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   Strategies & Market TrendsSpeculating in Takeover Targets

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To: richardred who wrote (2321)9/21/2010 12:31:35 PM
From: richardred
   of 6453
KNSY-Sold shares today at 29.05. Gain 35%. IMO still a Takeover target. The stock has made a nice move very quickly. I will look for a possible re-entry later on if the price drops.

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To: richardred who wrote (2420)9/26/2010 8:57:41 PM
From: richardred
   of 6453
Appreciating Teradata's Many Charms

NEARLY A YEAR AGO, WE NOTED that among the considerable appeals of Teradata, the leader in business intelligence and data analytics, was its attractiveness as a takeover target.

Not only has Teradata's (ticker: TDC) performance this past year surpassed expectations, but sure enough, in the last week, Teradata's takeover appeal received wider recognition. One of its competitors, International Business Machines, made a $1.7 billion, or $27-a-share, cash bid for another smaller but faster-growing rival, Netezza. Netezza adds to IBM's analytics offering and makes it a more formidable competitor to Oracle's Exdata data-warehousing service.

Data analytics is a focus on the mergers front as more mature technology companies turn to this field for its dynamic growth characteristics. IBM's bid for Netezza, for instance, came on the heels of a bidding war between Hewlett-Packard and Dell for data-storage company 3Par, which HP eventually won.
[Follow 1]

Teradata's shares spiked from a close of $34.47 on Friday, Sept. 17 to a recent $38.57 on takeover speculation and are up nearly 33% from when we recommended the stock ("Sounds Like a Dinosaur, But It's No Small-Brainer," Oct. 26, 2009). Its market value is now $6 billion, about $1 billion higher than when it caught our attention. It's in solid financial shape, with zero debt and about $4 a share in cash.

"If a larger company wants to put excess cash to work and dominate the business-analytic space in one decision, they will look at TDC," says James Tarkenton, portfolio manager at Lateef Investment Management of Greenbrae, Calif. "TDC remains the only provider in the space with product across all price points." Its superior performance is highlighted by its ability to lure high-profile companies such as Home Depot and JPMorgan away from the competition in the past year.

Tarkenton puts an intrinsic value of $50 a share on Teradata. But the firm would fetch more in a takeover. HP was once considered a front-runner to acquire Teradata because its former chief executive, Mark Hurd, ran the company when it was a unit of NCR.

Now that Hurd has been named co-president of Oracle, Teradata's biggest competitor, there is speculation Oracle might be interested in Teradata for its faster and more comprehensive solutions. Then, too, the company could provide an avenue for Microsoft to get into the hot area of analytics. Teradata would benefit from the broader sales networks at bigger companies.

The beauty of owning Teradata shares is that they will appreciate nicely with or without a takeover.

—Sandra Ward

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From: richardred9/26/2010 9:06:24 PM
   of 6453
Unilever in Advanced Talks to Buy Alberto Culver


Unilever PLC, the Anglo-Dutch consumer-products giant, is closing in on a deal to purchase Alberto-Culver Co., maker of Alberto VO5 hair-care products, people familiar with the matter said.

Precise terms of the deal couldn't be learned but Alberto-Culver, based in Melrose Park, Ill., has a market value of $3.1 billion. With a typical takeover premium of 20% to 30%, it would fetch as much as $4 billion. Barring a last-minute snag, a deal could be announced as early as Monday.

A spokesman for Unilever had no comment while Alberto-Culver officials couldn't be immediately reached.

Alberto-Culver's portfolio includes a number of well-known hair-care brands, such as TRESemme and Nexxus, in addition to Alberto VO5, and skin-care products such as St. Ives and Noxzema. The company, part owned by the family of founder Leonard Lavin, and which dates its roots back more than 50 years, had sales of $1.4 billion for the fiscal year ended in September 2009.

