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Deals: Torrid, then Tepid Exit for 2007

In our M&A Roundup for the weeks ended Dec. 23 and Dec. 30, pre-Christmas M&A heated up, then cooled off before year-end.
Roy Harris, CFO.com | US
January 2, 2008

In some ways, the last two weeks of 2007 represented a condensation of mergers and acquisitions for the entire hot-and-cold year.

Year-end dealmaking heated up in the week before Christmas, then dropped back in the quiet, short, final week of 2007. Still, private equity made a relatively strong showing in the two December periods, racking up $11 billion of transactions.

For the week ended Saturday, Dec. 30, the top two North American deals were Merrill Lynch & Co.'s $5.6-billion sale of a 12.1 percent stake in the financial concern to Singapore's Temasek Holdings Pte Ltd. and Tucson-based Davis Selected Advisers LP. Leading the dealmaking in the prior week was Ingersoll-Rand Co.'s agreement to buy air-conditioning systems maker Trane Inc. for $11.15 billion, according to data provided to CFO.com by mergermarket .

The 92 deals struck in the week ended Dec. 23 and the 33 in the year's last week — amounting to totals of $43.37 billion and $11.55 billion, respectively — closed out the year above 2006 from a value standpoint. There were 4,780 North American transactions through Dec. 30, down from 4,853 in the prior year. But the total of price tags for 2007 deals climbed to $1.58 trillion from $1.52 trillion, drawing on the first-half surge in dealmaking that receded only with the onset of the halftime credit cruch.

Top 10 Transactions for the Week Ending 12/30
Davis Selected Advisers LP and Temasek Holdings Pte Ltd. to buy 12.1 percent of Merrill Lynch for $5.6 billion
Under terms of the agreement, Singapore investment company Temasek Holdings and Davis, a Tucson investment firm, Temasek will purchase 91.7 million shares, of New York-based Merrill Lynch, representing 9.5 percent stake, at $48 a share, or a total of $4.4 billion, a 13.6-percent discount. Davis Selected's 25 million shares, worth $1.2 billion, represent a 2.6-percent stake. The transaction is expected to close this month.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Not Available
Seller legal advisor: Sullivan & Cromwell; and Wachtell Lipton Rosen & Katz (Advising Merrill Lynch)
Bidder legal advisor: Not Available

Berkshire Hathaway Inc. to buy 60 percent of Marmon Group Inc. for $4.5 billion
Under the cash agreement, the Omaha-based investment holding company headed by billionaire Warren Buffett will control Chicago-based Marmon, a conglomerate that is being acquired from the Pritzker family. Berkshire will acquire the remaining 40 percent stake over a period of five to six years at a consideration to be based on the future earnings of Marmon Group. Marmon employs around 21,000 people in more than 250 manufacturing, distribution, and service facilities in North America, Europe, and China, and reported revenues of $7 billion for 2006. The sale is in line with the Pritzker family's strategy of restructuring its business interests. The transaction is expected to be completed in the first quarter.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Not Available
Seller legal advisor: Latham & Watkins
Bidder legal advisor: Allen & Overy; and Munger Tolles & Olson

Berkshire Hathaway to buy Nederlandse Reassurantie Groep NV (NRG) from ING Group NV for $442 million
Berkshire Hathaway's smaller acquisition brings it Nederlandse, a Noordwijk, Netherlands-based reinsurance company being sold by Amsterdam-based insurer and banking services company ING Group NV. The transaction is expected to close in the first half.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Encore Energy Partners to buy oil-and-gas-producing assets of the Permian and Williston Basins from Encore Acquisition Co. for $250 million
Fort Worth-based Encore Energy, a producer of oil and gas properties, agreed to the assets in the Permian and Williston Basins from Encore for $125 m in cash and about 6.88 million common shares valued at $18.156 per share. The cash portion will be funded by Encore's existing $300-million revolving credit facility. Encore Acquisition and affiliates will continue to hold about 21.98 million shares, about 68 percent of Encore Energy’s share capital.
Seller financial advisor: Lehman Brothers
Bidder financial advisor: Simmons and Company International; and Griffis & Associates
Seller legal advisor: Not Available
Bidder legal advisor: Not Available


