Kaman shares up on plan to sell music unit; AbitibiBowater stock jumps 191%; Crdentia buys ATS

By Sheri Kasprzak

New York, Oct. 29 - A recent rush of asset sales may not be that unusual, sources said Monday, but earnings reports may be a partial culprit.

On Monday, Kaman Corp. agreed to sell its Kaman Music Corp. arm to Fender Musical Instruments Corp. in a $117 million cash transaction.

"You know, it varies from company to company, from sector to sector, but earnings may be at the heart of it," said one sellside trader. "I don't know about that one in particular [the Kaman sale]."

"If something's not profitable for you, you sell it," added another trader Monday. "If it's not in line with what you're hoping to do with your company, you get rid of it and focus on other things."

Kaman's second-quarter earnings report is scheduled for release on Friday.

Kaman said it is getting out of the instrument business and focusing on its aerospace and industrial businesses.

Shares of Kaman were up less than 1% on Monday on news of the sale and ahead of the company's earnings later this week.

Elsewhere, AbitibiBowater Inc. was formed Monday, and the stock began trading on the New York Stock Exchange, jumping by 191.13%, or $24.14.

The combination between Abitibi-Consolidated Inc. and Bowater Inc. formed North America's third-largest paper products company, a statement from the combined company released Monday said.

In other news, shares of Crdentia Corp. watched its stock climb by more than 15% on Monday after sealing its purchase of ATS Health Services, a provider of temporary nurse services.

In the offer, Crdentia paid $3.3 million in cash and issued 2.1 million in shares for ATS.

Kaman to sell music arm

Kaman said Monday it intends to sell for $117 million in cash its Kaman Music Corp. subsidiary to Fender Musical Instruments.

The transaction is set to close before Jan. 1.

Shares of Kaman gained 36 cents to end at $37.14 (Nasdaq: KAMN).

"We have invested in KMC over the years to build our leadership position in the industry and KMC has been a positive contributor to the overall success of Kaman Corp.," said Paul Kuhn, Kaman's chief executive officer, in a statement.

"However, our longer-term growth strategy has evolved to a focus on the aerospace and industrial distribution segments, which has meant finding a new home for KMC. We are pleased to have attracted a strategic buyer of Fender's stature, and we are confident that KMC will have a bright future under Fender's leadership."

The KMC segment owns Ovation Guitars, LP and Toca hand percussion products, among other names. Fender is one of the country's most popular guitar makers and distributors.

"KMC is one of the most respected companies in the musical instrument industry," said Bill Mendello, Fender's CEO, in a news release. "We have very similar cultures that have been developed over many years. The distribution expertise that Kaman Music brings to the music marketplace will complement and strengthen FMIC's growing operational excellence and ultimately offer dealers and customers a better way to access a wider variety of high-quality music products and accessories."

Crdentia buys ATS

Elsewhere, Crdentia's stock climbed by 15.15%, or 5 cents, to end Monday at $0.38 (OTCBB: CRDT) after the company purchased ATS Health Services, a company that provides temporary nursing and allied health staffing services to hospitals, private practices, clinics, home care, corporate and occupational facilities.

Crdentia paid $3.3 million in cash and issued 2.1 million shares valued at $700,000.

A statement from Crdentia said the acquisition will be immediately accretive to Crdentia.

ATS president Tim Jones joined Crdentia's senior management and will be responsible for overseeing the acquired operations.

"ATS Health Services is a well-run company operating in attractive markets with a strong reputation and an impressive customer base - all qualities we look for in potential acquisition targets," said Crdentia CEO John Kaiser in a statement. "The southeastern U.S. has an attractive demographic makeup for our service offerings, and we are excited about this new acquisition, which immediately gives Crdentia a strong market share position and broad coverage throughout the southeastern market.

"In addition, the far-greater presence throughout the Southeast region gained with this acquisition will allow Crdentia the ability to offer, a much broader area of coverage for our Travel Nurse Division."

Dallas-based Crdentia is a staffing company focused on the health care sector.

AbitibiBowater formed

Finally, the merger between Abitibi-Consolidated Inc. and Bowater Inc. was completed Monday, forming AbitibiBowater Inc.

The combined company's stock skyrocketed by 191.13%, or $24.14, to close at $36.77 (NYSE: ABH). Trading started under that ticker symbol on Monday.

Now that the merger is complete, the company is the third-largest paper and forest products company in North America.

"The company expects to achieve annualized synergies of at least $250 million within two years from improved efficiencies in such areas as production, selling, general and administrative costs, distribution and procurement," said a statement from the combined company on Monday.

"By combining Abitibi-Consolidated and Bowater, we have created a global leader that is well positioned to compete in an increasingly challenging global market," said John Weaver, executive chairman of the newly formed conglomerate, in a news release.

"This transaction marks a new and important chapter in our collective history," said David Paterson, CEO of AbitibiBowater.

"Through this combination, AbitibiBowater will be a more dynamic and competitive organization that will create long-term value for our stockholders and the communities in which we operate. Our plan to achieve $250 million in annual synergies is just the first step toward this goal."

Abitibi-Consolidated and Bowater will each release their third-quarter results before the market opens on Nov. 6.

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