The deal would come almost exactly a year after Unilever announced its purchase of Sara Lee Corp.'s personal-care business for €1.275 billion ($1.72 billion) in cash. That deal, which hasn't closed yet due to regulatory hurdles in Europe, would round out Unilever's personal-care portfolio by adding the cheaper Radox and Sanex brands to higher-end brands like Dove and Vaseline. Unilever has said it expects the Sara Lee deal to be completed by the fourth quarter of 2010.

Personal care, which includes shampoo and skin products, has been outperforming Unilever's other divisions in recent quarters, thanks in part to the success of Degree deodorant and Suave shampoo in the U.S. The consumer-goods giant also launched a successful range of Dove products for men across the globe earlier this year.

Sales in Unilever's personal-care division were €6.7 billion in the first half of 2010, up 7.9% when stripping out the effects of currency fluctuations, disposals and acquisitions. Total sales, when including all divisions, were €21.895 billion for the first half, up 3.8% from a year earlier.

When Unilever agreed to buy the Sara Lee brands last year, Chief Executive Paul Polman called personal care a "strategic category" and a "key growth driver" for the company. The business is also where much of Mr. Polman's experience lies, with him having spent years in the home and personal-care business of Procter Gamble Co.

The remaining bulk of Unilever's business is in food, and it includes products such as Ben & Jerry's ice cream, Hellmann's mayonnaise and Lipton tea.

By bringing Nexxus, VO5 and TRESemme shampoos into its stable of hair-care brands, the acquisition of Alberto-Culver would put the Anglo-Dutch Unilever in more direct competition with its American archrival Procter & Gamble. Cincinnatti, Ohio-based P&G—Mr. Polman's longtime employer—makes Pantene, Herbal Essences, Head & Shoulders and Clairol hair products.

It would also raise Unilever's presence in North America, where the company abandoned its laundry business in 2008, selling it for $1.45 billion in cash and shares to private-equity firm Vestar Capital Partners.

Mr. Lavin, a horse-racing enthusiast who turns 91 next month, founded the company in 1955 and took it public six years later. Today he sits on the board after relinquishing management of the company in 1994. Alberto Culver's executive chairman now is Carol Lavin Bernick, his daughter. Together, they own more than 14% of the company, according to the most recent proxy filing late last year.

In 4 p.m. composite trading Friday on the New York Stock Exchange, Alberto-Culver shares were up 18 cents at $31.48. Unilever's American depositary shares were up 52 cents, or 1.8%, at $29.37.

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From: richardred9/26/2010 9:11:15 PM
   of 6453
Chinese predator is stalking food group behind McVitie's

By Daily Mail Reporter
Last updated at 10:12 PM on 26th September 2010

A Chinese predator is lining up a multi-billion pound bid for the British food group behind Jaffa Cakes and McVitie's biscuits.

Shanghai-based Bright Food said it is in talks about a takeover that would value United Biscuits at more than £2billion.

Numbers: United Biscuits counts 7,000 staff, £1.3bn sales, £223m profits and £2-2.5bn value

United - whose brands also include Jacob's, Carr's, KP, Twiglets and Hula Hoops - is Britain's biggest biscuit producer.

Although United is owned by US investment firm Blackstone and French buyout specialist PAI Partners, a sale to the Chinese will revive the debate over foreign takeovers of British companies in the wake of Cadbury's sale to American rival Kraft earlier this year.

Read more:

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From: richardred9/26/2010 10:02:18 PM
   of 6453
Oracle: Genius, or Unbelievably Stupid?
Whether a chip buy makes sense is unknown, but no one should be surprised.

By Tim Beyers
updated 9/26/2010 8:00:00 AM ET

Oracle? chief Larry Ellison apparently surprised a lot of people on Friday, when he foreshadowed plans to acquire a chipmaker. I find it surprising that anyone is surprised.

I'll get to why in a moment. First, let's review what happened.

Loading up on chips
"You're going to see us buying chip companies," Ellison told an audience at the OracleWorld conference in San Francisco. He also downplayed speculation that Oracle would seek to compete with Accenture, Infosys, and IBM in professional services, media reports say.

Ellison would rather control the design and development of all the products Oracle sells and in the process become more like Apple. The key difference: Oracle sells to chief information officers, whereas Apple sells to consumers.

