Investors liked these 2 share buybacks on Tuesday | The motley fool

Investors settled in for a largely calm trading session on Tuesday. With an expected speech Wednesday from Federal Reserve Chairman Jerome Powell, most market participants have been content to wait and see what the central banker has to say about the future course of monetary policy. The Dow Jones Industrial Average (^ DJI 0.01%) increased an inch today, while Nasdaq Compound (^IXIC) and S&P500 (^GSPC -0.16%) were weaker.

Data source: Yahoo! Finance.

The calm day on Wall Street did not prevent companies from continuing their strategic moves. Both Apollo Endosurgery (APES 67.83%) and HSBC Holdings (HSBC 4.10%) have benefited from being the target of M&A activity, and it is encouraging to see that takeovers are still happening even as the cost of capital rises. Read on for more details on both offers.

Boston Scientific makes a big purchase

Shares of Apollo Endosurgery jumped 68% on Tuesday. The maker of minimally invasive medical devices for gastrointestinal and bariatric procedures has accepted a takeover offer from the industry giant Scientific Boston (BSX 1.62%).

Boston Scientific’s offer valued Apollo at approximately $615 million. Under the terms of the agreement, Apollo shareholders will receive $10 per share in cash for their shares. That’s well above Monday’s closing price of $6. The parties expect the transaction to close at some point in the first half of 2023.

For its part, Boston Scientific intends to capitalize on the Apollo devices for endoluminal surgery. With devices often used to treat patients with diseases of the gastrointestinal tract or those suffering from morbid obesity, Apollo’s product portfolio will help Boston Scientific grow its already impressive endoscopy business. Additionally, entry into the endobariatrics market is expected to open a new avenue for future growth.

Interestingly, shares of Apollo actually closed slightly above Boston Scientific’s offer price on Tuesday, at $10.07 per share. This at least implies the possibility that Apollo shareholders are hoping that another potential buyer could start a bidding war. That’s not out of the question, given that other companies in the industry have also been pursuing opportunities in endoscopy.

HSBC gets royal offer

Elsewhere, shares of HSBC Holdings closed up 4%. The international banking company received an offer of Royal Bank of Canada (RY -0.23%) which will enable the achievement of complementary strategic objectives for the two financial institutions.

RBC has reached an agreement with HSBC under which RBC will acquire the Canadian personal and commercial banking business of HSBC. Under the terms of the agreement, RBC will pay C$13.5 billion ($10 billion) to HSBC. Any profits from Canadian business HSBC generated after June 30 will also go to RBC if the deal is successfully completed.

For RBC, the purchase of HSBC Canada complements its strongest business and will potentially strengthen its market share in the Canadian banking sector. In particular, business customers who need assistance with international transactions will find HSBC Canada’s expertise invaluable in helping them do business.

Meanwhile, for HSBC, the divestiture comes in response to pressure from a major shareholder, who has suggested that HSBC’s Asia-Pacific business is its most valuable asset. With all the money it receives from the deal, HSBC would be in a much better position to pursue other strategic alternatives as well. Still, shareholders shouldn’t view the takeover as a done deal just yet, as Canadian regulators have already said they will review the purchase to assess any anti-competitive threats.