United Industrial up on Textron merger; Cyclacel slips; Business Objects stock jumps

By Sheri Kasprzak

New York, Oct. 8 - Textron Inc. said Monday it will purchase United Industrial Corp. in a $1.1 billion cash transaction in a deal called a good strategic fit by analysts and sellside traders alike.

The move sent shares of United Industrial up early in the day. The stock put on 5.79%, or $4.38, before the opening bell.

"Strategically, it makes good sense for them," said one analyst familiar with Textron. "Obviously, UIC is profitable, so that's a plus for them. They're not taking on a troubled name. It's a good fit with their business plan."

A sellside trader said the move was smart for United Industrial because its stock was steadily climbing on Monday.

"It looks good for them," said the sellsider. "The price is reasonable, if you ask me."

Textron will buy United Industrial's stock at $81 per share, a 7.11% premium to United Industrial's closing stock price of $75.62 on Friday.

In the pharmaceutical sector, Cyclacel Pharmaceuticals, Inc. agreed to buy Align Pharmaceuticals, LLC and Align Holdings, LLC in a deal valued at between $3.3 million and $3.8 million.

After the stock was boosted before the stock market opened Monday morning, shares of Cyclacel were down slightly Monday.

"Here we have a small, specialty pharma company," said one sellside trader of Align. "The good thing for Cyclacel is that they were able to pick it up a reasonable price and their products are in line with what they do. Their products are complementary."

Align, based in Cary, N.C., makes products to treat dermatitis, dry mouth and other symptoms cancer patients may experience after radiation therapy.

Tech companies were heavy in the headlines led by news that SAP AG will buy competitor Business Objects SA in a €4.8 billion deal.

Textron to buy United Industrial

The Textron acquisition of United Industrial was a good deal for both companies, according to an analyst and a sellside trader interviewed Monday.

One analyst said the move is good for Textron because they're buying a strategically advantageous company that is already profitable. The move is good for United Industrial, a sellside trader said, because the price is right.

"Basically, this expands their [Textron's] reach in the defense area, which right now is a huge industry," said an analyst.

United Industrial's stock was up 6.45%, or $4.88, by 11 a.m. ET. United Industrial's stock ended the day up 6.31%, or $4.77, Monday to close at $80.39 (NYSE: UIC).

Textron's stock closed the day down $1.32, or 2.1%, at $64.01 (NYSE: TXT).

United Industrial, a subsidiary of AAI Corp., designs aerospace and defense systems.

Textron begins its tender offer for United Industrial's stock on Oct. 16. The acquisition is set to close by the end of the year.

"AAI is a superb strategic fit for Textron," said Textron chief executive officer Lewis Campbell in a statement.

"It is in perfect alignment with out strategy to add important capabilities to our existing aircraft and defense businesses, adding new products and capabilities to further serve our government, military and homeland security customers. Textron is a recognized leader in manned, fixed and rotary wing aircraft. The addition of AAI broadens our leadership into unmanned vehicles. This combination of capabilities represents a very powerful growth platform, both in the near and long term."

AAI, following the merger, will become part of Textron's Bell Helicopter division.

"In addition to Textron Systems' expertise in situational awareness, intelligence gathering and precision weapons, we have experience in surveillance and reconnaissance with groundbreaking unmanned aircraft systems, such as Bell Helicopter's Eagle Eye - the first-ever unmanned tiltrotor aircraft," said Bell Helicopter CEO Dick Millman in a news release.

Cyclacel shares up on Align purchase

Cyclacel settled its purchase of Align Pharmaceuticals and Align Holdings, a North Carolina-based company that makes products to treat radiation therapy-induced dry mouth and dermatitis.

Before the market opened, shares of Cyclacel were up 3.44%, or 20 cents. The stock was down by 2 cents at 1:45 p.m. ET. The shares ended the day down 3 cents at $5.78 on Monday (Nasdaq: CYCC).

In the transaction, Cyclacel will not issue more than 258,840 shares. Also, certain deferred stock considerations will be payable within 12 months of closing, assuming operational and financial goals from Align.

Align's current CEO, William Collins, will become general manager of Align Pharmaceuticals.

Cyclacel develops three targeted, small-molecule drug candidates to treat cancer.

"Align provides an initial commercial base for building a diversified biopharmaceutical business focused on leading-edge therapeutic management of patients with cancer and other serious disorders and enhances the value of our existing oncology and hematology assets," said Spiro Rombotis, Cyclacel's CEO, in a news release.

"In addition to an experienced team led by Bill Collins, a veteran of GlaxoSmithKline, Align contributes three marketed products that provide an immediate revenue opportunity for supporting our development programs. Align's drugs are a good fit with the emerging indication profile of Cyclacel's investigational drugs, such as sapacitabine, seliciclib and CYC 116."

SAP, Business Objects to merge

Looking to the tech sector, Germany's SAP said Monday it will buy Parisian information technology company Business Objects in a deal valued at €4.8 billion.

SAP will buy Business Objects at €42 per share.

At 2:35 p.m. ET, shares of SAP were down $3.15, or 5.32%. The stock went on to lose $2.87, or 4.85%, to close at $56.36, losing another 25 cents after hours (NYSE: SAP). Meanwhile, shares of Business Objects leapt by 15.04%, or $7.56, to end at $57.83, gaining another 6 cents in after-hours trading (Nasdaq: BOBJ).

"The acquisition of Business Objects is in keeping with SAP's stated strategy to double our addressable market by 2010 as announced in 2005," said Henning Kagermann, SAP's head, in a statement.

"SAP will accelerate its growth in the Business User segment, while complementing the company's successful organic growth strategy. With the delivery of the first business process platform; the rapid adoption of our enterprise SOA platform, SAP NetWeaver; and the successful launch of the first complete on-demand business solution for midsized companies, SAP Business ByDesign, SAP can now take the opportunity to focus on the industry's next high-growth opportunity by accelerating and enhancing our efforts for the Business User category."

"Business Objects helps companies transform the way they work through the use of intelligent information," said Bernard Liautaud, Business Object's founder, in a statement.

"The combination of Business Objects and SAP means that we can truly amplify the reach of Business Intelligence - from the C-suite to Main Street. John Schwarz [Business Object's chief executive officer] and I are excited to see the innovation and hard work of our employees and partners validated and soon extended by the portfolio, domain expertise and presence of SAP."

The merger is set to close in the first quarter of 2008. Once the deal is complete, Schwarz will remain as CEO of the Business Objects entity and Doug Merritt, corporate officer of SAP, will join Business Objects and report to Schwarz.

In the tender offer, Business Objects shares will be tendered at €42 per share and its convertible bonds will be tendered at €50.65 each.

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