Makes you wonder what they need the cash infusion for. As far as I can see, they don't owe cash from last rounds of mergers. If they are borrowing cash, my guess is they are making a play to buy someone else, and not being bought by GE. Course who knows what Lucier is up to.
it is not clear whether that 10.4 billion buyout includes the newly priced debt or not.
I would doubt it because without the 1.5b then that 10.4 billion would be a ~18% premium of the current life's enterprise value, or commonly quoted as buy-out value.
EV= market value of equity + market value of debt - cash holdings
the EV is the least amount of $ you would expect to pay to buy a firm.
using all the public financial data you can see that 10.4 billion is about 18% premium of current value w/o the new debt. it's not clear why Life went on to borrow that much debt if were not for new investment.
the new stock price for life would then be at least 58/share with or without debt.
I have found that for a few weeks there are people buying big lots of life shares after market hours, also some time ago some one posted a link that the Feb call volume of life is significently higher than puts. I suspect there is a news leak and if you factor in the recent plant close and debt issue, something big is gonna happen very soon. either life gets bought by GE, or life goes out and make a major buyout. if the GE rumor is ture then what's the odds both events happen and how it would inflate the stock price. we will see. now it's those shorts that can not sleep well.
Issuing more debt is considered a lot better than issuing new stock shares from the market's view. the rationale is quite simple: if you issue more shares to finance new investments it signals the mkt that the company thinks its stock is overvalued. whereas issuing debt has few positive impact: 1st. more debt would add more tax benefits to the total future cash flow. (tax benefits are not cash flow but is certainly calculated as future cash flow in the valuation of a company). the increase of FCF would significantly increase its valuation, thus its stock price.
2. Debt increase would add more pressure to the current managment for a better Operating performance. it shows that the managment team is confident about their ability to repay all the debt.
by the way, have anyone heard about the M&A rumor about GE would acquire life for a premium of 17% soon? words from wall street being that GE healthcare unit would offer a tender offer for life tech for 17% premium based on its Jan 29th closed price.
if any one heard this could you please comfirm or tell more about this?