Investors mostly sold on the news. The stock was down half a percent in Friday afternoon trading, a sharp contrast to an otherwise broad tech rally.

Why you shouldn't be surprised
Whether it's surprise or skepticism that accounts for the selloff in Oracle stock isn't known. But I find it hard to believe anyone is genuinely surprised to see Ellison making bold predictions.

Acquisitions are Oracle's forte. Since 2004, the database king has acquired more than 30 companies. Returns on capital have come down only marginally in that time, from 17.8% in 2006 to 14% over the past 12 months. In each case, Oracle appears to be creating value above and beyond the cost of the capital it employs.

And while we've yet to see Oracle back away from the SPARC architecture it acquired from Sun, the company hasn't given investors much reason to believe that it would shepherd further development.

Last June, news reports surfaced that a planned upgrade to the SPARC architecture, nicknamed "Rock," would be canceled in light of what was then Oracle's yet-to-be-approved purchase of Sun.

The rumors were easy to believe. Semiconductors are costly to produce, and Sun's partnerships with Intel and Advanced Micro Devices would give Oracle plenty of options for sourcing chips for new hardware.

Which company would Oracle buy?
Apparently, Ellison wants more than just options. He wants a chip-design team working on custom database hardware that blows away anything IBM and Teradata can come up with.

It's up to us investors to decide whether the plan makes sense and, if it does, which companies we think Oracle should seriously pursue. Judging by Friday's top-performing semiconductor stocks, I'd say the three most likely candidates are:

* Micron Technology, up more than 7.7%. Micron specializes in memory chips used for data storage and retrieval.
* Cirrus Logic, up more than 7%. Cirrus specializes in chips for networked media products, such as digital TVs and audio and video receivers.
* AMD, up more than 6.8%. AMD is the yin to Intel's yang and at times has proved to be superior to its larger peer in developing high-performance server processors.

I asked the Fool's chip expert, Anders Bylund, which of these three names Oracle would be most likely to buy. His choice: AMD. He's long believed that a peer or systems developer would acquire the upstart chipmaker. But Oracle could also do well with AMD.

"If ever it was going to happen, this is the way it will happen," Anders said when I spoke with him on Friday. He also likes Big Blue's Power chips and NVIDIA's supercomputing designs as would-be brains for Oracle's database servers. I think he's right, but I'm willing to bet on AMD in my CAPS portfolio only. In CAPS, I've chosen the stock to outperform on the basis of a potential Oracle buyout.

Now it's your turn to weigh in. Should Oracle acquire a chipmaker? If so, which one should it be? Please vote in the poll below, and then leave a comment to explain your thinking.

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From: richardred9/27/2010 10:40:05 AM
   of 6453
Virtual Radiologic and NightHawk Radiology Announce Merger
Transaction Unites Leading Radiology Practices to Offer Enhanced Subspecialist Capabilities and Service, With 325 Affiliated Radiologists Serving Nearly 2,700 Healthcare Facilities Across United States
Virtual Radiologic to Pay $6.50 Per Share in Cash, Delivering Significant Immediate Value to NightHawk Stockholders

EDEN PRAIRIE, Minn. and SCOTTSDALE, Ariz., Sept. 27 /PRNewswire/ -- Virtual Radiologic (vRad), a national radiology practice and leader in the development of radiologist workflow technology, and NightHawk Radiology (Nasdaq:NHWK - News), a leading provider of radiology solutions to radiology groups across the United States, today announced that they have entered into a definitive agreement under which vRad will acquire all of the outstanding common stock of NightHawk Radiology Holdings, Inc. for $6.50 per share in cash. The offer price represents a premium of 100% over NightHawk's last closing stock price of $3.25 per share. The transaction is valued at approximately $170 million.

The combination of vRad and NightHawk will result in enhanced services to radiology groups and hospitals across the country, accelerating vRad's stated commitment to optimize radiology's critical role in the delivery of patient care. The combined entity will have 325 radiologists serving nearly 2,700 healthcare facilities across all 50 states and reading approximately 6 million studies annually. Additionally, more than 75 percent of the affiliated radiologists will be fellowship-trained subspecialists.

