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Deals: Forget the Dropped Ones, and M&A Seems Strong

In our M&A Roundup for the week ended Oct. 12, biopharma and tech take the lead, but the tally excludes a growing list of withdrawn offers.
Roy Harris, CFO.com | US
October 13, 2008

With your head still ringing from last week's drubbing in the market — and the accompanying musical chairs in the financial-services sector — you might find it surprising that no U.S. banking deals were among the mergers and acquisitions of the seven days just past. Just as startling, perhaps: how healthy a week it was for transactions, featuring Eli Lilly & Co.'s $5.75-billion purchase of ImClone Systems Inc., and the $1.7-billion acquisition of a 56-percent stake in Advanced Micro Devices' semiconductor manufacturing facilities by Abu Dhabi's Advanced Technology Investment Co.

Of course, deals done exclude the impact of several big offers that were done in. Recent transactions ended by the bidder include Waste Management's $6.73 billion bid for Republic Services, United Technologies' $2.65-billion offer for Diebold Inc., and Vishay Intertechnology Inc.'s $1.7-billion proposal for International Rectifier Corp.

Also, there was less dealmaking last week than in the week prior, with 43 North American deals struck, down from 53, according to data provided to CFO.com by mergermarket. But the total value of last week's agreements was a solid $12.72 billion. In the earlier seven days, the value of deals — led by Wells Fargo's $15.1-billion Wachovia offer and $9-billion in Mitsubishi UFJ Financial Group bids for stakes in Morgan Stanley — was $28.19 billion.

For the year to date, the 3,067 deals struck so far in 2008 are worth $797.62 billion, still sharply off the pace of 2007, of course. At this time last year, 4,022 transactions tallied amounted to $1.34 trillion.

Eli Lilly and Co. to buy ImClone Systems Inc. for $5.75 billion
New York City-based ImClone, a biopharmaceutical company specializing in oncology care, definitively agreed to be acquired by Indianapolis-based biopharma Lilly for $70 a share, a premium of 7.8 percent. Both boards approved the merger, which is expected to close in the fourth quarter or next year's first quarter.
Seller financial advisor: JPMorgan
Bidder financial advisor: Deutsche Bank; UBS
Seller legal advisor: Davis Polk & Wardwell (Advising JPMorgan); Katten Muchin Rosenman
Bidder legal advisor: Dewey & LeBoeuf (Advising UBS); Latham & Watkins

Bank of Nova Scotia to buy a 37-percent stake in CI Financial Income Fund from Sun Life Financial Inc. for $2.15 billion
Toronto-based Bank of Nova Scotia, also called Scotiabank, agreed to acquire the stake in Toronto-based wealth management company CI Financial Income Fund from Sun Life, a financial services firm also in Toronto. The price for 104,609,895 trust units is $20.95 per unit, a premium of 32.2 percent, although compared to the stock price one month before the announcement, the offer is at a discount of 1.49 percent. The transaction is expected to closed in the fourth quarter.
Seller financial advisor: Internal
Bidder financial advisor: Scotia Capital
Seller legal advisor: Torys
Bidder legal advisor: McCarthy Tetrault

Advanced Technology Investment Co. to buy 56 percent of the semiconductor manufacturing facilities of Advanced Micro Devices Inc. for $1.70 billion
Advanced Technology Investment, based in Abu Dhabi, in the United Arab Emirates, agreed to acquire the stake in those Advanced Micro manufacturing facilities in a deal that will set up a new entity temporarily to be called The Foundry Company. AMD is a Sunnyvale, Calif.-based technology concern. Terms call for Advanced Technology to pay $1.4 billion directly into the new entity, of which $1 billion will be for equity and $400 million for convertible debt. In addition, Advanced Technology will assume $1.2 billion of AMD's existing debt. As a result, AMD will hold 44.4 percent of the new firm. Advanced Technology also will pay $700 million to AMD to purchase additional shares in the new entity. In addition to ist 56-percent stake, Advanced Technology has committed additional equity funding of between $3.6 billion and $6 billion over the next five years for expansion of the new company's operations. Further, Mubadala Development Company PJSC, a UAE-based investment firm, will increase its stake in AMD from 8.1 percent to 19.3 percent by acquiring 58 million newly issued AMD shares, and warrants for 30 million additional shares, for $314 million. Advanced Technology and Mubala will also enter into a 12-month agreement to manage Advanced Technology's interest in the Foundry Company. The transaction is expected to close at the beginning of next year.
Seller financial advisor: Merrill Lynch; Morgan Stanley
Bidder financial advisor: Not Available
Seller legal advisor: Davis Polk & Wardwell (Advising Merrill Lynch); Greenberg Traurig; Latham & Watkins; O'Melveny & Myers
Bidder legal advisor: Covington & Burling; Shearman & Sterling


