With bets dwindling that a Federal Reserve rate hike is imminent, the dollar fell Tuesday, lifting stocks soundly in the process. Bond yields fell following last Friday’s tepid August jobs report.
The S&P 500 finished the day up 0.3% while the Dow Jones Industrial Average advanced 0.25%. The Nasdaq Composite gained half a percent.
The return of Merger
Monday Tuesday elevated a number of companies. Cepheid (NASDAQ:CPHD), Navistar International Corp (NYSE:NAV) and Spectra Energy Corp. (NYSE:SE) were among the day’s best stocks. We’ll take a quick look at the specifics of each:
Shares of diagnostics maker Cepheid surged 52.6% on more than 39 times the average daily volume on news that industrial conglomerate Danaher Corporation (NYSE:DHR) will acquire CPHD for $4 billion. Danaher’s offer includes the assumption of Cepheid’s debt.
Danaher is acquiring Cepheid to bolster its diagnostics business. California-based CPHD makes systems and tests used in genetic testing. “Cepheid had revenue of $539 million last year, and is expecting $618 million to $635 million in 2016,” according to Fortune.
Still, despite Cepheid’s promise, shares had difficulty showing that this year. CPHD was off some 6% this year on high volatility, and amid a broadly higher market.
The deal, which Danaher expects will be accretive to earnings, is expected to close in the fourth quarter.
Navistar International Corp (NAV)
Truck maker Navistar International Corp soared 40.6% on more than 15 times the stock’s usual volume on reports that German automotive giant Volkswagen AG (OTCMKTS:VLKAY) took a 16.6% stake in the company. Legendary investor Carl Icahn is one of NAV’s shareholders.
Illinois-based Navistar “expects the alliance to be accretive beginning in the first year, and for cumulative synergies for Navistar to ramp up to at least $500 million over the first five years,” the company said in a statement. “By year five, it expects the alliance will generate annual synergies of at least $200 million for Navistar. This annual run rate is expected to grow materially thereafter as the companies continue to introduce technologies from the collaboration.”
This, from a company that many felt was on its way to bankruptcy just a few years ago.
Analysts like Volkswagen’s partnership with Navistar, as it bolsters NAV’s financial recovery efforts. Some also believe this could set the stage for Navistar to eventually become a takeover target.
Spectra Energy Corp. (SE)
Energy infrastructure company Spectra Energy climbed 13.4% on more than 15 times the average daily volume on news that Canadian rival Enbridge Inc (NYSE:ENB) will acquire the company in an all-stock valued at nearly $28 billion.
The Enbridge deal for Houston-based Spectra will create the largest North American energy infrastructure firm. Enbridge is paying $40.33 per share of SE stock, or an 11.5% premium to Spectra’s closing price last Friday.
“Enbridge will issue about 694 million new shares and take on about $22 billion of Spectra debt. Enbridge also said it planned to divest about $2 billion of non-core assets over the next year,” according to Reuters.
Enbridge investors will own 57% of the new company.
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.