M&A Roundup

EMI and Warner Music; HM Capital and McClatchy; News Corp., Macquarie Bank, and PCCW; Houston Exploration and Jana Partners; Barr Pharmaceuticals a...
Helen ShawJune 29, 2006

• EMI Group and Warner Music Group are locked in a series of offers and counteroffers for each other; in the most recent round, the two companies have exchanged and rejected bids of about $4.6 billion. Both companies are also attempting to acquire BMG Music Publishing. In 2000, Time Warner abandoned efforts to acquire EMI so it could win approval for another merger, with AOL.

• HM Capital has partnered with publishing veteran Richard Connor to acquire the Wilkes-Barre, Pennsylvania Times Leader, the last of 12 newspapers sold by McClatchy following its acquisition of Knight Ridder. Terms of the deal were not disclosed.

• News Corp. has joined Australia’s Macquarie Bank in a $7 billion offer for the broadband television business of PCCW, a Hong Kong-based phone company owned by the Chinese government. U.S. private equity firm TPG-Newbridge Capital is also bidding for the assets. China Netcom, a major state-owned stakeholder in PCCW, has opposed a sale to foreign companies; the Chinese government has formed a panel to examine the proposals.

• Houston Exploration has rejected an unsolicited $1.8 billion bid by hedge fund Jana Partners. Jana, which currently owns 12.8 percent of the oil and natural gas producer, has expressed dissatisfaction with the company’s decision to use $530 million from asset sales to pursue onshore acquisitions instead of giving it to shareholders. Following Jana’s bid, Houston Exploration announced that it has engaged Lehman Brothers to help consider other ways to boost company value.

• U.S.-based Barr Pharmaceuticals plans to acquire Pliva, a Zagreb, Croatia-based drug manufacturer, by October. Pliva is backing the for $2.2 billion offer, which would create the world’s third-largest generic drug maker. Barr bid against Iceland’s Actavis Group, which made unsuccessful bids in March and April.

• Univision Communications, the largest U.S. Spanish-language broadcaster, has agreed to sell the company for approximately $12 billion to an investor group that includes Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group, Thomas H. Lee Partners, and billionaire Haim Saban. The group improved an earlier bid to defeat a rival consortium that included Mexico’s Grupo Televisa and a company controlled by Venezuelan investor Gustavo Cisneros.

• U.S.-based Phelps Dodge, the world’s third-largest producer of copper, has agreed to acquire Canadian nickel mining companies Inco and Falconbridge for $40 billion. The deal — which is contingent on Inco’s $20 billion acquisition of Falconbridge, announced last fall — could thwart a hostile bid for Inco by Canada-based Teck Cominco and a takeover bid for Falconbridge by Switzerland-based Xstrata.

• Arcelor, the world’s second-largest steel maker, has agreed to merge with Mittal Steel for about $33 billion. The deal ends six months of struggle between Arcelor managers, who originally favored a bid by Russia’s OAO Severstal, and shareholders who favored Mittal.

• Johnson & Johnson will acquire Pfizer’s consumer health unit, whose brands include Visine and Sudafed, for $16.6 billion in cash. The deal ends a four-month auction with competing bidders including GlaxoSmithKline, Bayer, and Reckitt Benckiser.

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