The Rebirth of Merger Monday?

Acquisition activity suddenly abounds, involving big names like Novartis, Nestlé, Microsoft, Yahoo, WaMu, and others.
Stephen TaubApril 7, 2008

For the first time in recent memory, there was a slew of merger news on a Monday morning. The biggest agreed-upon deal: Switzerland-based Novartis plans to pay Nestlé $11 billion for a 25 percent stake Alcon Inc. and acquire the rights to pay $28 billion more to gain a controlling interest in Alcon.

The first half of the two-step transaction is expected to be completed in the second half of 2008. The second half of the deal will allow Novartis to buy Nestlé’s remaining 52 percent stake Alcon, which makes contact-lens solution, between January 2010 and July 2011.

“This acquisition furthers our strategy of accessing high-growth segments of the healthcare market while balancing inherent risks,” said Novartis chairman and CEO Daniel Vasella.

Meanwhile, Yahoo said Monday that it is not opposed to being acquired by Microsoft. It did stress that any transaction”must be at a value that fully reflects the value of Yahoo” but did not identify what that price might be. Microsoft in January made an unsolicited $41 billion offer to acquire the Internet giant.

Elsewhere, The Wall Street Journal reported that private-equity firm TPG and other investors are close to reaching an agreement to invest $5 billion in Washington Mutual in return for stock, which is down 75 percent because of the subprime mortgage crisis. The deal could help the nation’s largest thrift meet its capital requirements.

Borders Group has finalized a revised financing agreement with hedge fund Pershing Square Capital Management, which agreed to pay $135 million for Pershing’s international subsidiaries, up from the original commitment of $125 million announced in March.

Borders also will reduce to 9.55 million the number of warrants issued to Pershing Square to purchase company common stock at $7 per share, and reduce term of all warrants under the deal from 7.5 years to 6.5 years. The original deal included 14.7 million in up-front warrants at $7 per share. Under the new agreement, Borders Group is required to issue 5.15 million warrants to Pershing Square only if any of three conditions occurs.

Huntsman Corp. said extended by 90 days the closing date for its acquisition by Hexion Specialty Chemicals to allow the Federal Trade Commission time to review the proposed merger. The $28 per share cash price to be paid upon completion of the merger will be increased at the rate of 8 percent per year.

Finally, Kinetic Concepts, which makes wound-care devices, agreed to pay $1.7 billion in cash, or $51 a share, for LifeCell Corp. to expand into the market for surgical tissue-repair products.