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Rayovac and United Industries; Archipelago and PCX Holdings; Blockbuster and Hollywood Entertainment; Gartner and Meta Group; more.
Craig Schneider, CFO.com | US
January 5, 2005
• Rayovac Corp. agreed to acquire privately held United Industries for about $476 million in cash and stock as well as the assumption of $880 million in debt. The deal, which would extend Rayovac's household product offerings into the lawn-and-garden and specialty-pet-supply categories, will also reduce worldwide battery sales as a share of total combined pro forma revenue to 40 percent from the current 67 percent. Rayovac will issue 13.75 million shares of common stock, along with additional consideration of $70 million in cash, to United Industries' current shareholders. It plans to enter into a new senior secured credit facility and issue senior subordinated notes in connection with the acquisition, which is expected to close in February.
• Archipelago Holdings Inc., the parent company of the Archipelago Exchange (ArcaEx), will acquire PCX Holdings (PCX), parent company of the Pacific Exchange and PCX Equities, for about $50.69 million, or approximately $83.74 per share. The deal brings together the Archipelago's all-electronic trading of equity securities and PCX's options products, expanding and diversifying Archipelago's business lines. Archipelago Holdings will also acquire the self-regulatory organization of the PCX, as well as its 20 percent ownership interest in the Options Clearing Corp., according to a company statement. Currently, ArcaEx operates as the exclusive equity trading facility of the PCX.
• Blockbuster Inc. announced that it intends to launch a hostile bid for Hollywood Entertainment Corp. for $11.50 per share in cash if Hollywood's board does not negotiate an acquisition with the video retailing giant by mid-January. Blockbuster reiterated its willingness to consider an offer greater than the current $1 billion, including debt, if the board cooperates and financials support a higher offer. The announcement trumps Hollywood's current merger agreement with buyout firm Leonard Green Partners and Hollywood chairman Mark Wattles, valued at $10.25 per share, but still falls short of the target's market capitalization, which stood at $12.97 per share at the close of trading on Monday. Movie Gallery also has an undisclosed bid for the retail chain.
• Gartner Inc., a provider of research and analysis on information technology, agreed to buy Meta Group, a rival IT research and consulting firm, for $10 per share in cash, or approximately $162 million. The combination will yield several operational efficiencies, according to a Gartner statement, including the addition of a META Group sales team that is already "highly conversant" in Gartner's product and service offerings. Gartner intends to finance the acquisition through cash on hand and through an existing line of credit. The transaction is expected to close in the second quarter of 2005.
• Investor group Saguaro Utility Group L.P. ended its bid to acquire UniSource Energy after the Arizona Corporation Commission rejected the proposed transaction. Under the terminated agreement, UniSource would have been acquired for $25.25 per share by an affiliate of Saguaro; the affiliate comprised general partner Sage Mountain L.L.C. and limited partners including Kohlberg Kravis Roberts & Co. L.P., J.P. Morgan Partners L.L.C., and Wachovia Capital Partners. The terminated agreement also obliges UniSource to reimburse $7 million of transaction-related expenses incurred by Saguaro.
• Chesapeake Energy Corp. agreed to acquire privately held, Tulsa-based BRG Petroleum Corp. and related partnerships for $325 million in cash. The deal is expected to close on February 1, 2005. Chesapeake intends to finance the acquisition through cash on hand and by using its bank credit facility. According to a company statement Chesapeake also expects to expand its bank credit facility to $1 billion and to extend the maturity of the facility to 2010.
• Storage-management software provider EMC Corp. agreed to acquire privately held Smarts Inc., which makes event-automation and network-management software, for approximately $260 million in cash. The acquisition is expected to be completed in the first quarter of 2005, according to an EMC statement.
• Oracle Corp. announced that PeopleSoft stockholders gave Oracle control of the company after about 75 percent tendered their shares of outstanding stock. Subsequently, Oracle designated four representatives to serve on PeopleSoft's board of directors and fired several executives, including chief financial officer Kevin Parker. Replacing him is Harry You, CFO of Oracle since July 2004.