BCE may face six month talks; NDS jumps on offer; Darwin joins forces with Allied

By Aaron Hochman-Zimmerman

New York, June 30 - As the market showed a slight recovery after the beatings of last week, the banks attempted to mount a recovery of their own by negotiating a revaluation of BCE Inc.

Investors expressed their confidence that NDS Group is on its way to being scooped up in a joint bid from News Corp. and Permina Advisors LLC.

Also, Digimarc Corp. improved after it made a match with for $310 million with L-1 Identity Solutions Inc., which beat out a $300 million offer from France's Safran SA.

In healthcare, Allied World Assurance Co. Holdings Ltd. found a link to Darwin Professional Underwriters Inc.

Meanwhile, in the broader market, the Dow Jones Industrial Average ended slightly better by 3.50, or 0.03%, at 11,350.01, while the Nasdaq Composite Index gave up 22.65, or 0.98%, to finish at 2,292.98.

The S&P 500 picked up 1.62, or 0.13%, to close at 1,280.00.

Please hold for BCE

BCE may have won a victory in court, but by the way its shares were trading, investors told the Canadian telecom that is still has a long struggle ahead before it can call itself privatized.

BCE's financing banks which "cannot afford billions of dollars of debt on their balance sheets" may drag negotiations throughout the coming months, an equity analyst said, and investors began to head for the door.

Canada's Globe and Mail quoted sources who predict talks to revalue the deal may last for the next six months.

The banks are claiming that the value of BCE should be based on the value of its competitor Telus Corp. at $35 per share to $38 per share, rather than the current offer of $42.75 per share.

"The deal could be repriced," the analyst said.

The prospect of negotiations lasting six months or longer scared off investors from BCE shares (NYSE: BCE) to the tune of $1.57, or 4.32%, to close at $34.81.

Still, the length of the feared negotiations "is an arbitrary number," the analyst said, "if the deal closes at all ... they're probably throwing darts.

"I've had the 'sell' rating all along," he said.

NDS jumps near to offer price

Shares of NDS Group (Nasdaq: NNDS) soared by $9.50, or 19.11%, to $59.20, just shy of the $60 per share offer price it received a from News Corp. and Permina Advisors which intend to split NDS 51% to 49%, respectively.

Completing the deal should require "a minimum of the $60 per share price," said Natixis Bleichroeder analyst Alan Gould.

The $60 per share offer represents a 21% premium to Friday's close.

Still, there is the chance NDS will consider the offer an undervaluation of the company, Gould said.

"It should get bumped to $65 a share," added Gould, who noted under disclosure rules that an analyst team member or a member of the analyst's household has a financial interest in NDS.

Shares of News Corp. (NYSE: NWS) lost $0.38, or 2.42%, to close at $15.35.

L-1 a match with Digimarc

L-1 Identity Solutions announced a merger with Digimarc Corp. that will send the ID Systems business of Digimarc to L-1 in exchange for $310 million, according to a press release.

The L-1 offer was accepted over a $300 million offer from France's Safran. The partially government-owned Safran also would have likely faced the Committee on Foreign Investment in the United States (Cfius) in order to be approved, Robert LaPenta, chairman and chief executive officer of L-1 said in a release.

"We believe that our all-cash offer is superior to the conditional, non-binding proposal from Safran SA and is a strong reflection of the intrinsic value of the business, its growth opportunities, and the

synergies unique to the combination with L-1," LaPenta said in the statement.

Shares of Digimarc (Nasdaq: DMRC) added $0.77, or 5.75%, to end the day at $14.16.

Darwin evolves

Allied World Assurance announced on Monday that it will acquire Darwin Professional Underwriters for $550 million in cash, or $32.00 per share, according to a press release.

Darwin is a subsidiary of the Alleghany Corp. which expects to receive $300 million for its 55% stake in Darwin.

"This acquisition will more than double Allied World's presence in the U.S., particularly within the U.S. healthcare market," said Scott Carmilani, president and chief executive officer of Allied World.

"The Darwin team is very excited about becoming part of Allied World. Darwin will reap the benefits from being part of a global company with strong ratings, a worldwide distribution network and over $3 billion in capital," said Jack Sennott, Darwin's chief financial officer.

Shares of Allied World (NYSE: AWH) slipped $1.85, or 4.46%, to finish the session at $39.62.

Shares of Darwin (NYSE: DR) were better by $0.60, or 1.99%, to end the day at $30.80.

The deal is expected to close in the fourth quarter.

© 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.