M&A

Deals: You Call This a Rally?

In our M&A Roundup for the week ended Sept. 9, total North America deal values and numbers are up, but still far below first-half levels.
Roy HarrisSeptember 10, 2007

Dealmaking rallied a bit, as both the number of transactions and overall merger-and-acquisition volume increased last week. But blockbuster deals and leveraged buyouts, which sent M&A into the stratosphere during the year’s first half, remained on summer holiday — courtesy of the credit crunch that began punishing the markets around mid-year.

There were 52 North American deals proposed during the week ended September 9, according to data provided to CFO.com by mergermarket. The data focuses on the top 10 deals, which in last week’s case were led by Royal Bank of Canada’s $1.63 billion agreement to buy Alabama National BanCorp.

The second-largest deal was the $1.62-billion acquisition of several Boise Cascade properties from private-equity company Madison Dearborn Partners LLC, which bought out Boise Cascade’s paper and timber business in 2004 and tried to launch a $400 million initial public offering for it the next year. (It eventually pulled the IPO back for lack of investor interest.) The Boise Cascade paper businesses were purchased last week by Aldabra 2 Acquisition Corp., a special purpose acquisition company (SPAC), also known as a blank check corporation, because investors trust management to take a “shell” operation and add a business by acquisition.

Only two other deals during the week were valued at more than $1 billion, although the value of all deals rose to $9.46 billion from $5.52 billion the week before. Year-to-date, 2007 dealmaking stands at $1.33 trillion, up from $1 trillion through September 9, 2006. Again in the week, there were no leveraged buyouts for which dollar values were reported, although the 52 deals did include one LBO that did not have a value attached.

Royal Bank of Canada to buy Alabama National BanCorp. for $1,630 million

The definitive agreement sets a price of $80 per share for Alabama National, or a 50.6-percent premium for the Birmingham-based bank holding company with 102 banking offices and six long/mortgage origination offices. The transaction is expected to close in early 2008.
Seller financial advisor: Keefe Bruyette & Woods
Bidder financial advisor: RBC Capital Markets
Seller legal advisor: Maynard, Cooper & Gale
Bidder legal advisor: Sullivan & Cromwell

Aldabra 2 Acquisition Corp. to buy Boise Cascade Transportation Holdings LLC, Boise Packaging & Newsprint LLC, and Boise White Paper LLC from Madison Dearborn Partners LLC for $1.62 billion

The Aldabra 2 SPAC, based in New York, will pay $1.34 billion in cash and issue its shares worth $325 million. Aldabra 2 will raise debt financing of $946 million to help fund the acquisition. Afterward, Aldabra 2 will be renamed Boise Paper Co. and apply for Big Board listing. The companies had combined turnover of $2.28 billion and EBITDA of $231.7 million for the 12 months ended June 30. Alexander Toeldte, vice president of Boise Cascade at Madison, will become CEO of Boise Paper. The transaction is expected to close by the first quarter of 2008.
Seller financial advisor: JPMorgan; Goldman Sachs
Bidder financial advisor: Lazard; Pali Capital
Seller legal advisor: Kirkland & Ellis
Bidder legal advisor: Kramer Levin Naftalis & Frankel

Canadian Pacific Railway Ltd. to buy Dakota, Minnesota, and Eastern Railroad from Candover Investments plc and Electra Private Equity Plc for $1.48 billion

Candover and Electra are the London, UK-based private equity firms that first invested more than 20 years ago in Dakota, Minnesota, and Eastern (DM&E), based in Sioux Falls, South Dakota. In addition to the $1.48 billion, the parties have agreed on a contingent payment of about $1 billion when certain projects are completed by December 31, 2025. DM&E employs about 1,000, and generated freight revenues of $258 million in 2006. Freight revenues are expected to reach $280 million this year. The acquisition is expected to be complete within 30 to 60 days.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Morgan Stanley; RBC Capital Markets
Seller legal advisor: Shearman & Sterling
Bidder legal advisor: Sidley Austin

MarkWest Energy Partners LP to buy Markwest Hydrocarbon Inc. for $1.22 billion

Denver-based MarkWest Energy Partners L.P is a natural-gas processor with midstream and gas-transmission assets. Its agreement is to acquire Markwest Hydrocarbon, the natural gas producer for cash and stock valued at $61.15 per share, a premium of 23 percent. Payment will be with $240 million in cash and the issuance of 15.4 million shares of MarkWest Energy Partners at $32.07 each. The management team of MarkWest Energy Partners will retain their position in the new combined company. Additionally, three members of the MarkWest Hydrocarbon board will become directors of the general partner of MarkWest Energy. The transaction conforms with MarkWest Energy’s strategy of eliminating the incentive distribution rights and reducing the future cost of equity capital. Completion of the transaction is expected in late 2007 or early 2008.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Lehman Brothers; RBC Capital Markets
Seller legal advisor: Akin Gump Strauss Hauer & Feld; Hogan & Hartson; Richards Layton & Finger
Bidder legal advisor: Andrews Kurth; Morris Nichols Arsht & Tunnell; Vinson & Elkins

