Dealmaking in North America plummeted 73 percent in the week ended Aug. 12 — the second straight period of sharp declines — offering further evidence of the severe damage to merger-and-acquisition activity being caused by tight credit.
The largest deals were Campbell Group Inc.’s $2.38-billion purchase of timber acreage from Temple-Inland Inc., and Pride International Inc.’s $1-billion sale of drilling and exploration businesses to Brazilian private equity interests. And the largest corporate combination was Bangalore, India’s Wipro Technologies information-technology company paying $529 million for Infocrossing Inc., an IT infrastructure firm based in Leonia, N.J.
In the last week of July — a much more typical seven-day period in what had started as a huge year for M&A — 9 of the top 10 deals exceeded $1 billion, and the top transaction approached $20 billion. Last week’s 34 deals were valued at a total of $6.49 billion, nudging year-to-date volume to $1.29 trillion, according to data provided to CFO.com by mergermarket.
There are few signs that downslide will ease any time soon, however, although at the recent weak levels, even one large deal could appear to turn things around.
Campbell Group to buy 1.55 million timberland acres from Temple-Inland for $2.38 billion
The agreement to calls for Austin, Texas-based Temple-Inland, a paper products and building materials maker, to receive payment almost entirely in installment notes from Portland, Ore-based Campbell. The sale by Temple-Inland, which had been under press from investor Carl Icahn, includes a 20-year fiber supply agreement for pulpwood and a 12-year fiber supply agreement for saw timber, with fiber to be purchased at market prices. Timberlands will continue to be managed and certified by a third-party. . The transaction is expected to close in fourth quarter.
Seller financial advisor: Goldman Sachs; Citigroup
Bidder financial advisor: Internal
Seller legal advisor: Sutherland Asbill & Brennan
Bidder legal advisor: Morrison & Foerster; Schwabe, Williamson & Wyatt
GP Investments Ltd. to buy Land Drilling and exploration and production services businesses from Pride International Inc. for $1,000 million
Under the terms of the agreement, the price is being funded by 60% debt and 40% equity by GP, the Brazilian private-equity fund.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Citigroup
Seller legal advisor: Baker Botts
Bidder legal advisor: Cravath Swaine & Moore
Capital One Financial Corp. to buy NetSpend Holdings Inc. from Gefinor Ventures and Oak Investment Partners for $700 million
Capital One believes the purchase of NetSpend Holdings, parent of prepaid-debt-card marketer and processor NetSpend Corp., will be accretive to earnings in its fiscal year 2009. NetSpend adds to Capital One’s distribution channel extending their solutions to the retail sector. The transaction is expected to close in the fourth quarter.
Seller financial advisor: JPMorgan; William Blair & Company
Bidder financial advisor: Deutsche Bank
Seller legal advisor: Baker Botts; Finn, Dixon & Herling (counsel to shareholder)
Bidder legal advisor: Gibson Dunn & Crutcher; Skadden Arps Slate Meagher & Flom (Advising Deutsche Bank)
Wipro Technologies to buy Infocrossing Inc. for $529 million
Wipro Technologies, part of Bangalore, India-based Wipro Ltd., is paying price $18.70 per share, a premium of 5.5 percent. Infocrossing would be merged with Wipro Technologies. The transaction is in line with Wipro’s strategy to enhance its market reach of the data center and mainframe capabilities and increase business-process and other products to healthcare customers. It also expects to enhance the shareholder returns and customer base of Infocrossing. Completion of the transaction is expected by the fourth quarter.
Seller financial advisor: Credit Suisse
Bidder financial advisor: Citigroup
Seller legal advisor: Gibson Dunn & Crutcher
Bidder legal advisor: Wilson Sonsini Goodrich & Rosati
Georgia-Pacific Corp. to buy Brewton mill of Smurfit Stone Container Corp. for $355 million
The manufacturer and distributor of paper and paper products and chemicals agreed to acquire Smurfit’s mill producing white top linerboard and bleached board from the integrated paper and packaging products company in a deal in line with Georgia-Pacific’s strategy to seek growth opportunities in the packaging business. This cost-competitive mill also complements its existing packaging business. This transaction is also in line with Smurfit-Stone’s divestment strategy since this mill no longer fits with the core business of Smurfit. This transaction is is expected to be completed by September.
