Radian up after MGIC merger called off; Ventana slips trailing acquisition of Spring BioScience

By Sheri Kasprzak

New York, Sept. 5 - MGIC Investment Corp. dodged a bullet, according to sell-side traders and analysts, when it called off its planned merger with Radian Group Inc. The two companies cited "market conditions" as the reason behind calling off the transaction.

MGIC said Wednesday that it was leaving behind its plans to merge into a mortgage and credit risk insurance company called MGIC Radian Financial Group Inc.

The choice not to move ahead was no surprise to traders and analysts who have been following the proposed deal.

Elsewhere, Ventana Medical Systems, Inc. acquired Spring BioSciences Corp. Shares of Ventana slipped slightly on the news.

Flotek Industries watched its stock dip after it acquired Sooner Energy Services in a $7.1 million deal. The stock fell by 5.13% on Wednesday.

MGIC calls off merger

MGIC said Wednesday that it will not move ahead with its merger with Radian Group. The move was no surprise to some.

"It was a train wreck waiting to happen," one sell-side trader said Wednesday afternoon. "MGIC would have acquired a company worth nothing and backing out was the thing to do."

An analyst said Wednesday morning that the move just doesn't make sense right now.

"In other conditions, you know, it might have been a good thing," he said. "I think MGIC just took a look at the mortgage industry and backed away as quickly as they could. There would be no benefit for them in this merger at all."

Another sell-side trader said he also believes the timing was just wrong.

"It's all about timing in these situations," he said. "They're both, obviously, better off not moving ahead with this. MGIC especially would have seriously taken a hit from a merger like this."

Radian provides credit protection for mortgage lenders. MGIC is an insurance provider for mortgage companies.

Radian's stock was up by 11.6%, or $2.10, by 1:30 p.m. ET. The stock went on to end the day with a gain of 16 cents, or 0.88%, to close at $18.27, but lost a penny after hours (NYSE: RDN).

Shares of MGIC, however, slipped after making some gains earlier in the day. The stock closed down 29 cents to close at $30.05 (NYSE: MTG).

"Both MGIC and Radian believe it is in their best interests to remain independent companies at this time," said a statement released by the two companies on Wednesday. "All outstanding litigation between the companies will be withdrawn. Neither party made a payment to the other in connection with the termination."

"I am pleased MGIC and Radian were able to reach this amicable resolution," said Curt Culver, MGIC's chief, in the statement.

"During the course of the merger process, our MGIC team met many fine people from Radian. We wish them the best."

"Our mutual decision to terminate the pending merger represents the best outcome for both companies under the circumstances," said Radian CEO S.A. Ibrahim, in the statement.

Ventana's stock falls

In other merger news, Ventana saw its stock slip on Wednesday after announcing the completion of its acquisition of Spring BioScience, a Fremont, Calif.-based

Ventana's stock ended the day down 17 cents to close at $82.01 (Nasdaq: VMSI). By 12:30 p.m. ET, the stock had fallen 33 cents, or 0.40%.

In the transaction, Ventana will pay $28.9 million in cash and up to $11.7 million over the next two years if Spring achieves certain scientific milestones.

Ventana, headquartered in Tucson, Ariz., is a tissue-based cancer diagnostics company and Spring supplies rabbit antibodies.

Ventana is currently the object of a planned hostile takeover by Roche Holding for its shareholders to be paid $75 per share in cash.

"Adding Spring's world-class team and capabilities to Ventana represents the achievement of our goal to establish and grow resources for product development and antibody design within our organization," said Christopher Gleeson, Ventana's CEO, in a news release.

"We now have the full range of internal capabilities to develop and distribute tissue-based cancer diagnostics to pathologists and patients around the world. In addition, because antibody development is a principle component of almost all companion diagnostic programs, the acquisition of Spring BioScience further enhances Ventana's global leadership in the rapidly emerging area of companion diagnostics - the future of personalized medicine.

"Spring's management team and employees are all highly regarded in the industry and we are looking forward to leveraging their talents and reputation for delivering superior products to build on Ventana's track record of market-leading success."

Flotek buys Sooner

Finally, Flotek's shares dropped Wednesday as the company settled its acquisition of Sooner Energy Services in a $7.1 million cash deal.

At 12:40 p.m. ET, Flotek's stock had fallen by 3.33%, or $1.30. The stock settled down 5.13%, or $2.00, to close at $37 (Amex: FTK).

Sooner Energy, based in Norman, Okla., produces specialty chemicals for natural gas producers, oilfield supply stores, drilling mud and other oilfield services companies. Flotek also makes specialty chemicals.

"I am very excited to bring Sooner Energy Services into the Flotek organization," said Jerry Dumas, Flotek's CEO in a statement.

"The acquisition provides the platform and momentum for the broadening of our specialty chemical division's field capability to sell and service production enhancement products and chemicals. We plan to expand SES's product offerings to include, among other items, CESI Chemicals' line of proprietary biodegradable production foamers. Our combined companies' goal is to provide a full line of specialty production chemicals to enhance hydrocarbon production rates and expand this service geographically."

Yahoo! shares up

A day after Yahoo! Inc. announced the acquisition of BlueLithium, the search engine company's stock climbed.

The stock gained 13 cents to close at $24.10 Wednesday (Nasdaq: YHOO). Shares were up 20 cents by 12:51 p.m. ET.

Yahoo! said late Tuesday that it had acquired the U.K.'s second-largest advertising network in a $300 million buyout.

"BlueLithium's products, technology and team will be an integral part of our drive to build the industry's leading advertising and publishing network," said Jerry Yang, Yahoo!'s chief executive officer, in a statement released late Tuesday.

"This acquisition will extend our ability to deliver powerful data analytics, advanced targeting and innovative media buying strategies to our customers, who are increasingly looking for these insights. By leveraging BlueLithium's complementary expertise and tools, we will be able to better address the needs of our performance-based display advertisers and enhance the value of our publishers' inventory."

"We believe that Yahoo! is the ideal home for BlueLithium, as we share a common goal of providing both advertisers and publishers with high-quality inventory and the essential targeting and analytical tools that are necessary to reach the right consumers at the right times," said Gurbaksh Chahal, BlueLithium's CEO, in a release.

"We are extremely excited about becoming a part of the Yahoo! network and believe that together, we'll have the opportunity to shape the future of the online advertising industry."

The transaction is expected to wrap up in the fourth quarter.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.