M&A Roundup

China Construction Bank and Bank of America Asia; Rite Aid and Jean Coutu Group; IBM and Internet Security Systems; Weyerhaeuser and Domtar; RusAl ...
Helen ShawAugust 24, 2006

•China Construction Bank Corp. has agreed to acquire the Hong Kong-licensed Bank of America Asia for $1.24 billion in cash. The deal gives China’s third-largest lender 17 outlets in Macau and Hong Kong. Last year, Bank of America purchased a 9 percent stake on China Construction Bank and agreed to expand in the China market in conjunction with its partner.

•Rite Aid Corp. has agreed to acquire the Eckerd and Brooks drugstore chains from Jean Coutu Group for $2.55 billion in cash and stock. The deal, which is subject to regulatory approval, will give Rite Aid another 1,800 stores. The Jean Coutu Group will own about 30 percent of Rite Aid, which is the number three drugstore chain in the U.S.

•IBM has agreed to acquire Internet Security Systems, a network monitoring service, for $1.3 billion in cash. The deal would give IBM products and technical consultants that protect against data theft. The transaction, which is subject to shareholder approval, is expected to close in the fourth quarter of 2006.

•U.S.-based Weyerhaeuser, the largest lumber company worldwide, will merge its fine-paper unit with Domtar, a Canadian paper producer, in a $3.3 billion deal that will give Weyerhaeuser shareholders a 55 percent stake in the new company and a majority of the board. The new company will be North America’s largest producer of paper used in copy and fax machines.

•Russian president Vladimir Putin has expressed support for a merger between RusAl and Sual, two of the largest aluminum producers in the world. The Russia-based companies have been in talks for 18 months and have not announced an agreement yet. A merger between the two companies would create the largest aluminum group worldwide.

•Hedge fund Firebrand Partners and Harbinger Capital Partners, an investment firm that targets distressed firms, have purchased a 10.2 percent stake in Gateway and requested to meet with Gateway chief executive officer Rick Synder. The investors aim to improve the shareholder value of the company, which has experienced declining revenue and stock values.

•Dublin, Ireland-based CRH, the third-largest supplier of building materials in Europe, has agreed to acquire the highway-construction unit of Covington, Kentucky-based Ashland for $1.3 billion in cash. CRH, already the largest producer of asphalt in the U.S., will gain the unit’s rock and asphalt divisions in 14 U.S. states.

•LogicaCMG, a computer services firm in the U.K., has agreed to acquire Sweden-based WM-data for $1.67 billion. Through the deal, LogicaCMG, which provides computer systems, payroll and other services for companies, would gain Nordic customers including Ericsson, Mokia Oyj, and Saab.