Seller financial advisor: The Levin Group, L.P.
Bidder financial advisor: Not Disclosed
Seller legal advisor: Winston & Strawn
Bidder legal advisor: Internal
HealthSpring Inc. to buy Leon Medical Centers Health Plans Inc. for $355 million
The acquiring managed care organization has agreed to put 2.7 million shares into escrow as part of the transaction, which is subject to Leon adding two medical centers before November 2009, unless that date is extended. The transaction will be financed with HealthSpring’s current cash balance and with debt. HealthSpring committed to a $400-million senior secured credit facility with Goldman Sachs Credit Partners L.P. This acquisition is expected to add 15 cents to HealthSpring’s 2008 diluted earnings per share, and to strengthen HealthSpring’s position in the Florida Medicare Advantage market by providing future growth opportunities. The transaction is expected to closed before the end of 2007.
Seller financial advisor: Not Available
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Bilzin Sumberg Baena Price & Axelrod
Bidder legal advisor: Bass Berry & Sims
Ecolab Inc. to buy Microtek Medical Holdings Inc. for $261 million
The cleaning-and-sanitizing-products maker will purchase all the outstanding shares of Microtek, converting each to $6.30. If all the outstanding shares are converted, the total consideration will be $274m. The offer price of $6.30 represents a premium of 34 percent over the closing price $4.70 on 6 August 2007, one day prior to the announcement, and a premium of 39 percent over the closing price $4.52 on 6 July 2007, one month prior to the announcement. The transaction has already been approved by the boards of directors of both companies, and is subject to the Microtek shareholders approval, as well as regulatory approvals and other customary closing conditions. The closing is expected in the fourth quarter of 2007.
Seller financial advisor: AG Edwards
Bidder financial advisor: UBS
Seller legal advisor: Arnall Golden Gregory
Bidder legal advisor: Internal
NAL Oil & Gas Trust to buy Seneca Energy Canada Inc. from Seneca Resources Corporation for $233 million
Canada-based NAL agreed to acquire Seneca Energy from the Seneca Resources unit of National Fuel Gas Co., with the price being financed by a combination of new equity convertible subordinated debentures and bank debt. National Fuel expects to book a non-recurring gain of $120 million after tax. The purchase complements NAL’s production base and provides it with growth opportunities. Seneca will add 10.3 million barrels of oil, 157,246 acres of exploration lands, and tax pools that can be used to shelter future profits. The sale will enable of National Fuel to focus on Seneca’s properties in the Gulf of Mexico, Appalachia, and California. The transaction is expected to be completed by Sept. 30.
Seller financial advisor: Scotia Capital
Bidder financial advisor: RBC Capital Markets; BMO Capital Markets
Seller legal advisor: Bennett Jones
Bidder legal advisor: Osler Hoskin & Harcourt
F5 Networks Inc. to buy Acopia Networks Inc. from Accel Partners, Charles River Ventures, Goldman Sachs JBWere Pty Ltd, Meritech Capital Partners LP, Star Ventures, and Vesbridge Partners LLC for $210 million
F5, a provider of application traffic management software products, agreed to acquire Acopia, which develops design file virtualisation software for network attached storage from the private-equity owners, in line with F5’s F5’s strategy of “optimizing the application infrastructure from the core of the datacenter to the edge of the network.” The deal will help Acopia enhance its data management capabilities. The transaction is expected to close in mid-September.
Seller financial advisor: Internal
Bidder financial advisor:
Seller legal advisor: Skadden Arps Slate Meagher & Flom
Bidder legal advisor: Kirkpatrick & Lockhart Preston Gates Ellis
Symyx Technologies Inc. to buy MDL Information Systems Inc. from Elsevier Inc for $123 million
Symyx, a developer and supplier of experimentation methods, instrumentation, software, is buying a provider of informatics, database, and workflow related software solutions from publisher Elsevier, in a deal subject to a working capital adjustment. Symyx and MDL’s combined software and database operations are expected to generate $100m in revenues on a pro forma basis in 2008, and the acquisition is expected to be earnings accretive in 2008. The transaction aims to position Symyx as a leader in research-and-development informatics. Closing is expected during the fourth quarter.
Seller financial advisor: Deutsche Bank
Bidder financial advisor: Thomas Weisel Partners
Seller legal advisor:
Bidder legal advisor: