Merger Monday in full effect

An increase in mergers could be a good sign for the markets in the months to come.

By Benzinga Oct 24, 2011 3:33PM

By Jonathan Chen, Benzinga Staff Writer


"Merger Monday" appears to be in full effect again.


After a period of quiet in capital markets activity, there were a few mergers announced Monday, which could be a sign that managers are seeing low valuations in the stock market as an opportunity to add businesses at cheap prices. Call it the "Warren Buffett" line of thinking.


The ever-acquisitive Oracle (ORCL), led by Larry Ellison, purchased RightNow Technologies (RNOW) for $43 per share, or $1.5 billion. That's a 20% premium over Friday's closing price.


Oracle praised RightNow's Customer Service Cloud product, which helps manage customer experiences across call centers, the Web and social networks. "Together, Oracle and RightNow can enable a superior customer experience at every contact and across every channel," Oracle said.


The California-based Oracle expects the deal to close late this year or early next year.

Shares of RNOW were 19% higher in afternoon trading to $42.86‎.


Then came an announcement that Cigna Corp. (CI) was acquiring HealthSpring (HS) for $55 per share in cash, a 37% premium over Friday's close. That makes the deal worth approximately $3.8 billion.



HealthSpring fits with Cigna's plans to expand into the seniors and Medicare segment, said Cigna chief executive David Cordani. Shares of HealthSpring soared nearly 34% in afternoon trading to $53.67.


Shares of Adolor Corp. (ADLR) were also up Monday after Cubist Pharmaceuticals (CBST) said it would buy all outstanding shares of Adolor for $4.25 per share in cash.


ADLR shares are up 144% to $4.69, suggesting that traders think an additional bid is coming in for Adolor, as it was trading above the offer price.


There was also news of mergers that have not quite consummated yet.


Mac-Gray Corp. (TUC) announced that its board rejected an offer from KP Capital to acquire the company for $17.50 in cash per share.


The transaction was "not in the best interests" of shareholders, the company said.


Shares of TUC rose more than 9% in afternoon trading to $14.41‎.


Finally, InterDigital (IDCC) announced it would suspend regular quarterly conference calls until further notice as the company is currently contemplating strategic alternatives. InterDigital has been mentioned before as a patent play for companies like Intel (INTC), Qualcomm (QCOM), Samsung, and potentially, even Apple (AAPL).


Just another merger Monday indeed.


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