Dealmaking in 2007 has hit a distinct plateau, though it is at a far lower level than the $50-billion-plus weekly totals that became almost routine during the year’s first half.

Our regular review of last week’s top ten deals in North America reveals that mergers and acquisitions totaled $8 billion, up from $6.49 billion the prior week, while bringing year-to-date activity to $1.31 trillion, according to data provided to by mergermarket.

That stratospheric-seeming total for the year to date was achieved thanks to a robust first-half of dealmaking that reflected easy credit markets and the hunger of private equity to tap them. But the gap between this year’s total and last year’s $909.81-billion total through Aug. 19 no longer seems quite so vast as year-to-year gaps earlier in the year, when weekly deal activity sometimes knocked on the door of $100 billion.

Four deals topped $1 billion, led by real-estate investment trust Behringer Harvard REIT I Inc. buying IPC US Real Estate Investment Trust for $1.4 billion, and Netherlands-based Aegon NV picking up two Merrill Lynch life-insurance units for $1.3 billion. The third-largest was Orlando-based Darden Restaurants Inc.’s $1.26-billion purchase of Atlanta-based RARE Hospitality International Inc., which operates LongHorn steakhouses and the Capital Grille Bugaboo Creek restaurant chains.

Behringer Harvard to buy IPC US Real Estate Investment Trust for $1.4 billion

The $9.75-a-share offer price represents a premium of 4.8 percent over IPC’s $9.30 per share price one day before the announcement, although it is a discount of 12 percent from the prevailing price a month prior. The price will include any declared and unpaid monthly distributions and 6.67 cents per unit, pro rated on the basis of the number of days that have passed in the month in which the closing occurs. Closing is expected in late October or early November.
Seller financial advisor: Banc of America Securities; RBC Capital Markets
Bidder financial advisor: Internal
Seller legal advisor: Davies Ward Phillips & Vineberg
Bidder legal advisor: Baker & McKenzie; Shefsky & Froelich

Aegon to buy Merrill Lynch Life Insurance Co. and ML Life Insurance Co. of New York from Merrill Lynch for $1.3 billion

Aegon, a life-insurance and pension firm agreed to acquire the Merrill Lynch insurance companies for cash, with Merrill Lynch continuing to serve the insurance needs of clients through its core distribution and advisory capabilities. Merrill Lynch also will continue to offer its flagship Merrill Lynch Investor Choice Annuity product, although Aegon is acquiring it as well as part of the transaction. Under the terms of the agreement, Aegon’s Transamerican companies will provide support to the Merrill Lynch financial advisor network. The transaction is expected to close before the end of the fourth quarter.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Internal
Seller legal advisor: Debevoise & Plimpton
Bidder legal advisor: LeBoeuf, Lamb, Greene & MacRae

Darden Restaurants to buy RARE Hospitality for $1.26 billion

The tender offer for RARE, agreed to by both boards, provides for a price of $38.15 per share of RARE, a premium of 42.6 percent. RARE operates and franchises 274 LongHorn Steakhouse outlets, 26 Capital Grilles, and 31 Bugaboo Creek Steak Houses. Darden is a casual dining restaurant company that owns and operates the Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones Barbeque & Grill, and Seasons 52 restaurant chains in the U.S. and Canada. The tender offer is expected to close in October.
Seller financial advisor: Wachovia; RBC Capital Markets
Bidder financial advisor: Lehman Brothers; Bank of America
Seller legal advisor: Alston & Bird
Bidder legal advisor: Wachtell Lipton Rosen & Katz; Jones Day (Advising Lehman Brothers)

Fifth Third Bancorp to buy First Charter Corp. for $1.07 billion

Charlotte-based First Charter signed a definitive agreement to be acquired by Cincinnati-based Fifth Third for $31 a share in cash and/or stock, a premium of 53 percent. The offer is an elective of cash and stock, subject to proration, with an aggregate consideration to be 30 percent cash and 70 percent Fifth Third common. The transaction is expected to close in next year’s first quarter.
Seller financial advisor: Keefe Bruyette & Woods
Bidder financial advisor: McColl Partners; Goldman Sachs
Seller legal advisor: Helms Mulliss & Wicker
Bidder legal advisor: Internal

El Paso Exploration & Production Co. to buy Peoples Energy Production Co. from Peoples Energy Corp. for $875 million

El Paso, a provider of natural gas and related energy products and a wholly owned subsidiary of El Paso Corp., agreed to acquire PEPCO in a cash deal. Houston-based Peoples Energy Corp. is a wholly owned subsidiary of Integrys Energy Group Inc. El Paso will finance the acquisition with debt in the short term, and with proceeds from the divestiture program in the long term. The transaction is expected to generate net after-tax proceeds of at least $600 million for Integrys, which it will use to reduce short-term debt. The deal is in line with the company’s strategy of selling non-core assets to reduce business risk profile, and is expected to be completed by Sept. 30.
Seller financial advisor: JPMorgan
Bidder financial advisor: Internal
Seller legal advisor: Foley & Lardner; Thompson & Knight
Bidder legal advisor: Andrews Kurth