"Local radiology practices and hospitals are under intense pressure to deliver the highest quality care in the most efficient manner possible," said vRad President and Chief Executive Officer Rob Kill. "The need for expanded access, improved quality, and reduced costs is clear. Both vRad and NightHawk have been delivering these benefits in partnership with local radiologists for many years. This combination – which brings together both companies' talented team members and affiliated radiologists – will expand access to much-needed subspecialty expertise, helping to improve the quality of patient care across the United States. We look forward to working with NightHawk's talented team to deliver the highest quality radiology service in the country."

"We are pleased to deliver significant, immediate value to our stockholders through this transaction," said NightHawk President and Chief Executive Officer David Engert. "The combination of our collective assets will enable us to better meet our clients' rapidly expanding needs and will enhance our ability to partner with local radiologists to address the needs of local hospitals, physicians and the patients they serve. We look forward to working with Rob and the vRad team to ensure a seamless integration and to continuing to provide the quality and efficiency that our clients have come to expect."

"We are very excited to bring together the strengths of our organizations," said Eduard Michel, MD, neuroradiologist, Chief Medical Officer and vRad co-founder. "We each have implemented leading quality assurance programs that help ensure accuracy and provide a platform for clinical benchmarking. With our combined talents and experiences, we will be uniquely positioned to deliver new and innovative care delivery models to best serve our clients."

Upon the completion of the transaction, Rob Kill will continue to serve as President and CEO of the combined organization. Dave Engert will remain as a Board Advisor following the close of the transaction. The remainder of the leadership team will be drawn from the management teams of both companies.

NightHawk's Board of Directors unanimously approved the agreement and recommends that stockholders vote in favor of the transaction. The transaction is expected to be completed in the first quarter of 2011, subject to customary closing conditions, including the approval of NightHawk's stockholders.

In conjunction with the merger agreement, a commitment for a senior secured credit facility was provided by GE Capital, Healthcare Financial Services. Morgan Stanley & Co., Incorporated is serving as financial advisor. Wilson Sonsini Goodrich & Rosati, Professional Corporation is serving as legal counsel to NightHawk. Weil, Gotshal & Manges LLP is serving as legal counsel to vRad. KPMG LLP is providing transaction and tax advisory services to vRad.

Additional Information and Where to Find It

In connection with proposed transaction, NightHawk will file with the Securities and Exchange Commission (SEC) a preliminary proxy statement and mail a definitive proxy statement and other relevant documents regarding the proposed transaction to NightHawk's stockholders. NIGHTHAWK'S STOCKHOLDERS ARE URGED TO READ, WHEN AVAILABLE, NIGHTHAWK'S PRELIMINARY PROXY STATEMENT AND DEFINITIVE PROXY STATEMENT IN CONNECTION WITH NIGHTHAWK'S SOLICITATION OF PROXIES FOR THE SPECIAL MEETING TO BE HELD TO APPROVE THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NIGHTHAWK AND THE PROPOSED TRANSACTION. NightHawk's stockholders may obtain a free copy of these documents, as well as other filings containing information about NightHawk, at the SEC's website NightHawk's stockholders will also be able to obtain, without charge, a copy of the proxy statement and any other relevant documents (when available) by directing a request to: 4900 N. Scottsdale Road, 6th Floor, Scottsdale, Arizona 85251, Attention: Investor Relations, or by telephone at (866) 400-4295 or through NightHawk's website at

NightHawk and its directors and executive officers may be deemed to be participants in the solicitation of proxies from NightHawk's stockholders in respect of the proposed transaction. Information about the directors and executive officers of NightHawk and their respective interests in NightHawk by security holdings or otherwise is set forth in its proxy statement for its 2010 Annual Meeting of Stockholders, which was filed with the SEC on March 19, 2010. Investors may obtain additional information regarding the interests of the participants by reading the proxy statement and other relevant documents regarding the proposed transaction when they become available.

