The big market gains on Wednesday were apparently due to rumors of further “easing” by the Fed and perhaps some bank rescues in Europe. Today (Thursday) the Fed chairman more or less poured cold water on the idea of immediate Fed easing. But China did some easing. All in all the market held up not badly on the disappointment from the Fed. The Dow was up 46 points but the S&P 500 was down slightly and Toronto was down 41 points.
Canadian Tire was up 1.5%.
Thursday afternoon there was news that a Montreal-based company called Genivar Inc. was issuing shares and was buying a British company WSP Group PLC for $442 million. This was a whopping 67% premium to the share price. Yet with WSP having 9000 employees, the price does not seem all that huge.
I know nothing about Genivar and had never heard of it and I would have no reason to have ever heard of WSP Group. What I find encouraging is that companies are being taken over at HUGE premiums like this. Basically on standard present value analysis a lot of companies look very cheap and that is why we see takeovers at premiums.