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Medley of merger activity cheers investors

By ASSOCIATED PRESS
Published June 27, 2006

Merger-and-acquisition activity stepped up Monday, with three acquisitions valued at nearly $90-billion giving Wall Street a modest advance, although many investors remained cautious ahead of the Federal Reserve's decision on interest rates later in the week. The Dow rose 56.19 points, or 0.51 percent, to 11,045.28. Investors were cheered by news from mining company Phelps Dodge Corp. that it will pay $40-billion in cash and stock for rivals Inco Ltd. and Falconbridge Ltd., while steelmaker Arcelor SA agreed to a $33-billion bid from Mittal Steel Co. In addition, Johnson & Johnson agreed to buy fellow Dow Jones Industrial component Pfizer Inc.'s consumer products unit for $16.6-billion. - ASSOCIATED PRESS

MINING MATCH: Phelps Dodge Corp. is buying Canadian mining companies Inco Ltd. and Falconbridge Ltd. in the hope that global demand will continue to support surging metals prices. The deal would create a dominant copper and nickel producer in the North American market. The company would be the world's largest nickel producer and the largest publicly traded copper producer, just as copper prices have quadrupled in the past five years. Demand for commodities, particularly from rapidly industrializing China, have steeply pushed up prices for metals such as nickel, aluminum, zinc, copper and others in the first half of the year, generating a growing stream of cash for mining and metal companies.

STEEL CONSOLIDATION: Late Sunday, Luxembourg-based Arcelor said its board would recommend shareholders approve Mittal Steel's takeover bid. In recent negotiations, Netherlands-based Mittal raised the offer to $33.83-billion along with a decreased stake of 43.6 percent, alleviating price and corporate governance concerns raised by Arcelor. The merger between the world's No. 1 and No. 2 steelmakers by crude steel output would create a 110-million metric ton per year behemoth, responsible for 10 percent of the world's steel production and three times larger than its nearest competitors. Analysts say future mergers will be attempts to compete with the scale and diversity of the merged Arcelor-Mittal.

HEALTH CARE HOOKUP: Johnson & Johnson said Monday it is buying Pfizer Inc.'s consumer health care unit for $16.6-billion in a nearly all-cash deal that strongly boosts J&J's smallest division. The purchase would give Johnson & Johnson of New Brunswick, N.J., products including Listerine, Visine, Neosporin and Lubriderm to add to its stable of name brands such as Reach toothbrushes, Acuvue contact lenses, Band-Aids and Neutrogena. J&J also would see nonprescription Pfizer drugs such as Sudafed, Zantac and Nicorette join its Tylenol, Motrin and Monistat, nearly doubling current over-the-counter drug revenues. Johnson & Johnson chairman and chief executive William C. Weldon said such strong products rarely come on the market. "These are extraordinary assets that will bring sustainable long-term value to the shareholders of Johnson & Johnson," he said.

STEEL CONSOLIDATION: Late Sunday, Luxembourg-based Arcelor said its board would recommend shareholders approve Mittal Steel's takeover bid. In recent negotiations, Netherlands-based Mittal raised the offer to $33.83-billion along with a decreased stake of 43.6 percent, alleviating price and corporate governance concerns raised by Arcelor. The merger between the world's No. 1 and No. 2 steelmakers by crude steel output would create a 110-million metric ton per year behemoth, responsible for 10 percent of the world's steel production and three times larger than its nearest competitors. Analysts say future mergers will be attempts to compete with the scale and diversity of the merged Arcelor-Mittal.

[Last modified June 27, 2006, 06:16:41]