Market downturn opens door to more takeover battles

Mar.07, 2008 in Market Outlook

Depressed stocks open door to more takeovers

Analysts see M&A activity ramping up as deals abound

By Christopher Hinton, MarketWatch

Last Update: 6:38 PM ET Mar 7, 2008

NEW YORK (MarketWatch) — The deep chill on Wall Street is heating up unsolicited
takeovers, with companies bearing solid balance sheets pouncing on the depressed
stocks of reluctant targets at a rate now outpacing what the market witnessed a
year ago.

Since Jan. 1, $52.6 billion has been thrown around in unsolicited merger offers
in the United States, according to data from Dealogic. That’s down 24% from a
year ago. But as a percentage of total takeovers, including the more-common
friendly ones, it’s up 11 points to 33%.

Analysts say that trend is likely to continue throughout 2008, creating
opportunities for nimble investors steeled against market volatility.

Heavy selling on Wall Street, triggered by tight credit markets and a steadily
deteriorating economy, has left plenty of good companies short on cash and
dangling close to historically low stock values. This leaves them vulnerable to
unwanted acquisitions by bigger companies with healthy finances and cheap access
to capital.

“This year, we’re going to see a survival of the fittest in the market,” said
Kjerstin Hatch, an analyst with Madison Capital Management.

Just this week, United Technologies Corp. (UTX) announced it wants to buy ATM and
voting-machine maker Diebold Inc. (DBD) for $2.63 billion, or $40 a share for a
stock that was trading at $54.50 less than a year ago. Prior to UTC’s bid,
Diebold shares had dropped by more than half to $23.07, swept lower along with
the broader market.

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