Alltel climbs as shareholders OK LBO; Zimmer to buy Orthosoft; Whole Foods up after reaping Wild Oats

By Sheri Kasprzak

New York, Aug. 29 - More mergers grabbed headlines on Wednesday led by news that Alltel Corp.'s shareholders agreed to its acquisition by TPG Capital and GS Capital Partners.

Approval of the $27.5 billion deal sent shares of Alltel up 60 cents to end at $67.90 Wednesday (NYSE: AT).

In other news, Zimmer Holdings, Inc. announced plans to buy Orthosoft Inc. for roughly C$50 million.

Elsewhere in merger news, shares of Whole Foods Markets, Inc. rose on Wednesday, a day after the organic foods retailer sealed its contested merger with competitor Wild Oats Markets Inc.

The $565 million transaction was questioned in court by the Federal Trade Commission over antitrust concerns.

Finally, Symmetry Medical Inc. agreed to buy Specialty Surgical Instruments and Ultra Containers of America.

Alltel's merger plans

Back to that Alltel deal, the wireless communications company said its shareholders gave the go-ahead to its acquisition by TPG Capital and GS Capital Partners.

TPG and GS plan to buy the stock of Alltel at $71.50 per share, a 6.2% premium to the company's $67.30 closing stock price on Tuesday.

The deal is set to close by the end of the year.

"It seems like a good thing," said one sell-side trader on Wednesday.

"It's not another communications company, it's not a competitor. They're just there to provide capital. I think investors might be a little more wary if there was a culture change, another communications company coming in and changing their business around."

Zimmer to buy Orthosoft

In other merger news, Zimmer Holdings said it will buy Orthosoft, a Canadian computer navigation provider for orthopedics surgery, in a deal valued at about C$50 million. Zimmer, based out of Warsaw, Ind., develops orthopedic surgical products.

Zimmer plans to make an offer to buy all of Orthosoft's stock at C$1.10 each.

By 2 p.m. ET, Zimmer's stock had climbed by $1.04, or 1.37%. The stock went on to gain $1.64, or 2.16%, to end at $77.72 (NYSE: ZMH).

Orthosoft's stock remained unmoved at C$1.06 (TSX Venture: OSH).

"We look forward to welcoming Orthosoft's leadership team and skilled employees to the Zimmer family," said David Dvorak, Zimmer's chief executive officer, in a statement.

"Their commitment to innovation and customer support in computer-aided surgical navigation has won the high regard of surgeons in North America and Europe. This acquisition will support our SmartTools strategic initiative and will allow us to vertically integrate our Zimmer Computer Assisted Solutions efforts, enabling us to direct future development and to apply CAS concepts across our various businesses."

Zimmer also entered into agreements for an irrevocable commitment from some of Orthosoft's shareholders that they tender all of their 20,754,014 common shares, which represent 40.63% of Orthosoft's stock.

The merger is set to close by the end of the year.

Symmetry's stock up

In other news related to orthopedic surgery companies, Symmetry Medical said sealed a deal to buy Special Surgical Instruments and Ultra Containers of America, a company that provides specialty surgical instruments and sterilization containers.

The merger is valued at $15.1 million in cash and, according to a statement released Wednesday by Symmetry, will be done on a debt-free basis.

Symmetry said it also entered into a two-year agreement for a possible earn out with Special Surgical and Ultra Containers.

The news sent shares of Symmetry up 15 cents to close at $16.06 (NYSE: SMA).

Symmetry, headquartered in Warsaw, Ind., develops orthopedic devices. SSI is based in Nashville and distributes surgical items.

The transaction is set to close by Sept. 30.

"SSI is an excellent strategic fit for Symmetry Medical," said Brian Moore, Symmetry's CEO, in a news release.

"This acquisition will be consistent with our long-term efforts to further diversify our business into other medical device markets and helps strengthen our competitive advantage as a Total Solutions provider. SSI's strong distribution channels offer the opportunity to increase our penetration directly into hospitals and deliver additional cross-selling opportunities to our customers. Further, the acquisition will extend Symmetry's product reach into surgical specialties where we previously had limited presence, including cardiovascular, ENT and ophthalmology."

Whole Foods seals merger

Moving back to Whole Foods, an analyst and sell-side traders said the move was a good one for the health-food chain.

An analyst familiar with Whole Foods said he can understand why the FTC was concerned about the merger.

"It's obviously a smart move for Whole Foods," he said. "If you can buy up your only major competitor, why wouldn't you? The FTC did have a valid reason to question the purchase because it is a very limited marketplace, at least in terms of major retailers of organic products."

Shares of Whole Foods improved by $1.03, or 2.3%, to end at $45.79 (Nasdaq: WFMI).

The FTC took Whole Foods to court over the merger, claiming that buying up its much-smaller competitor would remove all of its major competition in the organic foods sector.

An appeals court judge determined last week that the merger could move forward.

PolyMedica shares up

A day after Medco Health Solutions, Inc. agreed to buy PolyMedica Corp., shares of PolyMedica were up.

PolyMedica's stock gained 20 cents on Wednesday to close at $51.89 (Nasdaq: PLMD). The stock fell by 11 cents in after-hours trading.

Shares of Medco also improved Wednesday. The stock gained 47 cents to close at $85.58 (NYSE: MHS).

On Tuesday, after the merger news was released, the stock gained $6.40, or 14.13%, to close at $51.69. The merger news sent share of Medco down $1.00 to close at $85.11.

Medco said Tuesday it intends to buy PolyMedica for $53 per share, a deal valued at $1.5 billion.

PolyMedica, based out of Wakefield, Mass., distributes glucose testing devices while Medco Health Solutions, headquartered in Franklin Lakes, N.J., is the country's largest pharmacy benefit manager.

In other healthcare merger news, shares of Matritech continued to slide on Wednesday, a day after Inverness Medical Innovations, Inc. announced its plans to buy the diagnostic products company.

Matritech's stock slipped by 4.34%, or five-tenths of a cent, to end at $0.1256 (Amex: MZT).

On Tuesday, on word that Inverness would buy Matritech's stock in a $36 million transaction, Matritech's stock fell by 32.67%, or 6.37 cents, to close at $0.1313.

Inverness's stock climbed on Wednesday, gaining 45 cents to close at $46.78 (Amex: IMA). After hours, however, the stock slipped by 35 cents.

On Tuesday, Inverness's stock gave up 60 cents to close at $46.33.

Home Depot's shares climb

Home Depot Inc.'s stock was up on Wednesday, a day after the home improvement retailer agreed to again bring down the asking price on its distribution business.

The stock gained $1.50, or 4.28%, to close out the day $36.55 (NYSE: HD). After hours, the stock gained another 3 cents.

On Tuesday, when the deal was sealed, the stock climbed by 3 cents to end at $35.05.

Three buyers, Bain Capital Partners, the Carlyle Group and Clayton, Dubilier & Rice, will buy the distribution business from the Atlanta-based company for $8.5 billion, shaving $1.8 billion off its original asking price of $10.3 billion.

Last week, the company took $1.2 billion off the asking price.

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