Four more public companies succumbed to the allure of buyout bids Wednesday
and Thursday: Alliance Data Systems Corp.
($7.8
billion); Axciom Corp.
($3
billion); Bausch & Lomb Inc.
($4.5
billion); and Doral Financial Corp.
($610
million for 90%).
With those announcements, Reuters calculated Thursday that the market cap of
the S&P 500 will be reduced by almost 2% if 17 pending deals close. That
includes 12 proposed take-privates and five deals where most of the shares
will be acquired but some publicly traded equity will remain. (The
recapitalization of Doral, for instance, will give Bear Stearns Merchant
Banking and its co-investors 90% of the bank but leave 10%, still publicly
registered, in the hands of current shareholders. Likewise, KKR’s $8 billion
pending LBO of stereo equipment maker Harman International Industries Inc.
would leave up to 27% in public hands.)
Contracting public markets might not sound like a good thing. But Reuters
quotes an Oppenheimer & Co. analyst who sees it as good news for stocks.
With fewer shares outstanding and stock investors receiving cash as these
companies go private, the LBO wave should push up share prices, he figures.
—John E. Morris
Continue reading below
