Josh Boomgaarden's blog

Roche (RHHBY.PK) announced this morning that it has made a proposal to acquire Illumina (NASDAQ: ILMN), a provider of integrated systems for DNA sequencing, for approximately $5.7 billion. As part of the deal, Roche would acquire ILMN for $44.50 per share in cash, a 64% premium over the closing price on 21-Dec-11 (the day rumors about a deal began to fly). The hefty premium brings about a natural question: Is Roche paying too much?

With ILMN trading between $50 and $55 per share after the announcement, the market thinks Roche or another suitor is willing to pay more. That may be the case. However, back-of-the-envelope analysis says $44.50 a share could already be rich.

Vulcan Materials (NYSE: VMC) disclosed today that it had received a Civil Investigative Demand (CID) and a Request for Additional Information from the DOJ in connection with an exchange offer previously commenced by Martin Marietta Materials (NYSE: MLM). While it is impossible to know the DOJ’s exact intentions, it appears as though the requests largely relate to the potential regulatory approval issues cited by VMC as a reason for its rejection of the offer.

International Game Technology (NYSE: IGT) announced yesterday that it had reached a definitive agreement to acquire Double Down Interactive, an online social gaming company and developer of the DoubleDown Casino on Facebook. The acquisition will put IGT in position to take advantage of a massive untapped market should Facebook delve into real money gambling in the U.S., a real possibility in light of a recent DOJ opinion.

Rumors have already swirled regarding Facebook’s interest in supporting real money gambling in the U.K. Presumably, as the social media giant does not appear to be morally opposed to gambling, it would pursue similar ventures in the U.S. should legal channels allow it. A recent DOJ ruling, regarding what was barred under federal laws, indicated that such legal pathways could be open in the near future, if they aren’t already.

The banking industry is rife with risk. From heightened regulatory scrutiny to capital shortfalls, numerous banks, whether local, national, international, or foreign, have seen their shares slide on risk events. That does not appear to be the case with New York Community Bancorp (NYB), a $5.8 billion multi-bank holding company with branches in New York, New Jersey, Ohio, Florida, and Arizona. It is the only banking stock of the 28 we follow to earn a Low Risk rating, and for good reason. As our analysis of a spectrum of 4 regional banks shows, NYB is well-capitalized, does not appear to be involved in any regulatory or legal proceedings, and has not been weighed down by underperforming loans. Further, NYB has a dividend yield greater than 7.5%.

Bristol-Myers Squibb (NYSE: BMY) announced on Saturday that it had signed a definitive agreement to acquire Inhibitex (NASDAQ: INHX) for $26.00 per share, a hefty 163% premium over the $9.87 closing price on Friday. INHX will be BMY’s 6^th acquisition since Oct-07 and at $2.5 billion is estimated to be the largest of the group.

Prior to the INHX deal, BMY had completed 5 acquisitions (2 of which involved earn-outs) since Oct-07 for $4.15 billion, $1.07 billion of which was allocated to goodwill. The largest was Medarex in Sep-09 for $2.33 billion. Over the same period, the company recorded a total of $2.02 billion in restructuring and productivity transformation charges.