Forward Looking Statements

This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made, including general economic conditions, competitive conditions in the radiology industry, and regulatory risks.

Such risks also include failure to satisfy the conditions of the proposed transaction, including failure to obtain the required approvals of NightHawk's stockholders; the costs and expenses associated with the proposed transaction; contractual restrictions on the conduct of NightHawk's business included in the merger agreement; the potential loss of key personnel, disruption of NightHawk's business or any impact on NightHawk's relationships with third parties as a result of the proposed transaction; any delay in consummating the proposed merger or the failure to consummate the transaction; and the outcome of, or expenses associated with, any litigation which may arise in connection with the proposed transaction.

Other factors that could cause NightHawk's operating and financial results to differ are described in the company's periodic reports filed with the SEC. Other risks may be detailed from time to time in reports to be filed with the SEC. NightHawk does not undertake any obligation to publicly update its forward-looking statements based on events or circumstances after the date hereof, except as required by law.

About Virtual Radiologic

Virtual Radiologic Corporation (vRad) is a privately owned national radiology practice working in partnership with local radiologists and hospitals to optimize radiology's pivotal role in patient care. vRad's more than 140 radiologists serve 1,200+ facilities, reading 2.7 million studies annually. Delivering access to extensive subspecialty coverage, vRad contributes to improved quality of patient care. And with its next-generation technology, vRad enhances productivity, helping to lower the overall cost of care while expediting time to diagnosis and treatment. For more information, visit

About NightHawk

NightHawk Radiology (NASDAQ:NHWK - News) is leading the transformation of the practice of radiology by providing high-quality, cost-effective solutions in the U.S. NightHawk provides the most complete suite of solutions, designed to increase efficiencies and improve the quality of patient care and the lives of radiologists. NightHawk's team of U.S. board-certified, state-licensed, and hospital-privileged physicians are located in the United States, Australia, and Switzerland. They provide services 24 hours a day, 7 days a week, to nearly 1,500 sites. For more information, visit


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From: richardred9/27/2010 10:45:45 AM
   of 6453
Southwest Buys AirTran in Effort to Expand Reach
Published: September 27, 2010

Southwest Airlines, the nation’s largest low-fare carrier, said on Monday that it had agreed to buy its smaller rival AirTran Airways in a transaction valued at $1.4 billion, expanding its foothold in New York and Boston and allowing it to move into Atlanta, the nation’s largest airport.

Southwest’s offer for AirTran comes as the domestic airline industry is consolidating in a bid to return to profitability.

The deal is valued at $3.4 billion when AirTran’s debt and aircraft leases are included. Southwest said the purchase had been approved by the boards of both companies, although it still needs regulatory and shareholder approval.

The move comes as the domestic airline industry is consolidating and reducing the number of seats offered as it attempts to return to profitability. United Airlines is taking over Continental Airlines on Oct. 1, after shareholders of both companies recently approved the tie-up and the government gave the green light. Delta Air Lines led the way in 2008 when it acquired Northwest.

Analysts said the deal would help keep prices low, especially in the Northeast.

The transaction is a sharp departure for Southwest, one of the nation’s few consistently profitable airlines. The company’s success had been built on a simple business model, operating the same type of Boeing 737 planes at a higher frequency between smaller airports.

But Southwest has been looking for ways to expand as its network grew. For instance, it had sought ways into the nation’s larger markets, like New York, Boston and Washington.

So far, Southwest’s presence in New York has been very limited. It has a few landing and take-off rights, called slots, at La Guardia Airport. As part of the United-Continental merger, Southwest had recently obtained some slots at Newark Liberty International Airport.

Southwest said the acquisition would increase its presence in New York and open the door to Atlanta, which is the nation’s largest airport and the hub of Delta Air Lines.

Analysts at Deutsche Bank said they expect the deal to gain swift regulatory approval given the speed with which the federal government approved the United-Continental tie-up and the fact that the networks of Southwest and AirTran do not overlap much.

