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Merger Mania Hits Wall Street

Merger mania struck Wall Street in full force Monday, highlighted by America Online's move to acquire Microsoft rival Netscape Communications and Deutsche Bank's bid to buy Bankers Trust.

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AOL (AOL), the biggest U.S. consumer online service, acknowledged it's discussing a buyout of Netscape (NSCP) valued at around $4 billion. Shareholders of the Mountain View, Calif.-based Netscape would receive 0.45 shares of AOL stock for each share of the Web-browser pioneer. The deal could be announced as early as Monday, but AOL cautioned it couldn't assure an agreement will be reached.

As part of an agreement, AOL also indicated that some parts of Netscape could be sold to Sun Microsystems (SUNW). AOL stock was up 2 5/8 to 87 1/2, Netscape jumped 2 15/16 to 42 1/8 and Sun rose 3 1/2 to 71 in recent trading.

In other merger activity:

  • Deutsche Bank is said to be close to an agreement to acquire Bankers Trust (BT) for close to $10 billion, giving Germany's largest bank a strong foothold in the United States. The deal is expected to be announced later this week. Speculation of such a deal has existed for months.
  • AMP Inc. (AMP), which has been fending off a hostile takeover attempt by AlliedSignal (ALD), agreed Monday to be acquired in a friendly deal by Tyco International (TYC) for more than $11 billion.

    The Tyco offer is more than the AlliedSignal proposal, and includes a hefty $300 million termination fee to ward off counterbids from AlliedSignal or other potential suitors. See full story.

    Tyco, a diversified services and manufacturing conglomerate, has spent more than $6 billion this year on acquisitions, including the recent purchase of U.S. Surgical Corp. The acquisition of AMP will bolster Tyco's position in the production of electrical components, for which AMP was the world leader.

  • BF Goodrich (GR) agreed to acquire Coltec Industries Inc. (COT) for $2.2 billion, creating a giant in the supply of aerospace parts. Under the deal, already approved by both boards, each share of Coltec will be exchanged for 0.56 shares of B.F. oodrich stock. BF Goodrich has also been on an acquisition spree over the past few years.
  • AES Corp. (AES) said Monday it will acquire utility company Cilcorp Inc. (CER) for $885 million, or $65 a share. Arlington, Va.-based AES, the world's largest energy company, will get wider access to Illinois, where Cilcorp is among the largest electric and gas suppliers.
  • In the consumer sector, home improvement retailer Lowe's Cos. said it will buy Eagle Hardware & Garden Inc. in a stock deal worth about $1 billion. Each Eagle share will be valued at $29, Lowe's said.
  • Unum Corp. (UNM), based in Portland, Maine, said it will purchase Provident Cos. (PVT) of Chattanooga, Tenn.-based for nearly $5 billion in stock, creating the largest U.S. provider of disability insurance. Unum stock rose 2 9/16 to 50 11/16; Provident accelerated 2 1/2 to 35 7/8.
  • Fleet Financial Group said it will acquire Chicago-based Sanwa Business Credit from its parent, Sanwa Bank Ltd of Japan. Terms were not disclosed, but Reuters reported that the price was about $750 million - less than Sanwa Bank sought - along with the assumption of $5 billion in debt.

    The deal bolsters Fleet's presence in the Midwest and gives it a stronger grip on asset-backed lending and the leasing of capital euipment to businesses, particularly smaller ones. Fleet (FLT) stock climbed 15/16 to 44 1/4.

  • Another merger in the medical sector, announced Saturday, is also catching investors' eye Monday. Circon Corp.(CCON) shares have surged 36 percent following news that it will be acquired by Maxxim Medical Inc. (MAM) for $15 a share, or about $243 million in cash and debt. Circon was up 3 7/8 to 14 9/16, while Maxxim edged up 1/2 to 25 1/2.

    Maxxim, based in Clearwater, Fla., is a diversified maker of specialty medical products. The purchase of Circon allow its to add to its offerings of endoscopy systems, devices used for diagnosis and surgery of in a minimally invasive way.

Written By Jeffry Bartash, CBS MarketWatch

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