Special Situation Investing

Tuesday, May 09, 2006

(WB & GDW) Wachovia to Buy Golden West Financial

Wachovia has announced a deal to buy savings & loan giant, Golden West Financial. The deal values GDW at 1.051 shares of WB and $18.65 in cash. WB has dropped from ~$59 to the high $54s as a result of the deal.

The main criticism of the deal is that WB may be buying GDW at the peak of the real-estate market. However, WB has been around for over 40 years and has weather past real-estate storms.

Since the announcement, WB has dropped over $7 billion in market cap, while the premium for golden west amounts to only $4 billion. In addition the premium is substantially less after taking into account the WB price drop. As such, perhaps the market is over-reacting and we are seeing some large-scale institutional selling.

Thursday, May 04, 2006

(BOL) Bausch & Lomb Rating Cut by S&P 500

The S&P 500 has dropped it's rating on Bausch & Lomb down. They cite potential litigation and brand impairement. BOL is now trading at ~$41, down from a 52-week high of ~$87 .

(EK) Eastman Kodak Plans Sale of Health-Imaging Business

From the article:

Created a year after the discovery of X-ray film in 1895, the unit accounts for nearly one-fifth of Kodak's overall sales but its operating profit plunged 21 percent last year as margins tightened. A sale would wipe out most or all of Kodak's $2.6 billion in debt, analysts noted."

"...Shannon Cross of Cross Research in Short Hills, N.J, the business might fetch $1.5 billion to $2 billion"

"...Buckman, Buckman & Reid in New York who thinks the unit "can bring at least $4 billion.""

"...Kodak lost the equivalent of $1.04 a share in the January-March quarter"

Not a pretty picture, but it could be an opportunity. Legendary Bill Miller is banking on the stock making a recovery. For those who don't know, Bill Miller he has beaten the S&P 500 for 15 years straight. His picks include Dell and AOL (back when it was going up).

Some general background on the Eastman Kodak situation.