The Making of a Merger Target

Sometimes — like these times — it takes a plunge in the stock market to attract a bid, whether hostile or friendly.
Stephen TaubMarch 24, 2008

The stock market’s precipitous decline has turned a number of small and midsized companies into targets for acquirers — sometimes unwilling ones.

So far this year there have been more than one dozen hostile takeover offers, according to the Boston Globe, which cited research by Thomson Financial. Some, of course, grabbed headlines. Those include Electronic Arts Inc.’s $2 billion offer for Take-Two Interactive Software and United Technologies’ $2.6 billion bid for Diebold Inc.

But last week, Axcelis Technologies Inc. turned back a second, higher bid of $615.6 million from Japan’s Sumitomo Heavy Industries. And other hostile bids also involve pricetags well below $1 billion.

Meanwhile, the falling market has led a number of companies to actively look for a buyer. Borders Group, the second-largest American bookseller, has put itself up for sale, lining up $42.5 million in financing to help the chain continue operations. According to the Globe, the financing came from Pershing Square Capital Management, its largest shareholder, which also has offered to buy Borders’s international businesses. Borders said it is reviewing possibilities that include the sale of parts of the company.

Capital Senior Living, an operator of senior living communities, has announced that its board will form a special committee to explore a possible sale for cash or stock, or to go private, among other possibilities. It also agreed to expand the size of its board from seven to nine members, following a shareholder-proposed initiative.

And Aloha Airlines, too, reportedly said in bankruptcy court that it was in discussions to sell all or some of its company.

In general, however, global merger and acquisition volume has dropped by almost 30 percent during the first quarter to its lowest amount in four years, according to efinancialnews.com, citing Mergermarket.