RF Micro Devices Inc. to buy Sirenza Microdevices Inc. for $841 million

The definitive agreement calls for each share of Broomfield, Colo.-based Sirenza to be exchanged at a rate of $5.56 per share in cash and 1.7848 of RF Micro share, representing a 17.4-percent premium. RF Micro, based in Greensboro, N.C., designs and manufactures high-performance radio systems and systems that drive mobile communications. The strategic acquisition brings together two companies with leadership positions and considerable expertise in similar areas, and will combine their management teams. The post-closing board of directors of the combined company is expected to consist of nine RF members and two Sirenza members. The transaction is expected to close in RF’s third fiscal quarter ending Dec. 29.
Seller financial advisor: Banc of America Securities
Bidder financial advisor: Merrill Lynch
Seller legal advisor: Wilson Sonsini Goodrich & Rosati
Bidder legal advisor: Cooley Godward Kronish

International Paper Co. to buy stake in Ilim Holding for $650 million

The deal calls for International Paper, the manufacturer of paper, packaging, and forest products, has agreed to acquire 50 percent in Ilim Holding S.A., the Switzerland-based parent company of OAO Ilim Pulp Group, the Russian pulp and paper producer. Ilim Group includes Ilim Pulp’s Kotlas Pulp and Paper Mill, Bratsk Wood Industrial Complex and Ust-Ilimsk Wood Industrial Complex. The mills produce more than 2.5 million tons of market pulp, uncoated papers, and packaging annually. The acquisition is in line with International Paper’s strategy of investing cash from operations and additional debt, approximately $1.5 billion, in Ilim’s four mills over approximately five years. Ilim Pulp’s wood-products enterprises will not be integrated into the deal. Ilim Pulp’s board of directors will continue will include four members each from International Paper and the Ilim Group. The deal, which received approval from the Russian Federal Antimonopoly Service in June, is expected to close early in the fourth quarter.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Skadden Arps Slate Meagher & Flom

Kazatomprom JSC to buy a 10-percent stake in Westinghouse Electric Co. LLC from Toshiba Corp. for $540 million

The purchase by Kazatomprom, the state-owned energy company of Kazakhstan, leaves Japan’s electronic goods maker Toshiba holding a stake of 67 percent in Westinghouse, a provider of products and services for the nuclear energy industry. Engineering company Shaw Group Inc. continues to hold a 20-percent stake, with Japanese heavy apparatus manufacturer IHI holding the remaining 3 percent. The sale to Kazatomprom is expected to help enhance Toshiba’s foothold in the global nuclear power business.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Citrix Systems Inc. to buy XenSource Inc. for $500 million

Ft. Lauderdale, Fla.-based Citrix, a developer of computer access infrastructure systems, has agreed to pay a combination of cash and stock, which includes the assumption of approximately $107 million in unvested stock options, to acquire Palo Alto, Calif.-based virtualization software vendor XenSource. Citrix will finance the transaction partly through issuance to XenSource holders of about 5.6 million shares of common. If certain conditions set forth in the agreement are satisfied, the number of shares to be issued could be increased to about 7.9 million shares. For purposes of the acquisition, the stock consideration is based on a per-share value for Citrix’s common stock of $36.18. The acquisition is part of Citrix strategy to enter adjacent server and desktop virtualization markets. The combination of Citrix and XenSource is expected to bring together customer, technical, channel, and go-to-market synergies. Following the acquisition, the XenSource team and products would form the core of the new Citrix Virtualization & Management Division to build and grow these businesses. The acquisition is expected to add about $1 million in revenue and $3 million in cost of revenues and operating expenses to fiscal year 2007. It is also expected to add about $50 million in revenue and from $60 million to $70 million in total cost of revenues and operating expenses for fiscal 2008. The acquisition, approved by both boards, is expected to close in the fourth quarter.
Seller financial advisor: Not Available
Bidder financial advisor: Banc of America Securities
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Thomas & Betts Corp. to buy Lamson & Sessions Co. for $452 million

Thomas & Betts, a manufacturer of electrical components, will pay $27.30 a share fore Lamson & Sessions, including special dividend of 30 cents per share at closing, which is expected by the end of the year. The offer price represents a premium of 34.5 percent over the price a day before the announcement, but a discount of 1.82 percent from the price one month earlier. The acquisition is in line with Thomas’s expansion strategy of enhancing its product portfolio and leveraging its business infrastructure to enhance its networking in the market. The transaction is expected to be earnings accretive by contributing approximately $500 million to annual revenues, with earnings per share expected to increase by 15 cents to 20 cents.
Seller financial advisor: Not Available
Bidder financial advisor: Perella Weinberg Partners
Seller legal advisor: Jones Day
Bidder legal advisor: Davis Polk & Wardwell

source: mergermarket

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