Image: Western Digital.
The stock market closed another successful week on Friday, and major market benchmarks climbed toward their highest levels of the year. Many market commentators focused on the impact of the Federal Reserve's decision on Wednesday to hold interest rates steady as supporting the mood among investors, and the impact in the foreign currency markets to send the U.S. dollar downward could have an ongoing positive impact on profitability for many multinational corporations. Among rising stocks in today's session were Affymetrix (AFFX.DL), Western Digital (WDC -2.50%), and Goldman Sachs (GS -0.71%).
Affymetrix rose 14% after the genetic analysis and testing equipment specialist got a second takeover bid. The company had accepted a rival bid back in January from Thermo Fisher Scientific (TMO -1.50%) for $14 per share in cash, representing a better than 50% premium to Affymetrix's stock price prior to the offer. Today, though, former executives at Affymetrix offered the company a higher bid of $16.10 per share, also in cash.
Given the opportunities in the genetic testing and analysis area, the idea of a rival bid isn't all that surprising, even if it did take longer in coming than some might have hoped. The fact that Affymetrix stock didn't climb above the new offer suggests that shareholders aren't all that hopeful that Thermo Fisher will weigh in with a higher bid.
Western Digital led all S&P 500 component stocks with a gain of 7%. The hard disk-drive specialist said that it would offer a total of $5.6 billion in debt securities in order to help it finance its proposed merger with SanDisk (NASDAQ: SNDK). Of the total, $1.5 billion will be seven-year secured notes, while the remaining $4.1 billion will constitute eight-year unsecured notes.
With shareholders having approved the potential deal, and with financing seemingly lined up, the sole hurdle remaining is approval of the deal by Chinese authorities. Investors hope that cost savings from the merger will help both companies make the most of future growth opportunities in the memory- and data-storage space.
Finally, Goldman Sachs rose 3%, which was the best performance among Dow stocks. The financial sector generally was one of the biggest beneficiaries of the positive market environment Friday, and one key reason was that, as the financial markets start to regain their footing in what has been a tough 2016 to date, Goldman and other investment banks should have the capacity to profit from new opportunities.
Goldman has the ability to do proprietary trading for its own account, as well as offer strategic advice and services on mergers and acquisitions for client companies, and the bank's stock has gotten beaten down badly in the poor start to the year. If the markets finally have stabilized and can continue to hold their ground, then Goldman Sachs could still have substantial upside, and help lead the Dow to further gains throughout the rest of 2016.
