M&A

Merger Mania: Three Billion-Dollar Deals

The buying spree by Swiss Re, Cisco, and Alltel was unusual for a Friday.
Stephen TaubNovember 18, 2005

Call it merger Friday.

At least three major deals exceeding $1 billion were announced on November 18, buoying the overall stock market, which surged in the first few hours on the news. The deal activity was somewhat surprising for a Friday. Generally, the most active day for official announcements is Monday, as many companies like to take the weekend to finalize their transactions.

The largest deal announced was Swiss Re’s agreement to buy GE Insurance Solutions, the fifth-largest reinsurer worldwide, from General Electric Co. for $6.8 billion in cash and stock. Under the deal, Swiss Re will also assume $1.7 billion in debt.

Cisco Systems, known for making many small acquisitions each year, will acquire Scientific-Atlanta Inc., a provider of cable television set-top boxes, for $6.9 billion. The agreement calls for Cisco to pay $43 in cash for each share of Scientific-Atlanta stock, as well as assume outstanding options. The purchase price works out to $5.3 billion net of Scientific-Atlanta’s existing cash balance.

“Video is emerging as the key strategic application in the service-provider triple play bundle of consumer entertainment, communication, and online services,” says John Chambers, president and chief executive officer of Cisco. “The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large-scale video systems and networks, and the addition of Scientific-Atlanta further extends Cisco’s commitment to and leadership in the service-provider market.”

In the third deal, Alltel, owner and operator of the nation’s largest wireless network, will acquire privately held Midwest Wireless Holdings for nearly $1.1 billion in cash. Alltel officials say the company expects to gain approximately 400,000 wireless customers in southern Minnesota, northern and eastern Iowa, and western Wisconsin. These markets are contiguous to existing Alltel operations and cover a population of 1.9 million.

Meanwhile, Liz Claiborne Inc. made a hostile $366 million offer to buy The J. Jill Group Inc. The all-cash offer, representing a 40 percent premium over J. Jill’s closing share price on Thursday, came after two years of friendly overtures were spurned, say officials at Liz Claiborne.