eBay Inc. to buy Bill Me Later for $820 million
San Jose, Calif-based online trading community EBay agreed to acquire Bill Me Later, the privately held Timonium, Md.-based digital payments company for cash. It will receive shares and warrants of Bill Me Later. The price excludes $125 million of Bill Me Later employee options that eBay will assume. The transaction is expected to close by the end of the year.
Seller financial advisor: Allen & Company
Bidder financial advisor: Merrill Lynch
Seller legal advisor: Sidley Austin
Bidder legal advisor: Latham & Watkins

Allianz SE to buy an undisclosed stake in Hartford Financial Services Group Inc. for $750 million
Munich-based insurer Allianz SE agreed to acquire an undisclosed stake in Hartford, Conn.-based Hartford Financial Services, an insurance and investment company, for $31 a share in cash. The transaction came as a capital increase and private placement of Hartford, based on issuance of 24,193,548 preferred shares. The preferred shares will be convertible into common upon receipt of certain regulatory approvals.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Sullivan & Cromwell

Symantec Corp. to buy MessageLabs Ltd. for $695 million
Cupertino, Calif.-based Symantec, which provides of security, storage, and systems management products, agreed to acquire privately held Gloucester, UK-based MessageLabs, a provider of online messaging and web security services. The transaction , which is expected to close by the end of the year.
Seller financial advisor: Citigroup; JPMorgan Cazenove
Bidder financial advisor: Internal
Seller legal advisor: Heller Ehrman White & McAuliffe
Bidder legal advisor: Latham & Watkins

Tata Consultancy Services Ltd. to buy a 20-percent stake in Citigroup Global Services Ltd. from Citigroup Inc. for $505 million
Mumbai, India-based outsourcing firm Tata acquired the stake in Citigroup Global Services from New York-based Citigroup for cash in an acquisition expected to close in the fourth quarter.
Seller financial advisor: Citigroup
Bidder financial advisor: Merrill Lynch
Seller legal advisor: Skadden Arps Slate Meagher & Flom; Talwar, Thakore and Associates
Bidder legal advisor: AZB & Partners; Kelley Drye & Warren

Micron Technology Inc. to buy a 36-percent stake in Inotera Memories Inc. for $400 million
Boise, Id.-based semiconductor product provider Micron agreed to acquire the stake in Taoyuan,Taiwan-based Inotera, a manufacturer of dram memory, from Munich-based Qimonda AG, a supplier of dram memory product. The consideration represents an offer price of 12 cents a share, representing a discount of 64 percent.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

eBay to buy BilBasen ApS and Den Blaa Avis A/S for $390 million
eBay also acquired two privately held Danish online classifieds companies, BilBasen and Den Blaa Avis, for cash.
Seller financial advisor: Not Available
Bidder financial advisor: Deutsche Bank
Seller legal advisor: Horten
Bidder legal advisor: Cooley Godward Kronish

Stone Point Capital LLC to buy an undisclosed stake in Amherst Holdings LLC for $225 million
Greenwich, Conn.-based private equity firm Stone Point and a group of investors agreed to acquire the stake in McLean, Va.-based Amherst Holdings, a holding company for financial firms in the mortgage sector.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

source: mergermarket




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