M&A

DealWatch

DealWatch Alltel and Western Wireless; News Corp and Fox Entertainment; Petters Group Worldwide and Polaroid; Movie Gallery and Hollywood Entertain...
Craig SchneiderJanuary 12, 2005

• Alltel has agreed to buy Western Wireless for about $6 billion in stock and cash. The deal will give Alltel about 1.4 million domestic wireless customers in 19 western and Midwestern states, making it the nation’s fifth-largest wireless carrier with 10 million domestic wireless customers in 33 states. It also adds 1.6 million international customers in six countries. In aggregate, Alltel will issue approximately 60 million shares of stock, pay approximately $1 billion in cash, and assume estimated net debt of $1.5 billion. The transaction is expected to close by mid-2005, according to a company statement.

• News Corp. announced that it would buy the rest of its majority-owned subsidiary Fox Entertainment that it doesn’t already own for about $6 billion in a stock swap. The deal would give News Corp. full ownership of its U.S. entertainment assets such as 20th Century Fox film studios, the Fox television network, and the Fox News Channel as well as its stake in satellite broadcaster DirecTV. News Corp. believes the deal will simplify its capital structure, said chief financial officer David DeVoe, according to Reuters, since after the News Corp. reincorporated in the United States late last year, “the logic for Fox no longer exists.” Added DeVoe, “We really took Fox public as a way to drive value into the stock.”

• Petters Group Worldwide agreed to acquire Polaroid Holding Co. for about $426 million, or $12.08 a share. Petters plans to finance the acquisition using a combination of cash on hand and third-party funds. Polaroid will become a wholly owned subsidiary of Petters and will no longer be publicly traded. Privately held Petters, through an affiliate, has been a Polaroid licensee for certain consumer electronics since 2002, and the deal will enable Petters to expand its imaging and consumer electronics business. The transaction is expected to be completed early in the second quarter.

• Movie Gallery entered into an agreement with Hollywood Entertainment to buy all the outstanding shares of Hollywood for about $850 million, or $1.2 billion including the assumption of $350 million of Hollywood’s debt. The transaction would create a combined company that would be the second-largest North American video retailer. Blockbuster threatened to launch a hostile bid for Hollywood last month, but it is unclear what the company will do next. “We remain very much interested in [Hollywood],” said Blockbuster CEO John Antioco, according to Reuters, “but we’re not going to pay more than we believe the company is worth.” The deal with Movie Gallery is expected to be completed in the second quarter. The transaction price represents a 30 percent premium over the $10.25 per share negotiated with investment firm Leonard Green & Partners L.P — a deal which is now terminated and will require Hollywood to pay up to $4 million in transaction expenses.

• BMC Software Inc. agreed to buy privately held Calendra, a provider of Web-based identity-management software, for about $33 million in cash. Calendra, headquartered in Paris, will enhance BMC’s identity management offerings with directory-centric information and a customizable delegated workflow environment. The deal also strengthens BMC’s abilities to enable customers to manage IT from a business perspective, according to the company. “This acquisition gives customers the capability to manage not only their identity infrastructure and identity directories, but also enhances their capabilities in the area of audit and compliance,” said Somesh Singh, software general manager in BMC’s identity management business unit, in a statement. The acquisition is expected to close in this month.

• Concord Communications agreed to acquire privately held Aprisma Management Technologies Inc. from Gores Technology Group LLC for approximately $93 million in cash. Aprisma’s software manages the availability of IT infrastructures and the business services that rely on them; Concord plans to expand its ability to deliver business service management software that maps IT services to business processes, measures the actual end-user experience, and manages the entire IT infrastructure. The acquisition is expected to close in the first quarter.

• Tut Systems agreed to buy Cosine Communications, in a stock-for-stock transaction valued at approximately $24.1 million, primarily to provide additional financial resources. While it will honor support agreements of Cosine’s existing customers, Tut does not expect to offer those products for sale to new customers. Rather, Tut Systems will incorporate Cosine’s intellectual property into its own IP portfolio. Tut Systems will not add employees or facilities as a result of the transaction, which is expected to close by March 31.

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