Mariner Energy Inc. to buy Hydro Gulf of Mexico Inc. from StatoilHydro for $243 million
Houston-based Mariner is an independent oil and gas exploration, development and production company and StatoilHydro, based in Stavanger, Norway, is an oil and natural gas concern. The price includes reimbursement to StatoilHydro of $8 million for drilling costs attributable to the one well. The acquisition is expected to be funded by Mariner's bank credit facility, and is expected to close by Jan. 31.
Seller financial advisor: Not Available
Bidder financial advisor: Internal
Seller legal advisor: Not Available
Bidder legal advisor: Internal

Dragados Inversiones USA to buy Schiavone Construction Co. for $150 million
Dragados Inversiones USA, a New Jersey-based company engaged in providing heavy construction services, is a subsidiary of Madrid-based construction company Actividades de Construccion y Servicios SA. Schiavone Construction, based in Secaucus, N.J., is a construction company specializing in heavy projects. This acquisition is made in line with a general corporate strategy in Spain, where in Spanish companies are expanding elsewhere to push through the long-awaited slowdown in that nation.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Mariner Energy to buy the Spraberry interests of Permian Basin for $123 million
Mariner agreed to acquire interests in Spraberry, including 348 wells producing approximately 1,250 barrels of oil equivalent per day, from an undisclosed party. The deal is concurrent with Mariner's purchase of Hydro Gulf from StatoilHydro of Norway. The Spraberry transaction was expected to be closed by the end of 2007.
Seller financial advisor: Not Available
Bidder financial advisor: Internal
Seller legal advisor: Not Available
Bidder legal advisor: Internal

Petroleo Brasileiro SA to buy Argentine oil assets from Noble Energy Inc. for $118 million
Rio de Janeiro-based Petroleo Brasileiro, an oil exploration and production company, agreed to acquire the Argentina oil assets of Houston-based Noble, including the El Tordillo, La Tapera, and Puesto Quiroga concessions in Southern Argentina. Noble expects an after-tax gain of $80 million from this sale, expected to close this year.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

W&T Offshore Inc. to buy Ship Shoal 349 field from Apache Corp. for $116 million
Houston-based oil and natural gas exploration company W&T agreed to acquire Ship Shoal 349, an economic subsalt field off the coast of Louisiana. Apache, the seller, is a Houston-based crude oil and natural gas exploration company.
Seller financial advisor: Not Available
Bidder financial advisor: Internal
Seller legal advisor: Not Available
Bidder legal advisor: Internal

Inter-Americas Inc. to buy Nuclear Solutions Inc. for $111 million
Woodstock, Ill.-based Inter Americas Inc., a financial investment company, launched an unsolicited cash offer to acquire Washington, D.C.-based Nuclear Solutions, an energy company. The proposed acquisition covers the assets, technologies, current, and future business operations along with its subsidiary Fuel Frontiers Inc.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Top 10 Transactions for the Week Ending 12/23

Ingersoll-Rand Co. to buy Trane Inc. for $11.15 billion
Piscataway, N.J.-based Trane definitively agreed to be acquired by Hamilton, Bermuda-based Ingersoll-Rand, with boards of both companies approving. Trane provides air conditioning systems and services to commercial, residential, institutional, and industrial markets, while Ingersoll-Rand operates as a diversified industrial company through three segments: Climate Control Technologies, Industrial Technologies, and Security Technologies. The price per share of $36.50 in cash and 0.23 Ingersoll Rand common represents a value of $47.81, a premium of 28.52 percent. The transaction is expected to close late in the first quarter or early in the second quarter.
Seller financial advisor: Lazard
Bidder financial advisor: Credit Suisse; Goldman Sachs; and JPMorgan
Seller legal advisor: Davis Polk & Wardwell; and Skadden Arps Slate Meagher & Flom
Bidder legal advisor: Cravath Swaine & Moore (Advising JPMorgan); Simpson Thacher & Bartlett; Sullivan & Cromwell (Advising Goldman Sachs); and Osler Hoskin & Harcourt


