Last week the S&P ASX All Ordinaries Index (ASX: ^XAO) headed down, ending at 5316, 2.15% below the 5453 high set on 28 October.
Among the stocks hitting new 52-week highs, Wesfarmers Ltd (ASX: WES) touched $44.30, the new yearly high that it made on 2 January, before closing at $44.05 on Friday.
Last month it announced that it would be selling its insurance division to Insurance Australia Group Limited (ASX: IAG) for $1.8 billion. The division has brands like Lumleys and WFI.
The company expects to book a pre-tax profit of approximately $700 – $750 million, which is expected to be included in the financial results for the second-half of the 2014 financial year. It had NPAT of $2.26 billion in 2013.
Fund manager Perpetual Limited (ASX: PPT) also set a new yearly high at $49.16. It announced the completion of its takeover of The Trust Company Limited (ASX: TRU), an Australian trustee company, on 18 December.
Geoff Lloyd, CEO and Managing Director of Perpetual said of the acquisition: "The integration of these two historic companies will deliver greater scale and capabilities across each of Perpetual's three business units, benefiting shareholders and clients of both companies. This merger accelerates our growth plans as part of the Transformation 2015 strategy."
The Trust Company had $88.2 million in revenue, with $11.74 million in NPAT for 2013.
Amcor Limited (ASX: AMC), the global packaging company, set a new all-time high of $10.79 on 8 January and ushered in a new year after the December spin-off of Orora Ltd (ASX: ORA). It manufactures fibre and beverage packaging in Australia and New Zealand, as well as operating a packaging distribution business in North America. The new entity will have either the number one or two market position in Australia and New Zealand for each of its product segments.
Before the spin-off, the consolidated company raised NPAT before abnormals by 8.8% to $717.3 million in 2013. Amcor will still have packaging manufacturing in the US, and has already made one acquisition for the assets of Constar, a company that operates six plants generating annual sales of US$190 million. This will become part of Amcor Rigid Plastics.
Foolish takeaway
Acquisitions, mergers and spin-offs are exciting parts of business and make up a great part of a growth strategy for expanding companies. As investors, you have to consider these deals to see what value is being given or received. Projected earnings and revenue could possibly work out differently from what was planned, so by knowing the strategies, benefits and risks, you have a way to gauge the potential effects of acquisitions.
