Mergers and acquisitions may be exiting their recent slump with multiple takeover deals suddenly making news. Public Storage (PSA) made an $11 billion bid for Life Storage (LSI) on Sunday. Also Sunday, gold miner Newmont (NEM) offered $16.9 billion for smaller competitor Newcrest Mining (NCMGY). Meanwhile, shares of drug components supplier Catalent (CTLT) spiked 19.5% Monday on murmurs of an acquisition by Danaher (DHR).
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The proposals come as deal making fell starkly last year. Worldwide, mergers and acquisitions totaled $3.6 trillion in 2022, down 38.8% from 2021, according to markets research firm Dealogic. And fourth quarter takeover volume came in at $538 million. That was the lowest Q4 level since 2017, according to data compiled by Bloomberg Law.
Public Storage Takeover
Public Storage, the largest American self-storage property company, proffered an $11 billion all-stock bid for Life Storage after it denied previous takeover offers, Reuters reported. According to terms of the deal, Life Storage shareholders would receive 0.4192 shares of Public Storage stock for each LSI stock they own. That would equal $129.30 per share based on PSA stock’s closing price on Friday. And it represents a 19% premium based on 20-day volume-weighted average price of both stocks. Including debt, the deal would value Life Storage at $15 billion.
Glendale, Calif.-based Public Storage first approached Life Storage in December. It had an initial bid rejected in January, the company said in a statement. Both companies are real estate investment trusts (REITs). That tax-sheltered business model return unused cash flow to investors via payouts.
Life Storage currently yields 4.1%. Public Storage yields 2.6%.
In a separate statement, Life Storage said the public proposal is “substantially similar in all material respects,” to the previous deal that was denied. The company plans to review the proposal to determine the best course of action for shareholders. It advises shareholders not to take any action at this time.
Last year, REITs had $83 billion in merger and acquisition volume, making it the second-best year for the sector since 2007, according to the National Association of REITs.
PSA stock dipped 0.3% Monday while LSI stock jumped more than 11% following the news.
Newmont, Newcrest Mining
On Monday, Colorado-based gold miner Newmont made a $16.9 billion all-stock offer to buy Australia-based competitor Newcrest Mining. Newmont is the world’s largest gold producer by market value and ounce production.
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Under terms of the deal, Newcrest shareholders would receive 0.38 Newmont share for each Newcrest stock share they own. That would result in the combined company being 70% owned by Newmont and 30% owned by Newcrest, Newmont stated in a new release. And the current offer price of $27.16 per Newcrest share would represent a 21% premium based on Newcrest’s Friday closing price of $22.45 per share.
“The proposed transaction would join industry-leading portfolios of assets and projects to create long-term value across the combined global business, and we welcome the consideration of Newcrest’s Board of Directors,” Newmont CEO Tom Palmer said in the announcement.
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Takeover Bid Comes Amid Bobbing Gold Price
On Monday, Newcrest Mining confirmed that the offer followed a previously rejected proposal of 0.363 Newmont shares for each Newcrest stock share. However, Newcrest’s board of directors didn’t believe it delivered enough value to shareholders. Newcrest is considering Newmont’s latest proposal and advised shareholders to not take any action at this time.
The takeover attempt occurs as the price of gold bobs beneath an early February high. Spot gold prices rose to $1,953 per ounce on Feb. 1, it’s highest since April 21 last year when it traded at $1,951, according to data from metals dealer Scottsdale Bullion & Coin. Gold prices are currently hanging around $1,873 per ounce, but still well above November lows of $1,629. Bank of America projects it will reach $2,000 by the third quarter. JPMorgan and UBS Bank are a bit more bearish, projecting gold prices to reach $1,860 and $1,900 by the fourth quarter and end of year, respectively.
NEM stock slid 4.5% Monday while NCMGY stock rose about 12% following the news.
Catalent Chatter
Also on Monday, Catalent shares soared after Bloomberg reported that life sciences company Danaher is considering a takeover attempt. Those familiar with the matter say the deal is not imminent, and the companies have yet to comment publicly on the reports. Still, CTLT stock soared 19.5% by market close Monday after leaping 24% early in the day. DHR stock dipped 2.3% on the day.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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