Maksim Labkouski
Traders betting on mergers & acquisitions had a rough and unexpected week with the termination of Dupont’s (DD) acquisition of Rogers Corp. (NYSE:ROG). A Washington state court’s decision to halt an Albertsons (NYSE:ACI) dividend payment also surprised investors.
Rogers (ROG) plunged 44% in the wake of Dupont’s decision to abandon its $5.2 billion purchase after a walk deadline expired as a China review of the deal continued. The shares fell another 17% the following two days and now trade at $107, almost 50% below where the traded prior to the deal being announced a year ago.
Traders appeared to have been unprepared for the deal break as conventional wisdom was that the deal would be extended or at there would be a price cut after Roger’s business appeared to deteriorate meaningfully since the transaction was announced.
The fallout from the Rogers deal appeared to extend to Tower Semiconductor (TSEM), which Intel (INTC) agreed to buy in February for $53/share. TSEM shares fell in the wake of the Rogers new as some as investors were concerned about transactions that need approval from China’s antitrust regulator and the length of the approval process.
Late Thursday traders also received some unexpected news when a Washington state judge granted a temporary restraining order that blocked Albertsons (ACI) payment of a $4 billion dividend announced in conjunction with with its planned $25 billion sale to Kroger (KR).
Earlier in the week several states’ attorney’s general had sued in an attempt to block the dividend payment, though traders said a court halt of the dividend would be unprecedented.
“We applauded these attorneys general when they filed their lawsuits, and we applaud Washington State Attorney General Ferguson and his team for presenting a strong case yesterday and, at least temporarily, putting a pause on Albertsons’ $4 billion payout for rich stockholders instead of investing in lowering prices, improving store safety and increasing the wages of the workers in the store who made the stores function all during the height of the COVID-19 pandemic,” the United Food and Commercial Workers local unions 3000 and 367 said in a statement on Friday.
The Albertsons (ACI) dividend was set to be paid Monday, though now investors will have till at least Thursday to find out what’s next when a Washington state court hearing is set to discuss a preliminary injunction related to the dividend payment.
Not all was bad news for M&A traders this week. On Monday Johnson & Johnson (JNJ) agreed to acquire cardiac pump maker Abiomed, Inc. (ABMD) for about $17.3 billion, in one of the biggest biotech deals of the year.
Image and article originally from seekingalpha.com. Read the original article here.