National Oilwell Varco Inc. to buy Grant Prideco Inc. for $7.33 billion
Grant Prideco, a drill stem technology development and drill pipe manufacturing, sales, and service company, definitively agreed to be acquired by National Oilwell, which designs, manufactures, and sells equipment and components used in oil and gas drilling and production operations. Both companies are based in Houston. The transaction is expected to be accretive to earnings and cash flow per share for National Oilwell in 2008 on a pro-forma, full-year basis, assuming a full year rate of estimated consolidation cost savings of $40 million. The price of $23.20 and 0.4498 shares of National Oilwell per Grant Prideco share, a total of $58, provides for a premium of 22.2 percent. National Oilwell will finance the cash portion through a combination of cash on hand and debt, for which bank commitments have been secured. The transaction is expected to be tax free to Grant Prideco and the stock portion of the consideration will be received tax free by its stockholders. National Oilwell holders will own about 86 percent of the combined company, with Grant Prideco holders owning the remaining 14 percent. The transaction is expected to close late in the first quarter or early in the second.
Seller financial advisor: Credit Suisse
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Cravath Swaine & Moore; Fulbright and Jaworski; and Alston & Bird (Advising Credit Suisse)
Bidder legal advisor: Andrews Kurth

Koninklijke Philips Electronics NV to buy Respironics Inc. for $4.61 billion
Murrysville, Penn.-based Respironics, Inc, a developer, manufacturer, and distributor of products and programs for the global sleep and respiratory markets, definitively agreed to an all-cash purchase by the Netherlands-based Philips, with both boards approving. Respironics markets products in 141 countries, and employs more than 5,300 worldwide. Philips is a healthcare, lighting, and consumer products and services giant. The $66-a-share price offers a premium of 24.3 percent. Respironics will become the headquarters for Philips Home Healthcare Solutions group within Philips Healthcare. The transaction is expected to close in the first quarter.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Deutsche Bank; and Morgan Stanley
Seller legal advisor: Wachtell Lipton Rosen & Katz
Bidder legal advisor: Skadden Arps Slate Meagher & Flom (Advising Deutsche Bank); and Sullivan & Cromwell

Rank Group Investments Ltd. to buy the consumer products and packaging businesses of Alcoa Inc. for $2.7 billion
Auckland, New Zealand-based Rank, an investment holding company controlled by private investor Graeme Hart, agreed to pay cash for the consumer products and packaging businesses from Pittsburgh-based Alcoa, the maker of primary aluminum, fabricated aluminum, and producer of alumina. The Alcoa consumer products business employs about 10,000 in 22 countries and generates revenues of $3.2 billion, with operating income after tax of $95 million in 2006, about 10 percent of Alcoa's 2006 revenues and 3 percent of its operating income. The businesses include Closure Systems International, a manufacturer of plastic and aluminum packaging closures and capping equipment for beverage, food and personal care customers; Consumer Products, maker of Reynolds Wrap branded and private label foil, wraps, and bags; Flexible Packaging, manufacturers of laminated, printed, and extruded non-rigid packaging materials; and Reynolds Food Packaging, makers of stock and custom products for the foodservice, supermarket, food processor and agricultural markets. The transaction is expected to be completed by the end of March.
Seller financial advisor: Lehman Brothers
Bidder financial advisor: Credit Suisse
Seller legal advisor: Cleary Gottlieb Steen & Hamilton
Bidder legal advisor: Debevoise & Plimpton; and Blake, Cassels & Graydon

ACE Ltd. to buy Combined Insurance Co. of America from Aon Corp. for $2.4 billion
Hamilton, Bermuda-based ACE, a provider of property and casualty insurance, agreed to acquire Glenview, Ill.-based Combined from Chicago-based Aon for cash. Combined provides accident, health, and life insurance coverage, while Aon provides insurance and risk management, human capital consulting, and insurance underwriting products. The transaction will be funded by a combination of available cash and a modest amount of new debt, and is in line Aon’s strategy of exiting the lower margin and more capital intensive insurance underwriting business and concentrating on its core activities of insurance brokerage and consulting. Proceeds also will boost Aon’s share buyback program. Concurrently to the sale, Aon agreed to sell Sterling Life Insurance Co., a Bellingham, Wash.-based provider of accident, health, and life insurance coverage, to Munich Re Group for $352 million. Completion is expected by the end of the second quarter.
Seller financial advisor: Aon; Credit Suisse; and Merrill Lynch
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Shearman & Sterling (Advising Merrill Lynch); Alston & Bird (Advising Credit Suisse); and Sidley Austin
Bidder legal advisor: Mayer Brown


