Back To Being Friends Again...

I mentioned a week ago that GDT at $55.50 was a bit too steep of a discount for the stock to stay there for long -- hence, my advice at the time for first-time buyers to plough in there and load up on some cheap GDT shares. I thought the stock looked attractive both on a stand-alone basis and especially on a potentially newly-renegotiated (with JNJ) deal basis. I just didn't think that either one of those two companies would show themselves to be tough bullies for long. Being friends is so much easier. Neither company stood to gain much from an extended fight -- GDT would obviously invite lots of unpleasant lawsuits and JNJ needed the acquisition to bolster its flagging growth.

While the JNJ announcement today that it has indeed come to an agreement with GDT on a new all-in (cash & stock) purchase price of $63.08 is a little below the minimum that I expected GDT to settle for ($65), it's still 13.5% higher than $55.50, so I guess their shareholders can't be too unhappy with the situation, especially if they bought the stock last week for the first time.

On another note, Bloomberg has come up with an interesting article on GM today, basically pointing out how Kirk Kerkorian keeps buying, and the stock just keeps falling. At current levels ($23.74 closing price from yesterday), the loss might well be on the order of $350mm. My view on this is simple: the man is 88-years old. Unless he has suddenly found the elixir of eternal life, I can't imagine he will be around for too much longer, as sad as it sounds. He is going to go out with a bang - the ultimate contrarian's dream. I roughly estimate GM's probability of bankruptcy at this point to be around 50%, give or take... Kirk, having made his (very large) fortune owning and operating casinos, is obviously a gambling man. The question is not necessarily how much he wins or loses on this particular bet; in my mind, it's more about whether he wins or loses his race against father Time -- the eternal foe...