Please ensure Javascript is enabled for purposes of website accessibility

These 2 Stock Deals Are Pumping Up the Nasdaq Thursday

By Dan Caplinger - Updated Apr 8, 2021 at 2:28PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Merger and acquisition activity is starting to heat up again.

Investors have high hopes for economic growth, and the big beneficiary in Thursday's stock market action was the Nasdaq Composite (^IXIC -1.20%). 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.

Two people shaking hands.

Image source: Getty Images.

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 -2.17%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Century Bancorp, Inc. Stock Quote
Century Bancorp, Inc.
CNBKA
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,662.79 (-1.20%) $-142.21
ORBCOMM Inc. Stock Quote
ORBCOMM Inc.
ORBC
Eastern Bankshares, Inc. Stock Quote
Eastern Bankshares, Inc.
EBC
$18.52 (-2.17%) $0.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.