M&A Roundup

Hewlett-Packard and Mercury Interactive; Alcatel and Lucent Technologies; HCA and Bain Capital, Kohlberg Kravis Roberts, Merrill Lynch and Thomas F...
Helen ShawJuly 26, 2006

•Hewlett-Packard has agreed to acquire business-software maker Mercury Interactive for approximately $4.5 billion. This is the first large acquisition for H-P since its new chief executive Mark Hurd took the helm in 2005. Mercury, a Palo Alto, California-based company, is being investigated by regulators for its options-granting practices, which has already caused the company to restate profits.

•Paris-based Alcatel, a communications equipment maker, has received permission from the European Union to proceed with its plans to acquire its smaller American rival, Lucent Technologies. American regulators have already approved the deal. Lucent shareholders will vote on the transaction on September 7.

•HCA, the largest U.S. hospital chain, has agreed to a $33 billion buyout from Bain Capital, Kohlberg Kravis Roberts, Merrill Lynch, and HCA co-founder Thomas Frist Jr. The cash and assumed debt buyout is the largest ever, surpassing the $31.1 billion buyout of RJR Nabisco by KKR in 1989. The hospital chain first went public in 1969, completed a $5.1 billion leveraged buyout in 1988, and went public again in 1992.

•Advanced Micro Devices, the second-largest semiconductor market worldwide, has agreed to acquire ATI Technologies for $5.4 billion in cash and stock. ATI produces computer-graphics chips that are used in wireless phones, digital televisions, computers, and videogame consoles. The deal is Advanced Micro Devices’ largest acquisition to date and is viewed as a challenge to its rival Intel, which dominates the semiconductor market.

•Progress Energy, a U.S. utility, has agreed to sell its Winchester Energy and related natural gas businesses to Texas-based EXCO Resources for $1.2 billion. The related businesses include Winchester Production Company, Westchester Gas Company, Texas Gas Gathering, and Talco Midstream Assets. The transaction is expected to close in the fall.

•HSBC Holdings, the British bank, has agreed to acquire Grupo Banistmo, Panama’s largest bank, for $1.77 billion in cash. The acquisition, HSBC’s largest in Latin America, will give HSBC 200 branches in Panama, Nicaragua, Honduras, El Salvador, Costa Rica, and Colombia.

•An overwhelming majority of BellSouth and AT&T shareholders voted to approve AT&T’s planned acquisition of BellSouth. The $67 billion deal, which is still subject to regulatory approval, is expected to be complete in the fall.