GlaxoSmithKline Adds to Dermatology Business With Big Acquisition

Shares of GlaxoSmithKline ( GSK) are down nearly 2% after the company announced an agreement to acquire global dermatology company Stiefel Laboratories today.

Under the terms of the agreement, GSK will acquire the total share capital of Stiefel for a cash consideration of $2.9 billion. GSK's existing prescription dermatological products will be combined with Stiefel's and the new specialist global business will operate under the Stiefel identity within the GSK Group.

GSK's CEO says this is part of a strategy to grow and diversify GSK's business through targeted acquisitions. The deal will help solidify a strong presence in the prescription, consumer and aesthetic skin health markets.

We had removed shares of GSK from our "Recommended" list back on Oct. 6 when shares traded at $42.59. The company currently has an attractive 6.57% dividend yield, based on Friday's closing stock price of $30.59.

The stock has technical support in the $24 to $27 price area. If the shares can firm up here, we see overhead resistance around the $32 to $35 price levels. GSK is not recommended at this time, holding a DARST Rating of 3.4 out of 5 stars.

Oracle to Acquire Sun Microsystems

Shares of Oracle ( ORCL) are down nearly 3% in early trading after the company announced it has reached an agreement to acquire Sun Microsystems' ( JAVA) common stock for $9.50 per share in cash. The transaction is valued at approximately $7.4 billion, or $5.6 billion of Sun's net cash and debt.

The company sees the acquisition being accretive to Oracle's earnings by at least 15 cents on a non-GAAP basis in the first full year after closing. Management also believes the first year under Oracle may reap bigger rewards than what was planned for the acquisitions of BEA, PeopleSoft and Siebel combined.

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