Banks, Feds grapple with financials; Vishay ups ante with tender offer; Getinge scoops up Datascope

By Aaron Hochman-Zimmerman

New York, Sept. 16 - Non-investors as well as investors from around the world were fixated on the tangled cluster of failing finance that surrounded a bankruptcy at Lehman Brothers Holdings Inc. leading to a partial sale to Barclays plc.

No less important was talk of a solution to the drying liquidity pool at insurer American International Group, Inc.

Government and financial decision-makers argued over the fate of the two institutions, weighing moral hazard against the greater good.

Still, while the headline arguments raged, many wondered which banks would be the next on the chopping block.

JPMorgan Chase & Co. was rumored to be in talks with Washington Mutual, Inc., but speculation about the depth of the crisis seemed unending.

Outside of financials, International Rectifier Corp. turned down a second offer from Vishay Intertechnology Inc. and will now face a tender offer and proxy fight.

A more friendly agreement was reached by Sweden's Getinge AB, which will acquire fellow pharmaceutical firm Datascope Corp. for $53.00 per share.

Meanwhile in the broader market, as the Federal Reserve left interest rates unchanged, the Dow Jones Industrial Average recovered from early losses to end better by 141.51, or 1.30% at 11,059.02, while the Nasdaq Composite Index also added 27.99, or 1.28% to finish at 2,207.90.

The S&P 500 bounced back to finish better by 20.89, or 1.75%, to close at 1,213.59.

Financials run fumble scrum

Many had thought that as the leaves turned the crisis that brought down Bear Stearns would itself begin to show signs of a turnaround.

Instead, fall football season brought the market a scrum involving banks, mortgage lenders, insurers and the Fed to gain control of a financial system that has been slipping through the fingers of all involved.

When Lehman ran up the white flag by declaring bankruptcy, it became the hot topic even beyond the financially oriented.

Many had thought Lehman was the closest to the edge but still clung to the idea that it was too big to fail.

After federal funding was ruled out, Barclays announced it would try to salvage some of the once-unsinkable ship.

The market speculated that anyone with designs on Lehman's more attractive properties would have to move quickly and Barclays did.

Tuesday afternoon, after a breakneck round of talks, Barclays announced it will purchase Lehman's broker-dealer unit, according to reports.

Shares of Lehman Brothers (NYSE: LEH) launched up by $0.09, or 42.86%, to $0.30.

Greenberg rides in

Threatening to overshadow Lehman in the scope of its possible bankruptcy filing was insurer AIG.

However, the market wires buzzed with rumors of Maurice Greenberg riding in with his new investment company CV Starr & Co. to rescue his former firm.

A trader suggested that Greenberg would have to make his move before any formal bankruptcy filings, therefore likely before the end of the day on Tuesday.

What was certain was AIG needed money, although "AIG needs a bridge loan, not a bail-out," Greenberg himself wrote in the Wall Street Journal.

He described the company's need for a loan from the government, if necessary, as a matter of "national interest."

Treasury secretary Hank Paulson ruled out public money for Lehman but not for an entity as entangled in the market as AIG.

On the other hand, a trader said senator Chris Dodd, D-Conn., is "skeptical" of AIG being given money when Lehman was not.

"Idiot," the trader said about Dodd.

Some reports spoke of a possible government conservatorship for AIG.

Shares of AIG (NYSE: AIG) were slashed by $1.01, or 21.22%, to finish the day at $3.75.

JPMorgan wants more?

As banks including Goldman Sachs Group, Inc. and Washington Mutual slide one place closer to the edge of the cliff, JPMorgan has been mentioned as an anchor to keep WaMu from washing out to sea.

"JPMorgan will get WaMu a la Bank of America [Corp.] with Countrywide," a trader said.

If JPMorgan is willing to deal with a rescue operation for WaMu so recently after pulling Bear Stearns into the tent, the question is how long it will wait.

"I think it is already in the works," the trader said.

Even if the deal happens before WaMu is even closer to the brink, it is not in a strong position to negotiate, the trader said.

"No premium for common [stock], but bondholders and preferred folks will do well," he said.

"The new CEO of WaMu is not moving to Seattle," the trader said, he "uses the company plane to commute .... He is in New York" and is presumably going to stay.

Shares of JPMorgan (NYSE: JPM) jumped by $3.74, or 10.11%, to close at $40.74.

Shares of Washington Mutual (NYSE: WM) were better by $0.32, or 16.00%, to end at $2.32.

International Rectifier spurns Vishay again

International Rectifier kicked back another offer from Vishay Intertechnology, according to a press release.

The rejected offer had been improved to $23.00 per share, or $1.7 billion, up from $21.22 per share, or $1.6 billion.

Still, the unsolicited proposal was not enough to hold the attention of International Rectifier, which claimed the offer undervalued its assets.

"Vishay's offer still significantly undervalues the future prospects of the company when compared to the value that we expect our new strategic plan to deliver to our shareholders," International Rectifier chairman Richard Dahl said in a statement.

Dahl persisted in the statement with stronger language.

"We believe that Vishay's latest unsolicited proposal continues to represent an opportunistic attempt by Vishay to capture value that belongs to our shareholders," he said.

Despite the strong words from Dahl, Vishay does not plan to slink away quietly.

"We are confident our all-cash premium proposal would provide International Rectifier stockholders with far greater value than what International Rectifier could achieve on its own in the foreseeable future," Vishay said in a press release.

However, Vishay intends to go over the International Rectifier board by taking a tender offer to the shareholders.

"International Rectifier's refusal to negotiate with us has left us with no alternative but to present our increased all-cash premium proposal directly to International Rectifier stockholders," the Vishay statement said.

Vishay also put three nominees up for election to the International Rectifier board at the delayed 2007 annual meeting scheduled for Oct. 10.

Shares of International Rectifier (NYSE: IRF) improved by $0.20, or 0.94%, to $21.48.

Shares of Vishay Intertechnology (NYSE: VSH) slipped $0.12, or 1.66%, to $7.11.

Datascope pens deal for Getinge

Datascope's $53.00-per-share purchase by Getinge may be one of Lehman's last acts in its current incarnation.

The 158-year-old institution acted as financial adviser to the pharmaceutical merger even as it struggled to sell pieces or all of itself.

Shares of Datascope improved as the two cardiac-focused pharma firms combined.

"We are delighted that Datascope will be acquired by Getinge, a company that shares our commitment to serving the healthcare community. We believe that this transaction will deliver to our stockholders value at a historic high for our stock," Lawrence Saper, chairman and chief executive officer of Datascope, said in a statement.

Saper is also an 18% stockholder.

Shares of Datascope (Nasdaq: DSCP) tacked on $1.93, or 3.92%, to end at $51.16.

© 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.