Southwest said the transaction would save $400 million a year by 2013. It said the one-time costs related to integrating AirTran would be $300 million to $500 million.

The offer represents a premium of 69 percent over AirTran’s closing stock price on Friday. AirTran shareholders would receive a combination of Southwest shares and cash. That includes at least $3.75 in cash and 0.321 shares of Southwest common stock for each share of AirTran common stock.

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From: richardred9/27/2010 10:52:53 AM
   of 6453
Unilever aims for big hair day with Alberto buy

On Monday September 27, 2010, 10:38 am

By David Jones

LONDON (Reuters) - Consumer goods group Unilever Plc/NV (LSE:ULVR.L - News; Amsterdam:UNC.AS - News) will buy U.S. hair and skin care company Alberto Culver (NYSE:ACV - News) for $3.7 billion in the latest move to rebalance its portfolio toward higher growth lines.

Unilever's biggest acquisition in a decade will add brands such as V05, TRESemme and Nexxus to Unilever's existing Dove and Sunsilk, and make it the world's leading company in hair conditioning and the second largest in shampoo.

Analysts said the price of the deal looked high but could be justified by as-yet unspecified cost savings and by skewing Unilever's business to more high growth, high margin categories compared to its other food and detergent businesses.

The acquisition follows a yet-to-be completed deal to buy Sara Lee's (NYSE:SLE - News) bodycare division for $1.3 billion and will also mark Unilever's biggest acquisition since its massive $24.3 billion Bestfoods deal in 2000.

"The initial consideration for Alberto Culver of 14.8 times EBITDA (earnings before interest, tax, depreciation and amortization) on the face of it looks quite punchy, but we believe 'significant' but as yet undisclosed synergies will make the price look more reasonable," said analyst Graham Jones at brokers Panmure Gordon.

Alberto Culver shares jumped 19.4 percent to $37.60 in early trading in New York by 1345 GMT. The takeover deal values Alberto shares at $37.50 each in cash, or a 19 percent premium to Friday's close of $31.48.

Unilever Plc shares were up 1.6 percent to 1,821 pence and the FTSE All Share index (FTSE:^FTAS - News) was up 0.1 percent, as other analysts said the deal would give Unilever greater haircare sales in the United States where it has struggled in recent years.


The deal will be Chief Executive Paul Polman's second big purchase since he took over the helm at Unilever in January 2009. Both the Alberto Culver and Sara Lee acquisitions are in personal care, the company's biggest and fastest growing business line.

"Personal care is a strategic category for Unilever and growing rapidly. Ten years ago it represented 20 percent of our turnover; strong organic growth has driven it to now reach over 30 percent, with strong positions in many of the emerging markets," Polman said in a statement on Monday.

Its brands will complement Unilever's existing brands like Dove, Clear and Sunsilk in hair care, and Pond's and Vaseline in skincare, and enhance the company's presence in emerging markets such as Mexico and also in the more mature markets of the United States, Canada, Britain, and Australasia.

Unilever's proposed acquisition of Sara Lee Sanex deodorant and Radox bodycare business, first announced last September, is priced at around 10 times EBITDA, a relatively low price to reflect the disparate collection of brands being acquired.

The European Union is still examining the deal and is set to rule by October 26. Analysts expect Unilever to be required to divest some deodorant businesses to clear the deal which it hopes to complete in the fourth quarter.

Alberto Culver made annual sales of nearly $1.6 billion and EBITDA of over $250 million in the 12-month period ending June 30, 2010. Analysts estimate 65 percent of sales are in the United States and less than 10 percent in emerging markets.

They said the deal would strengthen Unilever's number three position in global haircare behind Procter & Gamble (NYSE:PG - News) with 23 percent and L'Oreal's (Paris:OREP.PA - News) 18 percent by adding Alberto's 2 percent to Unilever's 11 percent, while significantly improving Unilever's position in North America.

Analyst James Edwardes Jones at Execution Noble estimates cost savings could be around 150 million euros ($200.2 million) making it a sensible deal financially and also strategically.

