London Stock Exchange and Northwestern Mutual Life Insurance

Northwestern Mutual Life Insurance: The London Stock Exchange has confirmed it is in exclusive talks to buy US asset management business Russell Investments from Northwestern Mutual Life Insurance for around $3bn, according to The Guardian. Meanwhile aerospace and defence company Cobham has agreed to pay $1.46bn for US communications equipment maker Aeroflex. Cobham has slipped 5.7p to 306.5p as it said it would place 65m shares - 6% of its share capital - to help fund the deal. Andy Chambers at Cantor Fitzgerald said: Cobham is paying 10.5 times current year estimated adjusted so valuation is not that stretched in our view, and for an aggregate integration cost of 128m the company expects to achieve synergies of 50m per annum after three years. We estimate half of this would allow the deal to be value creating. Aeroflex is a leading supplier of radio frequency RF and microwave integrated circuits and components, and 70% of its sales are to commercial markets. It is therefore aligned with Cobham strategy, focusing on it strength in RF electronic components but increasing commercial sales. We continue to regard Cobham as fully valued, and the placing will likely cause some indigestion. However, this does meet many of its strategic acquisition criteria and will be well received by the market to some extent justifying the premium rating against peers. We have been saying for some time that we would like to see the new management team first self-generated deal and this looks like it, so we will evaluate our position on the stock following completion. Cobham is trading on 14.3 times 2015 consensus earnings per share, and remains a hold with a target price of 280p and Pfizer bid for AstraZeneca may have run into a roadblock but a couple of other multibillion dollar deals - this time UK companies buying US businesses - are in the pipeline. LSE shares have added 8p to 17.72 on the news, but some analysts are not entirely convinced. Numis said: A deal at that size $3bn would be the biggest in the LSE 213-year history and mark its boldest push into the US where Russell is best known for its equity benchmarks such as the Russell 2000. Given the transformational nature of this deal we have placed the LSE recommendation under review. We do not see the strategic logic of purchasing the asset management business of Russell and would need to be convinced. Should the LSE acquire the index businesses of Russell it would plug the strategic gap in the portfolio the US . Should this deal happen price will be key. We believe there will be a trade off between our outlook for price compression, and cross selling product to Russell customers and Russell product to customers plus cost synergies. (news.financializer.com). As reported in the news.