Pfizer doubles Encysive share price; line is dead for 3Com; Microsoft hires proxy muscle

By Aaron Hochman-Zimmerman

New York, Feb. 20 - Encysive Pharmaceuticals Inc. shares doubled in value after Pfizer Inc. pulled it into the fold in order to grab a bigger piece of the European market with the drug Thelin.

National security concerns were too high a mountain to climb for 3Com Corp. and Bain Capital Partners LLC as they withdrew their filing with the CFIUS review board.

The merger between the private equity firm and the data and information systems provider would have put China's Huawei Technologies in control of 16% of 3Com, which is a U.S. government contractor.

Microsoft Inc. added a ringer in the law firm Innisfree M&A to their side in preparation for an upcoming proxy fight with Yahoo! Inc.

Yahoo!'s refusal of Microsoft's original $44.6 billion offer left Microsoft looking for other options to tear off a slice of the web search market.

Market trading during Wednesday's session sprang back from a data-driven dive in the early hours to a recovery rally spurred on by positive earnings from Hewlett-Packard Co. and a release of the minutes from recent Federal Open Market Committee meetings.

The Dow Jones Industrial Average ended better by 90.04 or 0.73% at 12,427.26, while the Nasdaq Composite Index added 20.90 or 0.91% to finish at 2,327.10.

The S&P 500 added 11.25 or 0.83% to close at 1,360.03.

Strong medicine

Pfizer (NYSE: PFE) stock made a modest gain of $0.10 or 0.45% to close at $22.47 after announcing it will acquire Encysive Pharmaceuticals.

Meanwhile, shares of Encysive (Nasdaq: ENCY) launched up like a U.S. Navy anti-satellite missile by $1.19 to 110.19% to $2.27 on the news.

Pfizer will make a $2.35 per share or $195 million cash tender offer for all the shares of Encysive, according to an Encysive press release.

The deal stipulates that Encysive's debt under a 2.5% convertible senior note will be assumed by Pfizer.

The convertible traded up to 95 3/8 from 50, a market source said.

"The board of directors of Encysive has unanimously approved the merger agreement and unanimously recommends that Encysive stockholders accept the tender offer and tender their shares," the press release said.

Pfizer expects to benefit from a new European market with Encysive's drug Thelin for the treatment of pulmonary arterial hypertension (PAH).

"With this agreement, we will gain an important marketed product in PAH and will have the opportunity to complete the development of this new medicine to treat this devastating disease," said Martin Mackay, president of Pfizer global research and development.

The transaction is expected to close in the second quarter.

3Com pulls CFIUS filing

3Com (Nasdaq: COMS) shares staggered back by $0.86 or 23.06% to close at $2.87 as the Marlborough, Mass.-based information technology firm along with its affiliates Bain Capital Partners and Huawei Technologies withdrew its CFIUS filing.

The approval of the Senate's Committee on Foreign Investment in the United States was necessary to complete 3Com's $2.2 billion merger with Bain Capital.

The merger would have included the transfer of a 16% stake of 3Com - which provides data security services for the U.S. government - to Huawei Technologies, a company with reported connections to the Chinese government and military.

"We are very disappointed that we were unable to reach a mitigation agreement with CFIUS for this transaction," said 3Com's president and chief executive Edgar Masri in a press release.

"While we work closely with Bain Capital Partners and Huawei to construct alternatives that would address CFIUS' concerns, we will continue to execute our strategy to build a global networking leader," he said.

When asked if the deal had a chance at a second life, a source said: "3Com, dead."

Microsoft enlists help

Microsoft (Nasdaq: MSFT) stock added $0.05 or 0.18% to finish at $28.22 as it brought on a hired gun for its upcoming proxy fight with Yahoo! (Nasdaq: YHOO).

Meanwhile, Yahoo! stock fell by $0.18 or 0.62% to $28.83.

The law firm Innisfree M&A which specializes in proxy actions has been hired by Microsoft to help it push out Yahoo!'s current board.

Microsoft has shown no intention of raising its $44.6 billion offer for Yahoo!, but many market watchers believe some small increase is forthcoming.

"Microsoft may try to go hostile, then in time they will agree to slightly better price ... It's the dance," a market source said.

Hour power

Shares of Delta Air Lines Inc. (NYSE: DAL) were better by only $0.04, or 0.24%, at $16.81 while shares of Northwest Airlines Inc. (NYSE: NWA) were up $0.25, or 1.47%, to $17.22 on the news that the Airline Pilot's Association has not yet found a common ground in pilot senior negotiations.

Pilot's promotion schedules and pay are largely based on how many flying hours they have logged and seniority with their organizations.

Approval from the union is needed to seal the merger, which would create the nation's largest passenger air carrier.

Mixing two seniority groups, such as trip choices and pay "is like the Tower of Babel," a market source said.

Charlotte Russe to buy in shares

Charlotte Russe Holding Inc. (Nasdaq: CHIC) intends to hold a modified Dutch auction tender offer for up to 4 million shares or 16% of it's common stock, the company said in a press release.

The San Diego, Calif.-based company's share price jumped $0.48, or 2.25%, to close at $19.50.

The board of directors of the clothing retailer has already approved the tender offer, but the purchase price will not be less than $18 per share or more than $20 per share for a total price tag of $80 million.

The stock's Monday closing price was $19.02.

"We believe that repurchasing our shares is an attractive and prudent use of the company's strong cash position allowing us to return value to our shareholders while maintaining flexibility to achieve our growth objectives," said chief executive officer Mark Hoffman.

Leucadia tightens grip on AmeriCredit

Leucadia National Corp. (NYSE: LUK) of New York has quietly bought close to 25% of AmeriCredit Corp. (NYSE: ACF) while its shares were up $1.20 or 2.60% on Tuesday.

Fort Worth, Texas-based AmeriCredit shares added $0.12 or 0.93% to close at $12.99.

"I am watching Leucadia buying more AmeriCredit daily," a market source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.