- One-day loss for Intel is 3.52%, one-day return for McAfee is 57.07%
- Considering the trend, the loss for Intel was rather low, indicating that market punishment was not as severe for acquisition of unrelated (software) business
- My speculation is that perhaps the market was expecting a deal from Intel, as signaled by high trading volume and declining stock price prior to the announcement
- The high return on MFE signals significant liquidity motivation to exit the company
- INTC listing NASDAQ might have reduced the loss while MFE listing on NYSE might have increased the gain
- My speculative view on strategy of the deal: apart from hardware security, Intel now has access to cloud security which can be used to offer complementary service to key cloud service providers i.e. Amazon, Salesforce… This strengthens Intel’s alliance beyond the long-standing one with Microsoft (which is currently lost in the cloud). Then what can would Intel do with an alliance? War against Apple?
- Addendum: market reaction is favorable for Intel, signaling good corporate governance
Finance
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aapl, acquisition, amazon, amzn, anti-virus, apple, cloud, computing, corporate-governance, fins5538, fins5566, hardware, intc, intel, m&a, mcafee, merger, mfe, microsoft, msft, nasdaq, nyse, performance, salesforce, security, software, trading, unsw, volume
The Australian Market for Corporate Control and how Firms create value
2010
Xuan Huang, Logan Robertson, Tai Tran, Huy Truong, Frank Wong
Abstract
Academic literature has devoted much effort to analyse merger and acquisition activities. Event studies are conducted to look at factors affecting shareholder returns in M&As. In particular, Moeller et al (2004) documented a size effect of US firms’ cumulative abnormal return around acquisition announcements. Using similar methodology on a sample of 1578 takeover deals from 2001 to 2007, this report attempts to i) assist Australian managers to select potential takeover target, ii) assist investors to make informed investment decision. We documented that Cumulative abnormal return (CAR) are on average positive at 4.15%, but average dollar CAR loss $11.66 million. However, once we take into account the skewness of Australian firm, the median for both CAR and dollar CAR are positive. OLS, multivariate and Probit regression methods were employed to confirm our analysis. Our result did not indicate a significant firm size effect in our dataset of Australian Acquirers. We also find highest abnormal return in stock-financed deals where targets are private. Additionally, we link the positive result of combined cumulative abnormal return to synergy motivation for doing acquisitions. Our findings should be of interest to financial managers in Australia who plan on merger engagements. Finally, our probit regression indicates that larger acquirer size is no more likely to make value reducing deals than those who are smaller.
Finance
| acquisition, australia, bank, banking, deal, m&a, merger, st.george, ubs, unsw, wbc, westpac
The WSJ is reporting that Google is set to launch a venture fund to give it the option of investing in startups instead of just flat out buying them. The fund will be led by Google’s SVP Corporate Development David Drummond and Bill Maris, a long time business friend of Anne Wojcicki, Sergey Brin’s wife. Maris is a tech entrepreneur with a degree in neuroscience and worked with Wojcicki at a San Francisco-based for-profit company called Catalytic Health.
This hasn’t been confirmed by Google, and it’s clear they’ve been thinking about a fund off and on for years. From the article:
The move would make Google the latest technology giant to take on a more-formal role in seeding start-ups. Intel Corp. has had a large venture-capital arm for years, as have Motorola Inc., Comcast Corp. and many others. In the consumer-Internet area, Walt Disney Co.’s Steamboat Ventures has invested in a number of Web start-ups. So has Amazon.com Inc., which has funded a number of young companies without structuring a formal fund.
Their track records have been mixed. Corporate venture-capital arms have been hampered by challenges that traditional venture-capital businesses don’t face. Venture capitalists invest in private start-ups at an early stage, usually in hopes of a big payout if the company is sold or if its stock goes public.
Many start-ups fear that taking corporate money limits their options and comes with strings that could turn away other potential investors — such as a right to buy the company at a later date. Some funds with less competitive compensation have struggled to retain managers, and corporate venture funds often don’t allow senior employees to invest personal money in their funds, while other venture funds typically do.
This wouldn’t be the first time Google started a fund to invest in other companies. In June 2007 they launched Gadget Ventures, a pilot program that, in part, invests seed money in companies looking to develop for the gadgets platform. They have also previously invested through Indian VCs.
Source: TechCrunch
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