Three Takeover Deals That Have Investors Excited Today

With the Fed having postponed the rate hike again, companies are taking full advantage of the low interest rates to finance their diversification and expansion plans. Three major deals involving biotech and technology companies, as well as two conglomerates, have hit the headlines today. Let’s take a look at these deals and analyze the details behind them as well as how investors reacted to the news.

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Shire PLC (ADR) (NASDAQ:SHPG) quickly turned its attention towards other takeover targets after its $30 billion offer for Baxalta Inc (NYSE:BXLT) was rejected and has reached an agreement to buy Dyax Corp. (NASDAQ:DYAX) for a minimum $5.9 billion. Shareholders of the U.S biotech company will receive $37.30 per share in cash, with the possibility of a further one-time payment of $4 per share should Dyax’s flagship drug be approved by regulators. The drug in question is DX-2930 for the treatment of hereditary angiodema, a disease that attacks the immune system. A phase 3 study of the drug is expected to start before the end of this year. Should the drug be approved, Shire estimates annual sales of approximately $2 billion. The British drug company has prepared a $5.6 billion loan to finance the deal and is confident it will have only a mild impact on its bottom line. Dyax Corp. (NASDAQ:DYAX) surged by as much as 33% in the first hour of trading today, while Shire PLC (ADR) (NASDAQ:SHPG) is marginally down, by 0.46%.

The popularity of Shire PLC (ADR) (NASDAQ:SHPG) among elite hedge funds cooled down a bit during the second quarter, as the number of funds invested in the company fell to 44 at the end of the second quarter, while their combined holdings represented 7.3% of the company’s common stock. Billionaire John Paulson held the largest stake in the company among the hedge funds we follow, with Paulson & Co having reported ownership of 7.09 million shares as of the end of June. The number of funds holding Dyax Corp. (NASDAQ:DYAX) increased to 33 during the second quarter, and they amassed 18.5% of the company’s outstanding stock. Julian Baker and Felix Baker are set to profit handsomely from this deal, as their fund, Baker Bros. Advisors, held 7.92 million shares of Dyax at the end of the second quarter.

We have more news of big deals and trending stocks on page two.

General Electric Company (NYSE:GE) has put the finishing touches on its takeover of Alstom’s power and grid businesses. The iconic U.S conglomerate had reached an agreement with Alstom in 2014 to buy the businesses for €12.35 billion ($13.62 billion). Some price adjustments had to be made to account for certain changes, including currency swings, and the final number is believed to be around €9.7 billion ($10.70 billion). General Electric has also announced the sale of its rail signaling business to the French giant, in a deal worth approximately $800 million. These moves are part of a larger transformation strategy GE has been implementing as it seeks to become a simpler and more focused company. According to Jeff Immelt, the CEO of General Electric, the acquisition of Alstom’s power and grid businesses will strengthen the company’s industrial growth and will enhance its “technology offerings in the energy sector.”

Although it is among the companies hedge fund managers like the most, only 1.4% of General Electric Company (NYSE:GE) was held by 70 elite funds in our database at the end of June, up from 62 at the end of the first quarter. Billionaire Ken Fisher continues to bet big on the U.S giant, having increased his stake by 1% during the third quarter. His fund, Fisher Asset Management, reported ownership of 30.8 million shares in its latest 13F filing. Phill Gross and Robert Atchinson are also bullish on GE, having increased their investment by 35% to 19.3 million shares during the second quarter.

M&A activity in the technology sector is also hot at the moment, with the latest deal seeing Constant Contact Inc (NASDAQ:CTCT), a provider of online marketing tools for small businesses, being taken over by Endurance International Group Hldgs Inc (NASDAQ:EIGI), a provider of web-hosting services. The deal is worth approximately $1.1 billion, with Endurance set to compensate Constant Contact shareholders with $32 per share, which constitutes a 23% premium over Friday’s closing price of $26.10. With the deal to be completed in the first quarter of 2016, the management of Endurance expects revenues to grow by 10%-to-12% next year as a result of this and other recent acquisitions. Constant Contact Inc (NASDAQ:CTCT) jumped by more than 20% in the opening hour today, while Endurance International Group Hldgs Inc (NASDAQ:EIGI) slumped by roughly 15%.

Hedge fund sentiment towards Constant Contact Inc (NASDAQ:CTCT) did not change during the second quarter, as 14.4% of its outstanding stock was held by 16 hedge funds we track at the end of June. Mariko Gordon was among the fund managers that actually stepped up their interest in the company, having upped her stake by 44% to amass 2.49 million shares by the end of the quarter. During the second quarter, some hedge funds decided to distance themselves from Endurance International Group Hldgs Inc (NASDAQ:EIGI), with the number of funds holding the stock falling to 12, while their aggregate investment in the company amounted to 9.2% of the its common stock. Richard Barrera sees great potential in Endurance International, as his fund Roystone Capital Partners held 6.22 million shares on June 30, the largest stake in the stock among the funds we follow.

Disclosure: None