"Financially the deal makes sense and should be about 1 percent earnings enhancing, and strategically it strengthens Unilever's number three position in haircare, particularly in America," he said.

The U.S.-based group has operations in nine countries, including the United States, Canada, Argentina, Mexico, Britain, South Africa and Australasia. It has six manufacturing plants and employs around 2,700 people.

In another personal care deal, Britain's PZ Cussons (LSE:PZC.L - News) said it bought the tanning-products firm St Tropez from its private equity owner LDC for 62.5 million pounds ($98.92 million).

(Editing by Sharon Lindores and Dan Lalor)

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From: richardred9/28/2010 12:30:29 AM
   of 6453
Wal-Mart offers to buy Massmart for $4.25B
Wal-Mart Stores offers to purchase S. African retailer Massmart for about $4.25 billion

NEW YORK (AP) -- Wal-Mart Stores Inc. is offering to buy South African retailer Massmart Holdings Ltd. for about $4.25 billion in a bid to jump-start growth beyond its sluggish U.S. business.

A deal would give the world's largest retailer an opening to expand in South Africa, a fast-growing economy but one that's also troubled by high crime and a 24 percent unemployment rate. It also has a heavily unionized work force.

Wal-Mart has focused on expanding overseas, particularly in emerging markets, but South Africa had not been an area that officials had discussed as a potential opportunity.

"South Africa possesses attractive market dynamics, favorable demographic trends and a growing economy," Executive Vice President Andy Bond said in a statement. Wal-Mart has sourced products there but doesn't have a retail presence, company officials confirmed.

Wal-Mart said it would pay 148 rands ($21.11) per share for Massmart, which has 201.5 million shares outstanding, according to Thomson Reuters. Further details of the proposed deal were not disclosed.

Massmart is Africa's third-largest distributor of consumer goods, the leading retailer of general merchandise, liquor and home improvement equipment and supplies and the leading wholesaler of basic foods. Massmart was founded in 1990 and operates chains including Game and Makro.

Shares of Massmart surged above Wal-Mart's offer to 149 rands ($21.29), or 10.6 percent, Monday. That's an indication that shareholders are expecting a higher offer, either from Wal-Mart or another bidder. Wal-Mart shares fell 60 cents to $53.48.

Massmart said in a statement that its board will provide a recommendation to shareholders once a firm offer is made. The two companies have entered into an exclusivity period to allow for due diligence and other pre-conditions to a deal.

Wal-Mart's overseas business makes up about 25 percent of its revenue, generating more than $100 billion in the fiscal year that ended Jan. 31. Last month, the discounter reported second-quarter results were helped by robust global growth in China, Brazil and Mexico.

Massmart, based in Johannesburg, runs 290 stores in 13 countries in Africa, with most in South Africa. It also manages eight wholesale and retail chains under various brand names. Its Game stores, Africa's largest discount chain, offer predominantly general merchandise and nonperishable groceries for home, leisure and business use.

At a press conference Monday, Massmart CEO Grant Pattison said of Wal-Mart: "They're of course very interested in a strategy that includes the entire African continent and therefore have asked questions of Massmart about our operations outside of South Africa, which as you know is in several countries as far north as Nigeria and Ghana and as far east as Tanzania and Mauritius."

Sean Ashton, an analyst from Johannesburg-based Investec Private Client Securities, said Massmart reported a revenue of 47 billion rand (about $6.7 billion) in its last financial results. And its strategy is similar to the Wal-Mart model -- big box, warehouse-style retailing, he added.

"South Africa is a country that's still urbanizing, so we should see a continuing trend of the formal retailers gaining market share from informal ones," Ashton added.

"This is a visionary thing," said Richard Hastings, macro and consumer strategist with Global Hunter Securities. "The transformation of South Africa is well under way." He said he believes South Africa will be where South America is today in about seven to 10 years.

But Brian Sozzi, an analyst with Wall Street Strategies, was skeptical. "I'm surprised," Sozzi said. "As a Wal-Mart shareholder, I would have a lot of questions. There seems to be too many moving parts. I think they should be fixing their own business in the U.S. There's too much confusion over its strategy here."

