M&A Roundup: Week Ending April 20

Buying or selling, it was all about private equity, as the LBO of Sallie Mae led the way, Blackstone's sale of Extended Stay America followed, and ...
Roy HarrisApril 24, 2007

Private equity didn’t dominate the dealmaking last week. It owned it, either as buyers or sellers. Led by the $24.7-billion leveraged buyout of student-loan provider SLM Corp., better known as Sallie Mae—the fourth-largest North American deal so far this year when announced—the week’s activity also included Blackstone Group Holdings LLC’s $8-billion sale of hotelier Extended Stay America Inc. to a private real estate company, Lightstone Group LLC.

Exit deals were popular, with Welsh, Carson, Anderson & Stowe’s $2-billion sale of AmeriPath Inc. to Quest Diagnostics Inc. joining the Extended Stay deal. All 10 of the week’s top deals were valued at more than $1 billion, according to data provided to CFO.com by mergermarket, and both UBS and Merrill Lynch served as adviser in three of them.

JC Flowers & Co.; Friedman Fleischer & Lowe LLC; Bank of America Corp.; and J.P. Morgan Chase & Co. to buy SLM for $24.7 billion.

The definitive agreement for Sallie Mae to be acquired calls for a $60-a-share price per SLM share. The offer provides a 28.3 percent premium, and is expected to close in late 2007.
Seller financial advisor: Greenhill & Co.; Sandler O’Neill & Partners; UBS
Buyer financial advisor: Banc of America Securities; J.P. Morgan
Seller legal advisors: Covington & Burling (Advising Greenhill & Co.); Davis Polk & Wardwell; Debevoise & Plimpton
Buyer legal advisors: Sullivan & Cromwell; Wachtell Lipton Rosen & Katz.

Lightstone Group to buy Extended Stay America from Blackstone Group for $8 billion

The deal by affiliates of Lightstone for Extended Stay is said to be the largest hotel deal ever that doesn’t involve casinos. Completion is expected within two months.
Seller financial advisor: Bear, Stearns & Co.; Blackstone Group Holdings; Banc of America Securities; Merrill Lynch
Buyer financial advisor: Citigroup; Wachovia; Lehman Brothers
Seller legal advisors: Simpson Thacher & Bartlett
Buyer legal advisors: Dechert

Teekay Shipping Corp. and A/S Dampskibsselskabet TORM to buy OMI Corp. for $2.4 billion

The definitive agreement for OMI, which operates ocean tankers, calls for a $29.25-a-share price, a 5.4-percent premium. The deal is expected to close in the second quarter.
Seller financial advisor: Perella Weinberg Partners; Fearnley Fonds
Buyer financial advisor: Internal
Seller legal advisors: Jones Day
Buyer legal advisors: White & Case; Perkins Coie

Quest Diagnostics to buy AmeriPath from Welsh Carson for $2 billion

The price for Quest includes $770 million of assumed debt. Quest plans to cover the consideration and refinance existing AmeriPath’ debt from the proceeds of a new five-year $1.5-billion term loan and a new $1-billion one-year bridge loan underwritten by Morgan Stanley. The transaction is expected to close during the second quarter.
Seller financial advisor: Citigroup
Buyer financial advisor: Morgan Stanley
Seller legal advisors: Ropes & Gray
Buyer legal advisors: Shearman & Sterling; Mayer Brown Rowe & Maw (Advising Morgan Stanley)

Farallon Capital Management affiliate to buy Affordable Residential Communities Inc. for $1.8 billion

Terms call for American Riverside Communities LLC, the Farallon affiliate, to acquire the manufactured-home community business for a price that includes $540 million to $545 million in cash, net of debt and preferred stock. The price is equivalent to between $9.35 and $9.40 per fully diluted share. The deal is expected to close by year-end.
Seller financial advisor: Sandler O’Neill & Partners
Buyer financial advisor: Merrill Lynch
Seller legal advisors: Skadden Arps Slate Meagher & Flom
Buyer legal advisors: Paul Weiss Rifkind Wharton & Garrison

Hellman & Friedman LLC to buy Catalina Marketing Corp. for $1.6 billion

The $32.50-a-share price for Catalina offers a premium of 2.4 percent. The sale to Hellman and Friedman, which the prior week took part in the sale of DoubleClick to Google for $3.1 billion, is expected to close in the third quarter of 2007.
Seller financial advisor: Goldman Sachs; Lazard
Buyer financial advisor: Morgan Stanley; Bear, Stearns & Co
Seller legal advisors: Cravath Swaine & Moore (Advising Goldman Sachs); Paul Hastings Janofsky & Walker
Buyer legal advisors: Simpson Thacher & Bartlett

Essar Global Ltd. to buy Algoma Steel Inc. for $1.5 billion

The Canadian steelmaker was sold to Essar, of India, for $49.52 a share, a premium of 3.5 percent. Algoma expects that shareholders will approve the arrangement at their June meeting, with the deal closing shortly thereafter.
Seller financial advisor: Genuity Capital Markets
Buyer financial advisor: UBS
Seller legal advisors: Torys
Buyer legal advisors: Stikeman Elliott

Alinda Capital Partners LLC to buy UE Waterheater Income Fund for $1.5 billion

The private-equity deal for the Toronto-based income trust, expected to close by June, allows Union Energy LP to develop and gain access to additional resources and benefit its development.
Seller financial advisor: Genuity Capital Markets
Buyer financial advisor: RBC Capital Markets
Seller legal advisors: Borden Ladner Gervais
Buyer legal advisors: Torys

Sherritt International Corp. to buy Dynatec Corp. for $1.4 billion

The transaction is expected to strengthen Sherritt Metals’ global nickel position and result in significant capital build-out, operating, and knowledge-transfer synergies.
Seller financial advisor: Merrill Lynch; GMP Securities
Buyer financial advisor: National Bank Financial
Seller legal advisors: Davies Ward Phillips & Vineberg; Aird & Berlis
Buyer legal advisors: Torys

Apollo Investment Corp. to buy Innkeepers USA Trust for $1.3 billion

In its latest hotel deal, Apollo will pay a 7.9-percent premium for Innkeepers, with a closing expected in the second quarter.
Seller financial advisor: Lehman Brothers; UBS
Buyer financial advisor: JF Capital Advisors
Seller legal advisors: Covington & Burling (Advising UBS); Wachtell Lipton Rosen & Katz
Buyer legal advisors: Skadden Arps Slate Meagher & Flom

source: mergermarket