a decline in our sales." In a cost-cutting move, PCD laid off several workers last week, according to reports.
Oral transmucosal drug delivery company Anesta Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSTA)") else Response.Write("(Nasdaq: NSTA)") end if %> leaked $1 to $20 7/16 following Friday's announcement that it registered with the SEC for a proposed public offering of 2 million shares, about a 21% boost to the total outstanding.
Notebook computer modems maker Xircom Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XIRC)") else Response.Write("(Nasdaq: XIRC)") end if %> lost $3 17/32 to $32 after Morgan Stanley Dean Witter downgraded the company to "neutral" from "outperform."
Safeskin Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SFSK)") else Response.Write("(Nasdaq: SFSK)") end if %> washed away $2 1/4 to $20 3/16 after Barron's said the disposable latex and synthetic glove maker could see its share price fall amid increased competition that could hurt sales and profits.
Information technology education and training company Learning Tree International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LTRE)") else Response.Write("(Nasdaq: LTRE)") end if %> was pruned $1 1/8 to $8 1/8 after Legg Mason cut its rating on the firm to "market perform" from "outperform."<% ' AvantGo:End %>
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
Click here for continually updated Portfolio Numbers.
See something moving a stock that we didn't cover?
E-mail the Fool News Team
and we will start working on the story.
Unfortunately, we cannot answer every e-mail
or respond to individual questions.
|
Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), another Fool David Marino-Nachison (TMF Braden), a new Fool
Editing |