VideoAnother light week of dealmaking last week featured only one transaction of more than $1 billion. But nine of the 56 total acquisitions proposed — worth $1.87 billion — were private equity buyouts, a definite spike from recent weeks of relative nonactivity.
Leading the buyouts were two involving San Francisco-based Hellman & Friedman LLC, which joined with General Atlantic LLC in a $575 million deal to raise their stake in revenue-cycle management firm Emdeon Business Services. Hellman also plunked down $454 million to buy 30 percent of the French naval engineering company Gaztransport & Technigaz SA from a unit of Rome-based Eni SpA.
The week's leading deal among the top ten North American transactions was the $1.5-billion purchase of GMH Communities Trust by student housing owner-operator American Campus Communities, although the transaction included nearly $1 billion of debt. In another GMH deal, it sold its GMH Militarey Housing unit to Balfour Beatty Construction for $350 million.
Overall, mining and natural resources companies continued to be among the more attractive targets during a week in which total North American dealmaking totalled $7.5 billion, according to data provided to CFO.com by mergermarket .
For the year to date, 430 transactions have been announced, worth $52.68 billion, still far below the 709 deals valued at $221.16 billion in the same period a year ago. However, a monster deal involving Yahoo — sought by Microsoft — seems on the horizon to many. And other dealmakers are expecting mining giant Rio Tinto to be at the center of more consolidation activity in that sector.
American Campus to buy GMH Communities Trust for $1.5 billion
Austin, Texas-based American Campus Communities, a student housing owner/operator, agreed to acquire Newtown Square, Penn.-based GMH Communities in a deal that includes includes $963 million in debt. The transaction relates solely to GMH's student housing business and not its military housing business, which will be sold in a separate transaction to Balfour Beatty. The GMH acquisition is expected to close in the second quarter, with GMH stockholders owning about 15.7 percent of ACC's outstanding equity.
Seller financial advisor: Wachovia Capital Markets
Bidder financial advisor: Merrill Lynch
Seller legal advisor: Goodwin Procter and Reed Smith
Bidder legal advisor: Locke Lord Bissell & Liddell
First Reserve Corp. to buy Bahamas Oil Refining Co. International Ltd. from Petroleos de Venezuela SA for $900 million
First Reserve, based in Greenwich, Conn., is a private equity firm focused on the energy sector. Bahamas Oil Refining, of Freeport, the Bahamas, owns and operates oil storage, fuel blending, and marine facilities, and is part of the Caracas-based Venezuelan state-owned Petroleos. The actual price is undisclosed, but estimated to be $900 million. ABN AMRO Bank NV provided senior debt financing is expected to close in the second quarter.
Seller financial advisor: Citigroup
Bidder financial advisor: ABN AMRO
Seller legal advisor: Curtis Mallet
Bidder legal advisor: Simpson Thacher & Bartlett; and Harry B. Sands, Lobosky & Co
Hecla Mining Co. to buy Kennecott Greens Creek Mining Co. and Kennecott Juneau Mining Co. from Kennecott Minerals Co. for $750 million
Hecla, of Coeur d'Alene, Idaho, explores for minerals and develops mineral properties, and mines and processes precious metals. The Kennecott properties are being sold by Salt Lake City-based Kennecott Minerals, which is engaged in developing, managing, and operating gold and silver mines. It is a subsidiary of Rio Tinto Group, the UK-based precious metals mining company. Terms call for $700 million in cash and $50 million in Hecla shares. Kennecott Greens Creek Mining and Kennecott Juneau Mining hold a combined 70.3 percent stake in Greens Creek Mine, a U.S. precious metal mine, with the remaining stake held by Hecla. The acquisition will be financed through a combination of debt provided by Scotia Bank and existing cash resources. The transaction is part of Rio Tinto’s plan to divest at least $15 billion of assets. The acquisition is expected to close by the second quarter.
Seller financial advisor: Scotia Capital
Bidder financial advisor: Rothschild
Seller legal advisor: Not available
Bidder legal advisor: Not available
Goldman Sachs and Thomas H. Lee Partners LP to buy a 19.9 percent stake in MoneyGram International Inc. for $710 million
Boston-based private-equity firm T.H. Lee and New York-based investment and banking company Goldman Sachs agreed to acquire 19.9 percent stake from Minneapolis-based financial services provider MoneyGram, receiving a combination of non-voting preferred stock and common stock of MoneyGram. The non-voting preferred consists of an initial 20 percent interest rate, increasing to a maximum 22 percent. After approvals, the non-voting preferred and common will be exchanged for convertible voting preferred stock, with the convertible paying a cash dividend of 10 percent, or of 12.5 percent if not in cash. Additionally, the convertible preferred shares may be converted into common at $5 a share, equal to an initial equity interest of 63 percent. The $5 common price represents a discount of 6 percent. Under the agreement, Lee and Goldman will invest about $775 million into MoneyGram, while the exact amount will de determined in a later stage, depends on the price of selling certain investment portfolio assets as indicated in the agreement. In addition, MoneyGram has achieved an agreement with the affiliates of Goldman Sachs that Goldman Sachs will provide up to $500m debt financing. MoneyGram expects to obtain an additional $200m in debt financing prior to the closing. On the other hand, MoneyGram will negotiate new amendments with existing lenders to obtain the availability of the $350 million. The committed debt from Goldman affiliates provides for 13.25 percent senior second lien notes with a 10-year term, and is not callable for five years.
Seller financial advisor: JPMorgan; and Duff & Phelps
Bidder financial advisor: Internal
Seller legal advisor: Wachtell, Lipton, Rosen & Katz
Bidder legal advisor: Weil, Gotshal & Manges; Fried, Frank, Harris, Shriver & Jacobson
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