As we reported yesterday in our article “Merger Monday,” mergers and acquisitions are dominating this week’s news headlines. Drugmaker Abbot Laboratories (ABT:NYSE) is expected to announce it will buy Solvay (SVYSY:OTC ADR) for $6 billion in cash. Solvay is a Belgian plastics and chemical giant. The two firms already have an agreement to market cholesterol-related drugs.
According to The New York Times, the all-cash acquisition would be Abbott's third significant deal this month and fifth this year. Abbott hopes the acquisition of Solvay will help bolster its lackluster prescription drug business.
Abbott has annual pharmaceutical sales of about $17 billion a year. However, the company’s profit fell in the second quarter of this year.
In 1863, Belgian scientist and industrialist Ernest Solvay founded Solvay S.A, of which Solvay Pharmaceuticals is a subsidiary. Solvay considers itself an innovative company able to create new and much needed treatments. For example, according to the company’s Web site, “Solvay Pharmaceuticals, with its whollyowned subsidiary Unimed Pharmaceuticals, launched the first topical testosterone gel approved to treat men with low levels of this important hormone.”
Xerox Corporation (XRX:NYSE) has announced it also intends to buy Affiliated Computer Services (ACS:NYSE), an outsourcing and information services provider, for $6.4 billion. According to Bizjournals.com, this Xerox acquisition will give Xerox an opportunity to cross-sell many of Xerox products to ACS customers.
According to the Wall Street Pit, Xerox will pay in the deal 4.935 Xerox shares and $18.60 in cash for each share of the other company, totaling $63.11 per share.
However, not all deals go perfectly. Kraft Foods (KFT:NYSE) is ready to launch a hostile take over of Cadbury, PLC (CBY:NYSE ADR). Earlier this month Kraft made a $16.7 stock-and-cash proposal that was rebuffed by the confectionary company.
According to an article in the TimesOnline, Cadbury Chief Executive Todd Stitzer claimed his growth strategy for the company would produce better returns than the Kraft bid. Irene Rosenfeld, the chairman and chief executive of Kraft Foods accused Mr. Stitzer of failing to do the math.
The article further claims that most Cadbury investors are backing Carr’s decision to turn down Kraft’s proposal.
News of these deals helped to keep Wall Street in the black. European markets also rose on the M&A activity. As the markets rose, the dollar traded down.
Investors and analysts are worried about the dollar especially if G-20 nations push for a new world reserve currency. Earlier last week, currency markets got a sense that the IMF’s role is being expanded to be the watchdog of stimulus funds as well as any retraction of these funds by major economic powers when the these major economies indicate upturns.
“What this could be interpreted to mean is that the U.S. dollar’s role as the world reserve currency could be reduced,” says currency expert and editor of Currency Profits Trader, Harinder Singh.
Harinder provides readers with trading recommendations on all major currencies incuding the U.S. dollar, Japanese yen, the eruo, and the Aussie. You can learn more about his service, Currency Profits Trader, right here.
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