M&A

M&A Roundup: Week Ending May 11

Alcoa's $32.6-billion bid for Alcan creates an unalloyed furor in the metals and mining sector—but builds suspicion that there's much more M&A ahead.
Roy HarrisMay 14, 2007

Last week’s biggest proposed deal by far — Alcoa Inc.’s $32.7-billion bid for Canadian rival Alcan — left the feel that there is more merger history to be written in the metals and mining sector in the near future. For now, Alcoa-Alcan lifted the total for North American M&A year-to-date to $709 billion, 43% above the $497.2-billion in dealmaking through May 11, 2006. But few stories were written about Alcoa’s acquisition prospects that didn’t also mention Rio Tinto PLC, BHP Billiton, and Xstrata PLC as parties looking for their own big aluminum deal. (Alcan says it is considering the offer.) Without Alcoa swallowing its neighbor to the north, either Alcoa, Alcan, or both were cited as likely targets.

The week’s second-largest deal similarly had the feel of the Canadian piece of a larger, global M&A puzzle. Thomson Corp. moved to divest its Thomson Learning and Nelson Canada subsidiaries to a private equity consortium for $7.8 billion. In the background, of course, was Thomson’s interest in acquiring Reuters, although no formal announcement had been made about that larger deal for the UK media company. Thomson’s divestiture was the largest of three private-equity buyouts among last week’s top ten deals.

Morgan Stanley should continue to remain the top-performing investment bank through May 11, according to data provided to CFO.com by mergermarket.
Morgan Stanley, the leader through the first quarter, served last week as the only adviser to the bidding party on the Alcoa/Alcan deal, and as adviser in two additional deals among the top four.

Alcoa to buy Alcan for $32.7 billion

Alcoa’s offer calls for a price of $73.25 per Alcan share, including $58.60 in cash and 0.4108 shares of Alcoa common, a 20-percent premium.
Seller financial advisor: Morgan Stanley
Bidder financial advisor: BMO Capital Markets; Citigroup; Goldman Sachs; Lehman Brothers
Seller legal advisor: Sullivan & Cromwell
Bidder legal advisor: Cleary Gottlieb Steen & Hamilton; Skadden Arps Slate Meagher & Flom; Stikeman Elliott

Apax Partners and OMERS Capital Partners to buy assets of Thomson Learning, and Nelson Canada, from Thomson Corp. for $7.75 billion

The price is all cash, and the transaction, subject to regulatory approvals and other conditions, is expected to close in the third quarter.
Seller financial advisor: Morgan Stanley; RBC Capital Markets
Bidder financial advisor: Evercore Partners; Atlas Advisors
Seller legal advisor: Shearman & Sterling; Torys
Bidder legal advisor: Simpson Thacher & Bartlett; Cahill Gordon & Reindel (Advising JPMorgan, Royal Bank of Canada, Citigroup, Royal Bank of Scotland Group, and UBS as debt providers)

BAE SYSTEMS plc to buy Armor Holdings Inc. for $4.95 billion

The definitive agreement calls for a price of $88 a share, a 7.1-percent premium. The transaction is expected to close in the third quarter.
Seller financial advisor: Goldman Sachs; Merrill Lynch
Bidder financial advisor: UBS
Seller legal advisor: Kane Kessler
Bidder legal advisor: Cravath Swaine & Moore

Fortress Investment Group LLC to buy Florida East Coast Industries Inc. for $3.33 billion

Terms of the definitive agreement call for a price of $62.50 a share plus a $21.50-a-share cash dividend, offering a premium of 13.3 percent. Closing is expected in the third quarter.
Seller financial advisor: Morgan Stanley
Bidder financial advisor: Not Available
Seller legal advisor: Greenberg Traurig
Bidder legal advisor: Skadden Arps Slate Meagher & Flom

Liberty Mutual Group Inc. to buy Ohio Casualty Corp. for $2.64 billion

The definitive agreement calls for a price of $44 a share, a premium of 32 percent. The transaction is expected to close in the third quarter.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Citigroup
Seller legal advisor: Sullivan & Cromwell; Vorys Sater Seymour & Pease
Bidder legal advisor: Debevoise & Plimpton

PrimeWest Energy Trust to buy Shiningbank Energy Income Fund for $1.32 billion

The transaction is in line with PrimeWest’s strategy of generating opportunities for better returns to the unitholders of both PrimeWest and Shiningbank. The transaction is expected to close by July.
Seller financial advisor: National Bank Financial
Bidder financial advisor: GMP Securities; Scotia Capital
Seller legal advisor: Gowling Lafleur Henderson
Bidder legal advisor: Stikeman Elliot

Pearson plc to buy Harcourt Assessment Inc. and Harcourt Education Ltd. from Reed Elsevier plc for $950 million

The cash transaction is in line with Pearson’s strategy of combining educational content and technology to offer new products and services, and will also allow it to enhance their international reach. Harcourt Assessment and Harcourt Education will also add new intellectual property, capabilities, and skills to Pearson. The transaction is expected to be completed by the second half.
Seller financial advisor: UBS
Bidder financial advisor: Internal
Seller legal advisor: Freshfields Bruckhaus Deringer
Bidder legal advisor: Herbert Smith, Gleiss Lutz, Stibbe; Morgan Lewis & Bockius

Universal American Financial Corp. to buy MemberHealth Inc.

for $630 million

The deal, excluding earnouts, is for $346.5 million in cash and $283.5 million in Universal American common. The acquisition, expected to close in the third quarter, will help Universal American strengthen its business by introducing additional value-oriented health products and services to the market.
Seller financial advisor: Banc of America Securities
Bidder financial advisor: Credit Suisse
Seller legal advisor: Squire, Sanders & Dempsey; Ropes & Gray
Bidder legal advisor: Dechert; Willkie Farr & Gallagher; Ropes & Gray; Cravath, Swaine & Moore; LeBoeuf, Lamb, Greene & MacRae; Weil, Gotshal & Manges

Littlejohn & Co. to buy Van Houtte Inc. for $541 million

The price of $22.56 per share represents a premium of 3.6 percent.
Seller financial advisor: CIBC World Markets; National Bank Financial
Bidder financial advisor: Credit Suisse
Seller legal advisor: Fasken Martineau
Bidder legal advisor: Stikeman Elliott

Bragg Communications Inc. to buy Persona Communications Inc. from Birch Hill Equity Partners Management Inc; CIBC Capital Partners; and HM Capital Partners LLC for $423 million

The transaction is subject to approval from the Canadian Radio-television and Telecommunications Commission, and is expected to be completed by September.
Seller financial advisor: CIBC World Markets
Bidder financial advisor: TD Securities
Seller legal advisor: Bennett Jones
Bidder legal advisor: Stewart McKelvey Stirling Scales

source: mergermarket