Advanced Medical grabs high bid; Aladdin buyout set at $11.50 a share; Landry's falls after deal tanks

By Cristal Cody

New York, Jan. 12 - Abbott Laboratories' plans to acquire Advanced Medical Optics, Inc. for a premium offer of $22.00 a share in cash gave investors a surprise on Monday.

In other deals, no other bidders are expected to top the $11.50-a-share cash offer made for Aladdin Knowledge Systems Ltd., an analyst said Monday.

Moving to tanked deals, shares of Landry's Restaurants Inc. plunged $4.19, or 33.93%, to close at $8.16 after the company called off its planned buyout.

On Wall Street, another round of fears that Citigroup Inc. will report billions of dollars in fourth-quarter losses sent indexes down.

The Dow Jones Industrial Average fell 125.21 points, or 1.46%, to close at 8,473.97.

The S&P 500 index shed 20.09 points, or 2.26%, to finish at 870.26, and the Nasdaq Composite index fell 32.8 points, or 2.09%, to 1,538.79.

Premium bid for Advanced Medical Optics

Abbott Laboratories said it plans to start the tender offer for its $2.8 billion acquisition of Advanced Medical Optics by Jan. 26.

The boards of directors of both companies have approved the transaction.

The deal is subject to antitrust clearances from the Federal Trade Commission and the European Union Commission, Abbott spokesman Scott Stoffel told Prospect News.

The acquisition is expected to close in the first quarter of 2009.

Abbott was the lone bidder for Advanced Medical Optics.

Joanne Wuensch, an analyst with BMO Capital Markets, said she was surprised by the price.

"I think they paid quite a bit for it, given what the stock was trading at on Friday," she said. "This was not a competitive process - it was a negotiated process that both groups came to understand of what the company was worth and what they were willing to pay."

The companies' products do not overlap so there will be few regulatory hurdles to clear, Wuensch said.

Advanced Medical Optics shares shot up $12.65, or 142.94%, to $21.50. The company's stock has traded as high as $24.90 and as low as $2.88 over the past year.

Shares of Abbott fell $1.11, or 2.17%, to close at $50.06.

Aladdin to go private

Computer security company Aladdin Knowledge Systems said Monday it agreed to be acquired by an investor group led by private equity firm Vector Capital in a deal valued at $160 million.

The offer is a 19.8% premium over the stock's Friday closing price of $9.60.

Shares of Aladdin closed at $10.96, up $1.36, or 14.17%, on Monday.

Vector has been pursuing Aladdin since August.

No other bidders are expected to top Vector's offer, said Daniel Ives, an analyst with Friedman, Billings, Ramsey & Co.

Wells Fargo & Co. is providing debt financing in support of the acquisition.

The deal represents a fair multiple, given Aladdin's execution headaches and margin expansion ability, Ives said.

"This deal was an all-cash bid with no financing conditions attached to consummate the transaction, making the transaction that much more appealing, in our opinion," Ives said in an investors note.

The transaction is subject to certain closing conditions, including shareholder and regulatory approvals.

The deal is expected to close within the next two to three months.

Landry's buyout on the skids

Landry's on Monday ended the $13.50-a-share deal in the works since October to take the company private with chief executive Tilman Fertitta.

The company said the deal fell apart because the Securities and Exchange Commission required that it disclose information from a commitment letter by lenders Jefferies & Co. and Wells Fargo Foothill LLC.

The lenders said Landry's would be in violation if it disclosed the terms.

Landry's said it is pursuing alternative financing from the lenders to refinance its existing $400 million in senior notes.

"Given our need to refinance approximately $400 million in senior notes, and the existing world-wide credit crisis, we felt that it was in the best interests of our stockholders to terminate the merger agreement in order to maintain the alternative financing," Michael Chadwick, chairman of the special committee formed to evaluate the merger, said in a statement.

No termination fees will be required.

Mentioned in this article:

Abbott Laboratories NYSE: ABT

Advanced Medical Optics, Inc. NYSE: EYE

Aladdin Knowledge Systems Ltd. Nasdaq: ALDN

Landry's Restaurants Inc. NYSE: LNY

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