VNUS gets 'full' value; Emulex shares hold above bid; Analyst: 4Q on Live Nation deal close

By Cristal Cody

Tupelo, Miss., May 8 - Covidien, Ltd.'s $440 million buyout of VNUS Medical Technologies, Inc. at $29.00 a share in cash should close without any regulatory or shareholder issues, an analyst told Prospect News on Friday.

Meanwhile, a market source said Broadcom Corp.'s plan to conduct a consent solicitation to repeal Emulex Corp.'s bylaws and allow investors to call a special meeting will speed up its hostile bid process, but the company still must contend with a poison pill and gain shareholder support.

In other deals, Live Nation, Inc. and Ticketmaster Entertainment, Inc. probably will only have to sell off a few small assets as part of potential conditions from the Department of Justice's investigation into the merger, an analyst told Prospect News on Friday.

On Wall Street, stocks rallied on growing confidence in the economy and sent the Dow Jones Industrial Average up 164.80 points, or 1.96%, to close Friday at 8,574.65.

The broader indexes also rose. The Standard & Poor's 500 index increased by 21.84 points, or 2.41%, to 929.23, and the Nasdaq Composite index added 22.76 points, or 1.33%, to close at 1,739.00.

Covidien to file HSR

Shares of VNUS shot up $7.44, or 34.90%, to close at a new high of $28.76 on Friday.

The deal with Covidien represents a 36% premium to VNUS stock's closing price on Thursday. San Jose, Calif.-based VNUS develops medical devices to treat venous reflux disease, an underlying cause of varicose veins.

Covidien, a health-care products company, is based in Hamilton, Bermuda, and has U.S. headquarters in Mansfield, Mass.

The boards of directors of both companies have unanimously approved the transaction.

Joe Almeida, president of Covidien's medical devices division, said in a statement Friday that the acquisition "is in line with our strategy of becoming a leading partner with vascular surgeons and interventional radiologists."

Covidien spokesman Bruce Farmer told Prospect News the only regulatory clearance needed will be the Hart-Scott-Rodino antitrust application.

VNUS shareholders also must approve the transaction.

The companies expect the deal to be completed by June 30.

The takeover should close without a hitch, Christopher Warren, an analyst with Caris & Co., told Prospect News on Friday.

"It's all cash. There's no overlapping operations, so I don't see any antitrust issues," he said. "Covidien is paying a full amount. Strategically, I guess it gives them growth in their vascular segment, but it'll be a question of how well they can integrate it."

Shares of Covidien rose 34 cents, or 0.99%, to close at $34.54 on Friday.

Broadcom faces challenge

Irvine, Calif.-based Broadcom launched its hostile $764 million bid on Tuesday for the outstanding shares of Emulex at $9.25 a share in cash.

"At the current bid price, we believe that Emulex shareholders are unlikely to support Broadcom," a market source said. "Emulex was trading its lowest level since 2002 at the time of the announcement of Broadcom's acquisition [offer]. We believe that a negotiated offer price could fall between $11.00 and $12.00 per Emulex share."

Emulex shares rose 11 cents or 1.04%, on Friday to close at $10.71.

The tender offer from Broadcom, which makes semiconductor chips for communications equipment, expires on June 3.

In January, Costa Mesa, Calif.-based data networking storage products maker Emulex amended its bylaws and adopted a new stockholder rights agreement to deter a takeover.

Emulex also faces two Delaware lawsuits over the company's bylaws amendments.

Broadcom's stock slid $1.15, or 5.07%, to end at $21.55 on Friday.

Live Nation, Ticketmaster divestitures

The Live Nation and Ticketmaster Entertainment merger has been scrutinized since the deal was announced Feb. 10 over concerns of the influence the combined company would have over the live entertainment business.

U.S. Senate and House antitrust subcommittees held hearings in February on the deal.

The companies reported on March 20 that the Justice Department had requested additional information about the merger.

Beverly Hills, Calif.-based Live Nation is the world's largest concert promoter, and West Hollywood, Calif.-based Ticketmaster controls most of the ticketing arrangements for events.

The companies expect the deal to close in the third or fourth quarter.

David Joyce, an analyst with Miller Tabak & Co., said in an interview Friday that the deal likely will close in the fourth quarter.

"There will probably be some conditions," he said of the Justice Department probe. "But there are some smaller assets each company can sell to satisfy that. I don't think they've tipped their hand yet on how they're going to do it."

In the all-stock merger, Ticketmaster shareholders will receive 1.384 shares of Live Nation stock for each share of Ticketmaster.

Ticketmaster's stock lost 32 cents, or 4.46%, to close Friday at $6.85. Live Nation shares rose 5 cents, or 0.97%, to $5.19.

Mentioned in this article:

Broadcom Corp. Nasdaq: BRCM

Covidien, Ltd. NYSE: COV

Emulex Corp. NYSE: ELX

Live Nation, Inc. NYSE: LYV

Ticketmaster Entertainment, Inc. Nasdaq: TKTM

VNUS Medical Technologies, Inc. Nasdaq: VNUS

© 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.