Delta, United Airlines merger rumors lift shares; United Rentals shares dive; Qualcomm shares up

By Sheri Kasprzak

New York, Nov. 14 - Reports that United Air Lines Inc. and Delta Air Lines Inc. are in talks for a possible business combination sent shares of both airlines way up on Wednesday.

A sellside trader said Wednesday that a merger would be very viable for the two airlines.

"Airlines are facing a major crisis in terms of fuel prices right now," said the trader. "Pooling their resources will benefit both. Seems like a good plan to me. It's all speculation right now, all talk and no action, so we'll have to see what happens."

Delta specifically denied that it has engaged in merger talks with United.

Shares of United ended the day up 69 cents, or 1.6%, to end at $44.19 (Nasdaq: UAUA) and Delta's stock closed up 4.32%, or 81 cents, to end at $19.56 (NYSE: DAL). In after-hours trading, the stock gave up 15 cents.

In a soured deal that may lead to a lawsuit, Cerberus Capital Management LP backpedaled from its planned $7 billion merger with United Rentals Inc.

United Rentals said it has retained a law firm should it have to move to a lawsuit. The equipment rental company said Cerberus has no reason to back out of the merger plan and expects Cerberus to pay up for the failed deal.

Meanwhile, after agreeing to buy Firethorn Holdings, LLC in a $210 million cash-only transaction, shares of Qualcomm Inc. were up on Wednesday.

Qualcomm said Wednesday it plans to buy Atlanta-based Firethorn, a mobile banking enabler.

Shares of Qualcomm ended Wednesday up 88 cents, or 2.25%, to close at $40.04 (Nasdaq: QCOM).

Moving to the pharmaceutical sector, Roche said Wednesday it will complete due diligence with regard to its planned acquisition with Ventana Medical Systems, Inc.

Shares of both Ventana and Roche responded positively to the news. The two entered into a merger agreement in June.

Qualcomm to buy Firethorn

Qualcomm said Wednesday it wants to buy Atlanta's Firethorn in a $210 million cash transaction.

The deal is set to close in the next 30 days. When the deal is done, Firethorn's employees will remain in Atlanta and will continue to be led by Firethorn CEO Tripp Rackley.

"Qualcomm is a recognized technology leader and this acquisition is a strong endorsement of the strategic importance of mobile commerce," said Rackley in a statement.

"The team at Firethorn will now join this industry leader as we continue to evolve mobile commerce solutions and bring new and exciting functionality to the mobile handset, including expanded payment options."

Qualcomm is a San Diego-based developer of wireless technologies. The company said in a statement that it expects $0.02 dilution to pro forma earnings per share in the fiscal year ending September 2008.

Cerberus calls off United Rentals merger

Elsewhere, Cerberus Capital Management is not moving forward with its merger with United Rentals.

Shares of United dove on Wednesday, giving up 30.9%, or $10.51, to end at $23.50 (NYSE: URI). The stock gained 35 cents after the stock market closed.

"The company noted that Cerberus has specifically confirmed that there has not been a material adverse change at United Rentals," said a statement released by United Rentals.

"United Rentals views this repudiation by Cerberus as unwarranted and incompatible with the covenants of the merger agreement. Having fulfilled all the closing conditions under the merger agreement, United Rentals is prepared to complete the transaction promptly."

United Rentals indicated in a statement that it might be seeking out legal help with the matter, hiring the law firm Orans, Elsen & Lupert LLP to represent it.

In July, Cerberus said it would purchase United Rentals in a $7 billion cash transaction.

United Rentals, based in Greenwich, Conn., is an equipment rental company.

Roche shares up

In other news, shares of Roche were up on Wednesday after the company said it signed a confidentiality agreement with Ventana Medical Systems with regard to the acquisition plan between the two companies.

Shares of Roche closed up CHF 4.50 on Wednesday to close at CHF 219.70 (Swiss: RO). Meanwhile, shares of Ventana were up $4.76, or 5.65%, to close at $88.94 (Nasdaq: VMSI).

Roche said it will begin due diligence in the acquisition.

In June, Roche began a tender offer to buy all of Ventana's outstanding shares at $75.00 per share, a 44% premium to Ventana's $51.95 closing stock price on June 22. The tender offer is set to close on Jan. 17.

Oritani to buy Greater Community

In the banking sector, Oritani Financial Corp. said it will buy Greater Community Bancorp in a $187 million stock and cash deal.

The deal sent shares of Greater Community soaring by 40.28%, or $5.80, to settle at $20.20 (Nasdaq: GFLS).

Shares of Oritani sank, giving up more than 13%, or $2.23, to close at $14.84 (Nasdaq: ORIT).

In the deal, shareholders of Greater Community will receive $21.40 per share, a 48.6% premium to the company's $14.40 closing stock price on Tuesday.

The merger is expected to close in the fourth quarter of 2008, which ends June 30, 2008. Greater Community will be merged into Oritani and will be renamed Oritani Community Bank.

Charles J. Volpe and Alfred R. Urbano, directors of Greater Community, will join Oritani's board of directors.

"The acquisition of Greater Community accomplishes a number of financial and strategic goals for Oritani," said Kevin Lynch, Oritani's chief executive officer, in a news release.

"The transaction significantly deploys the capital raised in our initial public offering earlier this year and provides the option for the transition to a fully public company at the appropriate time. The acquisition is expected to substantially increase our earnings. On a pro forma basis, Oritani's deposit mix will shift from primarily time deposits to primarily core deposits. Both instructions have a sound credit culture, a strong commercial lending staff and have no exposure to subprime loans."

Oritani is a regional bank holding company based in New Jersey.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.