Transocean (NYSE:RIG) shares moved up $6.45, or 5.87%, to $116.42 today after the company announced the acquisition of GlobalSantaFe for nearly $18 billion. The combined company will have a global fleet of 146 rigs worth an estimated $53 billion. Shareholders in both companies applauded the deal that will greatly expand their offshore drilling services.

Transocean stands to gain substantially from the transaction in terms of both increased scale and cost savings. The company expects to realize cost savings of $100 to $150 million a year by 2010 - that's a million dollars per rig per year! The additional rigs should also help the company with its extensive backlog while a proposed recapitalization will fund a buyback and other measures to increase shareholder value.

Interestingly, the deal took place at no premium and resulted in the stocks of both companies rising - a rare occurrence in M&A deals. This happened because the deal was structured to give shareholders in both companies a total of $15 billion in cash dividends collateralized by a combined $33 billion in backlogs. Essentially, the company underwent a leveraged recapitalization that enabled it to buy GlobalSantaFe at a substantial discount while also improving the company's capital structure.

Overall, this deal is exactly what shareholders were hoping for - a cheap acquisition with a way for them to cash in on Transocean's massive backlog. The transaction should also help improve the company's financial position and improve their future outlook. This makes RIG a stock worth watching!

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American Standard Companies Inc. (NYSE:ASD) announced last week that its spin-off of WABCO Holdings Inc. (NYSE:WBC) is set to take place on July 31st. Under the terms of the deal, shareholders are American Standard on record July 12th will receive one share of WBC for every three shares of ASD that they own. Investors and shareholders should watch this spin-off as it presents several opportunities to profit that we will explore in this article.

WABCO is a leading provider of technologically advanced breaking, stability, suspension and transmission control systems that has been around since 1869. Their products include a range of control systems that improve vehicle safety and reduce overall vehicle operating costs for the world's leading truck, trailer and bus manufacturers as well as select passenger car manufacturers. The company's strong competitive and financial condition make it a great stock to own.

Investors may find it worth noting that spin-offs in general tend to outperform the overall market during their first couple of years as an independent public company (just check out this article by the Journal of Investment Management). The reasoning behind this is simply that many people who receive the shares do not want them so they immediately turn around and sell - creating a discount.

The company is also much more nimble, being independent from its parent, and therefore may be able to increase its revenues and cut costs. It is also worth nothing that insiders are often given a high stake in the new spin-off, which provides them incentive to jump the stock price. We already know that WABCO is an excellent candidate with management's sizable stake in the company with a leading market position.

In the end, investors should carefully watch this stock after its July 31st spin-off while existing shareholders should consider holding onto their shares for awhile. Evidence has shown that spin-offs do tend to outperform the market in certain instances - and WABCO appears to be a poster child for these cases. This makes WBC a stock worth watching over the next year!

UBS AG (NYSE:UBS) has been facing a sort of midlife crisis lately just after new chief executive Marcel Rohner took the reins and promised to keep the current strategic direction of the company intact. The company has been experiencing problems with its investment bankers that some are speculating could result in a spin-off or sale of the division, which would transform the company into an asset management pure play.

The financial services company's problems with its investment bankers stem from a blowup of a hedge fund within the company that eventually led to ex-CEO Peter Wuffli and several high profile bankers leaving the company. Putting the ex-head of the wealth management and private banking segment in charge after didn't help much either. In the end, the whole ordeal is casting serious doubt as to whether or not UBS can retain its best investment bankers with what has become a second-rate program.

Meanwhile, any spin-off or sale would be welcome news for shareholders and investors who are well aware that an asset management pure play UBS could fetch a multiple of 20x while investment banking typically only trades at 10x. It is also worth noting that UBS's asset management business produces a full 25 percent more each year in profit than its investment banking business.

Specifically, many shareholders and investors are hoping for a sale of the investment banking division (with the proceeds returned to shareholders via a buyback or special dividend) which would result in the 20x multiple pure play. This would solve both the company's internal problems with their investment bankers along with valuation issues they face by providing two services that trade at such varied multiples. Whether or not this materializes remains to be seen; however, UBS is definitely a stock to keep an eye on!

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