Two Mega mergers today-
DJ BEFORE THE BELL: Merger Mon. Returns With $66.5B In Deals
Dow Jones News Service ~ October 27, 2003 ~ 8:45 am EST
By George Stahl
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Stocks were active in premarket trading Monday following the announcement of four mergers, carrying a total value of about $66.5 billion, and earnings from two Dow Jones Industrial Average components.
The biggest merger is Bank of America Corp. (BAC) agreeing to acquire FleetBoston Financial Corp. (FBF) for about $47 billion.
Under terms of the agreement,FleetBoston shareholders will receive 0.5553 share of Bank of America stock for each of their FleetBoston shares.
Based on Bank of America's price at the close of business last Wednesday, the transaction is worth almost $47 billion, or $45 for each FleetBoston share, the banks said. The price represents a rich premium of 42% to FleetBoston's price of $31.80 at 4 p.m. EDT Friday on the New York Stock Exchange.
The combined company will retain the Bank of America name and be based in Charlotte, N.C., the current headquarters for Bank of America. Charles K. Gifford, chairman and chief executive of FleetBoston, will be chairman of the combined company, working out of Boston, where FleetBoston is based.
Kenneth D. Lewis, chairman and chief executive of Bank of America, will be chief executive of the combined company, and will keep his principal office at Charlotte.
Bank of America expects the deal, which has been approved by the boards of both companies, will close in the first half of 2004.
In premarket trading Monday, Banc of America shares slid 6.7% to $75.35. That stock price would value FleetBoston at $41.84; FleetBoston recently traded at $ 40.85, up 28.5%.
In another deal, Anthem Inc. (ATH) signed a definitive agreement to acquire WellPoint Health Networks Inc. (WLP) by exchanging $23.80 a share in cash and one Anthem common share for each WellPoint share.
The companies valued the deal at about $16.4 billion. The deal represents a premium of about 21% to WellPoint shareholders based on Friday's closing stock prices.
As reported Monday in The Wall Street Journal, the deal transforms the Blue Cross and Blue Shield name into a truly national brand for the first time. The Blue plans currently operate under license from a nonprofit association but are owned by different companies.
Both companies also reported their earnings. Anthem's third-quarter earnings rose 15%, paced by solid membership gains. Following the company's announcement to buy WellPoint, Anthem boosted its outlook for full-year 2003 and 2004 earnings.
Anthem's third-quarter income grew to $196.5 million, or $1.38 a share, which included net realized investment gains of 3 cents a share. The company's earnings beat the Thomson First Call earnings estimate of $1.33 a share.
WellPoint reported an increase of almost 17% in its third-quarter net income, with both periods including gains. The strength in third-quarter earnings led WellPoint to raise its full-year 2003 guidance again, and the company gave an initial 2004 earnings forecast.
Including gains, third-quarter net income rose to $246.2 million, or $1.63 a share, from $211.3 million, or $1.38, a year earlier; the latest period included a $1 million gain. This is well ahead of a First Call mean earnings estimate of $1.45 a share.
Anthem hadn't traded yet in premarket trading, remaining at its Friday close of $77.26. WellPoint recently rose 13.1% to $94.93.
The healthcare sector was home to a second deal as UnitedHealth Group Inc. ( UNH) agreed to acquire Mid Atlantic Medical Services Inc. (MME) in a cash-and- stock deal valued at about $2.95 billion.
Under the deal's terms, UnitedHealth said Mid Atlantic shareholders will receive UnitedHealth Group stock at an exchange ratio of 0.82 of a UnitedHealth share for each share of Mid Atlantic held, plus $18 a share in cash. Those terms would value Mid Atlantic's stock at about $62.49 a share, a 16% premium to its Friday close of $53.88.
Separately, Mid Atlantic said it now expects third-quarter earnings between $ 1.08 and $1.10 a share and anticipates full-year earnings of $4 to $4.08 a share. Analysts currently expect earnings of about 93 cents a share in the third quarter and $3.64 a share for the full year, according to a survey by Thomson First Call.
In premarket trading, UnitedHealth moved at $53.75, down nearly 1%, while Mid- Atlantic remained at its Friday close of $53.88.
Finally, in a much smaller deal, Internet security technology provider Symantec Corp. (SYMC) agreed to acquire ON Technology Corp. (ONTC) for $100 million in cash.
Under the agreement, ON Technology shareholders will receive $4 a share, the companies said in a press release Monday. This represents a 16% premium to ON Technology's closing price of $3.45 on Friday.
In premarket trading, Symantec was up 0.5% at $65.92, while On Technology gained 12.5% to $3.88. |