Eaton Corp. to buy Moeller Group GmbH from Doughty Hanson & Co. for $2.23 billion
Cleveland-based Eaton, a maker of engineered products and electrical systems, agreed to acquire the Germany-based Moeller, which makes low-voltage electrical distribution and automation components, from the London-based private equity firm of Doughty Hanson. It had acquired a majority stake in Moeller in September 2005 for $2.2 billion, including pension liabilities and financial debt, in a deal financed through an equity investment of $275 and debt of $930. Moeller employs about 8,800 people. In a related transaction, Eaton offered to acquire all the shares in Phoenixtec Power Company Ltd., ad Taiwan-based manufacturer of single- and three-phase uninterruptible power supply systems, for $1.54 per share. Eaton intends to finance the acquisitions with a mixture of cash, debt, and equity. The two transactions are expected to be neutral to Eaton’s operating earnings per share in the year 2008 and accretive by $0.25 to $0.35 per share in 2009. Completion is expected in the first quarter.
Seller financial advisor: UBS
Bidder financial advisor: Morgan Stanley
Seller legal advisor: Skadden Arps Slate Meagher & Flom
Bidder legal advisor: Freshfields Bruckhaus Deringer; Hengeler Mueller; and Fenwick & West

Occidental Petroleum Corp. to buy 50 percent of the Texas, Colorado, New Mexico oil and gas assets of Plains Exploration & Production Co. for $1.55 billion
Los Angeles-based Occidental, the oil and gas company, agreed to acquired the interest in the Texas, New Mexico, and Colorado properties of Plains for cash. Houston-based Plains is selling properties that include holdings in the Permian and Piceance basin. The Permian property currently generates sales volume of 18,000 barrels of oil equivalent per day (BOEPD) and 91 million barrels of oil equivalent (BOE) reserves as of December 31, 2006. The transaction is expected to close before the end of the first quarter.
Seller financial advisor: Jefferies & Company; JPMorgan; and Lehman Brothers
Bidder financial advisor: Not Disclosed
Seller legal advisor: Locke Lord Bissell & Liddell
Bidder legal advisor: Vinson & Elkins

Oak Hill Capital Partners LP to buy eight local television stations from News Corp. for $1.1 billion
Menlo Park, Calif.-based private equity concern Oak Hill agreed to acquire New York City-based News Corp.'s stations KDVR in Denver, KSTU in Salt Lake City, KTVI in St. Louis, WBRC in Birmingham, WDAF in Kansas City, WGHP in Greensboro, WITI in Milwaukee, and WJW in Cleveland. The eight stations will be jointly managed by Local TV LLC, the company created by Oak Hill to acquire nine stations from New York Times Co. The News Corp. is expected to close in the third quarter.
Seller financial advisor: Allen & Company
Bidder financial advisor: Deutsche Bank
Seller legal advisor: Hogan & Hartson
Bidder legal advisor: Paul Weiss Rifkind Wharton & Garrison; Dow Lohnes

Yildiz Holding AS to buy Godiva Chocolatier Inc. from Campbell Soup Co. for $850 million
Istanbul-based Yildiz, a food conglomerate, agreed to acquire Godiva from Camden, N.J.-based Campbell, the maker of convenience foods including soups, biscuits and confectionery. Godiva, a producer and marketer of chocolates and ice creams, reported annual revenues of about $500 million in 2006. Godiva will become part of the Ulker Group Yildiz after the close, expected within the next several months.
Seller financial advisor: Centerview Partners
Bidder financial advisor: Citigroup; and Standard Unlu
Seller legal advisor: Davis Polk & Wardwell
Bidder legal advisor: Fasken Martineau; and Weil Gotshal & Manges

BlueScope Steel North America Corp. to buy IMSA Steel Corp. from Ternium SA for $730 million
BlueScope is the U.S.-based subsidiary of BlueScope Steel Ltd., the Melbourne, Australia-based steel manufacturer. Kalama, Wash.-based IMSA makes and distributes steel and building products, had is currently owned by Ternium, a Luxembourg-based producer of flat and long steel products. BlueScope will fund the acquisition through a 364-day bridge facility, and will assume about $20 million in underfunded pension liabilities. IMSA comprises four distinct businesses with manufacturing facilities throughout North America including: Steelscape Inc., ASC Profiles Inc., Varco Pruden Buildings Inc., and Metl-Span LLC. Completion is expected by the first quarter of 2008.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Credit Suisse
Seller legal advisor: Vinson & Elkins
Bidder legal advisor: Not Available


source: mergermarket




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