Investors have high hopes for economic growth, and the big beneficiary in Thursday's stock market action was the Nasdaq Composite (^IXIC -0.16%). Other major market benchmarks were mixed, but as of 1:45 p.m. EDT, the Nasdaq was up close to a full percent on the trading day.
Big-name tech stocks helped give the Nasdaq a much-needed lift, as it has lagged below its record levels even as other indexes have hit all-time highs. In addition, though, merger and acquisition activity is heating up, and that was good news for Century Bancorp (CNBKA) and Orbcomm (ORBC) on Thursday. Below, we'll look at who's picking up on these opportunities and what the combined companies will look like.
Banking on a big gain
Century Bancorp shares jumped 25% on Thursday afternoon. The move came as a result of a buyout offer from Eastern Bankshares (EBC 1.25%) that will create a larger regional player in the New England market.
The $642 million deal will pay Century shareholders $115.28 per share in cash for their stock. Eastern will be the surviving entity, and existing Century locations will get rebranded with the Eastern name after the deal is completed. The two banks anticipate closing on the deal by the fourth quarter of 2021 if they can get all necessary regulatory approvals.
For Eastern, the acquisition will boost its asset levels to around $22 billion. That'll be enough to give it the leadership role among community bank deposits in the greater Boston area. Eastern also anticipates a quick payoff, with the deal adding to earnings by next year as the two banks save money from cost-sharing synergies.
Many investors neglect regional banks, but every massive national powerhouse started out as a smaller regional player. Century shareholders are reaping the rewards today, but it might well be Eastern that gets the bigger payoff down the road.
This Internet of Things play got an offer it couldn't refuse
Elsewhere, Orbcomm got an even bigger boost, rising more than 50% on Thursday afternoon. The global provider of Internet of Things solutions for industrial companies will go private after accepting an acquisition bid from a data infrastructure hedge fund.
Orbcomm accepted a deal from GI Partners, which offered a total of about $1.1 billion in an all-cash transaction. Orbcomm shareholders are set to receive $11.50 per share for their stock. That's a premium of more than 50%, which closely matches the stock's jump today. GI Partners anticipates closing on the acquisition in the second half of this year.
Interestingly, the stock price actually moved above the $11.50-per-share mark following the announcement. That suggests that some shareholders hope that a rival bid will come in at a higher level.
However, Orbcomm CEO Marc Eisenberg seemed excited about the prospects for the deal going forward. With industrial companies accelerating their digital transformation efforts, now's a good time for Orbcomm to push its business into overdrive, and being privately held might make that easier to do.