Further recommended reading

FWOb also recommends today's Wall Street Journal articles on Navistar and Biomet.

From the Dennis Berman story regarding Warsaw-based Biomet:

The buyout of medical-device maker Biomet Inc. was thrown into doubt last night as shareholder-advisory service Institutional Shareholder Services recommended Biomet holders vote down a $10.9 billion private-equity deal for the company.

The recommendation, made prior to a June 8 shareholder vote on the deal, was a rebuke for a group of private-equity heavyweights who had assembled to buy the maker of artificial knees, hips and other orthotic devices. That group consists of Blackstone Group, Goldman Sachs' private-equity arm, Kohlberg Kravis Roberts & Co., and TPG Capital.

As an Indiana-incorporated company, Biomet's buyers must meet a high standard to get final approval for the deal: Winning support from at least 75% of all shares outstanding.

The story is of particular interest to me because I worked with Indiana Secretary of State Ed Simcox in crafting the original legislation which allowed Indiana companies to adopt the higher standard for takeovers.

Terry Kodlosky reported on Navistar in a story titled "Navistar Glows Amid Its Woes." (The article is only available to subscribers).

Mr. Kodlosky writes:

Navistar International Corp. has been delisted from the New York Stock Exchange, faces a slowdown in its core truck market and is feuding with one of its major customers.

Despite these headwinds, its shares are up about 85% since the beginning of the year, as takeover rumors swirl and investors focus on projected good times ahead and a significant potential military contract.

The company's share performance demonstrates how investors are increasingly willing to ignore issues that in previous eras might have made them turn up their noses. In a market reaching new highs amid big mergers and access to inexpensive capital, Navistar offers to many an opportunity to get in while a cycle is trending downward, with the potential for an upward swing. Meanwhile, the merger speculation underscores the potential appeal of the U.S. market, particularly for makers of larger commercial trucks, despite signs of softness in some parts of the economy.

[ ... ]

Navistar, parent of International Truck & Engine Co., is one of the largest U.S. makers of medium- and heavy-duty trucks, which range from some construction vehicles to buses to the highway's big rigs. It's a market coming off big highs -- new federal emissions regulations that kicked in this year led to a surge of buying by truck users ahead of the expensive modifications. North American truck production is suffering this year as a result, with builds for the big, commercial highway haulers down to 220,000 to 230,000 from about 380,000 last year, says research firm Americas Commercial Transportation Research Co.

[ .. ]

But some investors this year have seen opportunity in these troubles. For example, Navistar represents one of the few pure-play truck makers in North America in a time of global consolidation in the industry. Talks between German truck maker MAN AG and Sweden's Scania AB on creating a single truck titan has spurred merger speculation. Navistar's competitors include arms of Germany's DaimlerChrysler AG and General Motors Corp. The other major U.S.-based, independent truck maker, Paccar Inc., has a strong majority shareholder.

Photo credit: Fort Wayne Observed | Mitch Harper