He added that digesting Massmart may be difficult because it has a "huge portfolio of brands." And he believes with this deal, Wal-Mart is acknowledging it's going to be difficult to grow in the U.S.

Wal-Mart's push to expand in an emerging market comes as it posted its fifth consecutive quarter of declines in revenue at stores open at least a year in the U.S. Wal-Mart is aiming to pump up domestic sales with an aggressive push into urban markets, planning a small format that's a fraction of the size of its supercenters.

The retailer has more than 8,500 stores under 55 different names in 15 countries. It has more than 4,000 stores in the U.S. Its fiscal 2010 sales were $405 billion.

Associated Press writers Jenny Gross and Eric Naki in Johannesburg contributed to this report.

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From: richardred9/28/2010 12:37:42 AM
   of 6453
TransDigm to Acquire McKechnie for $1.27 Billion
By Will Daley - Sep 27, 2010 4:24 PM ET

TransDigm Group Inc. agreed to buy rival aircraft-parts supplier McKechnie Aerospace Holdings Inc. for about $1.27 billion to expand its offerings for planes built by companies such as Boeing Co. and Airbus SAS.

McKechnie, controlled by buyout firm JLL Partners Inc., will post about $300 million in revenue this year, Cleveland- based TransDigm said today in a statement. The cash purchase is TransDigm’s largest, Bloomberg data show.

McKechnie makes parts for aircraft including Boeing’s 787 Dreamliner and Airbus’s A380, TransDigm said. The world’s two largest planemakers are boosting output as airlines recover from the recession and seek more fuel-efficient jets to refresh and expand their fleets.

“TransDigm and McKechnie both make proprietary, sole-source aerospace component parts,” said Jonathan Crandall, director of investor relations for TransDigm. “McKechnie has a complementary product mix to TransDigm’s.”

Products made by TransDigm include pumps, motors, cockpit security doors, flight-deck audio, batteries, ignition systems and lavatory hardware. McKechnie makes external latches for thrust reversers, engine cowlings and cargo doors, along with motors, blowers and valves used all over the aircraft.

“The McKechnie customers are the same customers as TransDigm’s,” Crandall said.

Revenue, Employment

McKechnie gets about 60 percent of its sales from aerospace manufacturers and the rest from replacement components, TransDigm said. The closely held company, based in Irvine, California, has about 1,500 workers.

In August, TransDigm forecast revenue of as much as $825 million for its fiscal year that ends this month. The company’s sales a year earlier were $762 million. TransDigm had about 2,000 workers at the end of September 2009, according its annual regulatory filing.

TransDigm said that it expects to pay for the purchase with senior and subordinated debt and that it has commitments for the full amount, without providing specifics. The company reported cash and equivalents of $258.4 million and $1.77 billion in long-term debt as of July 3.

“We feel very comfortable at this level of leverage, as we have operated at this level in years past,” Crandall said. TransDigm is able to pay down debt quickly because of its cash flow and growth in its existing business, he said.

TransDigm fell 56 cents to $61.68 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 30 percent this year.

Other Bidders

Precision Castparts Corp. and TransDigm were both bidding for McKechnie, people with knowledge of the discussions said last week. Carlyle Group, the Washington-based buyout firm, also submitted an offer for McKechnie last week, the people said.

JLL, based in New York, and Morgan Stanley had been seeking bids for McKechnie for several months. They bought the company in 2007 for about $850 million from Melrose Plc, the London- based component maker. Before that, it was owned by Cinven Ltd., the U.K. private-equity firm.

The company’s issuer default rating from Fitch Ratings is B, five levels below investment grade. Fitch in an April 7 report cited concerns including “the size or number of potential acquisitions going forward and the risks of integrating them successfully.”

Credit Suisse and UBS Investment Bank served as financial advisers to TransDigm.

To contact the reporter on this story: Will Daley in New York at

To contact the editor responsible for this story: Ed Dufner at

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