Copano Energy/Rocky Mountains LLC to buy Cantera Natural Gas Inc. from Cantera Resources Holdings LLC for $675 million

Houston-based Copano Energy/Rocky Mountains agreed to acquire the unit of Englewood, Colorado-based Cantera Resources Holdings for $562.5 million in cash and $112.5 million through 3.24 million of its Class D units. Funding of the cash portion will be through $335 million from a private placement of its equity shares and from debt taken from Bank of America. The acquisition will help Copano expand operations in the Rocky Mountains, and is expected to close in the fourth quarter.
Seller financial advisor: Lehman Brothers
Bidder financial advisor: Morgan Stanley
Seller legal advisor: Davis Polk & Wardwell
Bidder legal advisor: Vinson & Elkins

Drilling and Wireline Solutions Ltd. to buy Sondex Plc for $594 million

Drilling and Wireline, a London-based unit of General Electric Co., agreed to by Hampshire, UK-based Sondex for $9.28 a share in cash, a premium of 8.9 percent over its August 31 closing price, and of 35.5 percent over the price on August 30, the last trading day prior to the announcement of the deal. Financing will be through existing cash resources currently available within the GE Group. After the offer, Sondex will operate as part of GE Energy’s Optimization and Control business.
Seller financial advisor: Investec Investment Banking
Bidder financial advisor: Credit Suisse
Seller legal advisor: Nabarro
Bidder legal advisor: Slaughter and May

National Penn Bancshares Inc. to buy KNBT Bancorp for $441 million

Boyertown, Pennsylvania-based National Penn Bancshares will acquire Bethlehem, Pennsylvania-based KNBT at $16.81 per share, a premium of 26.2 percent. KNBT holders will own 34.8 percent of the enlarged entity, named National Penn Bancshares. National Penn president and CEO Glenn E. Moyer continue in his position with the merged entity and KNBT president an CEO Scott V. Fainor will be senior executive vice president and COO of National Penn Bancshares and CEO of National Penn Bank. The transaction is expected to close at the end of the 2008 first quarter.
Seller financial advisor: Sandler O’Neill & Partners
Bidder financial advisor: Janney Montgomery Scott
Seller legal advisor: Elias Matz Tiernan & Herrick
Bidder legal advisor: Reed Smith

Crescent Point Energy Trust to buy Innova Exploration Ltd. for $400 million

Calgary, Alberta-based Crescent Point’s offer for Calgary-based Innova is for $7.16 per share in cash, a premium of 22 percent. Crescent Point will also assume Innova’s net debt of approximately $37 million. The acquisition would increase Crescent’s presence in the Viewfield Bakkenlight oil resource play in southeast Saskatchewan and reduce costs. Crescent Point has announced it has entered into an agreement, on a bought deal basis, with underwriters co-led by BMO Capital Markets and Scotia Capital Inc., and including CIBC WorldMarkets Inc., RBC Capital Markets, FirstEnergy Capital Corp., TD Securities Inc., GMP Securities L.P, and Tristone Capital Inc., to offer 8.9 million trust units at $17.60 per trust unit to raise proceeds of $156.55 million. Closing is expected to occur about September 25.
Seller financial advisor: GMP Securities
Bidder financial advisor: BMO Capital Markets
Seller legal advisor: Bennett Jones
Bidder legal advisor: McCarthy Tetrault

Cognos Inc. to buy Applix Inc. for $306 million

The Ottawa-based business intelligence and performance management software company agreed to pay $17.87 a share for Westborough, Massachusetts-based Applix, a premium of 24.3 percent. The price is net of Applix cash on hand. Applix products will complement Cognos’s in the area of financial performance management, adding performance analytics to the offerings from Cognos and enhancing customers’ abilities to analyze and optimize financial performance. Cognos expects the acquisition to be completed in the fourth calendar quarter.
Seller financial advisor: Bear, Stearns & Co
Bidder financial advisor: Lehman Brothers
Seller legal advisor: WilmerHale
Bidder legal advisor: Bingham McCutchen

Yahoo! Inc. to buy Blue Lithium Inc. from 3i Group plc and Walden VC for $300 million

Sunnyvale, California-based Yahoo! Would pay all cash for San Jose-based Blue Lithium, an online advertising network. 3i Group plc is a London-based private equity firm, and Walden Venture Capital is in San Francisco. BlueLithium will become a wholly-owned subsidiary of Yahoo!, letting it leverage BlueLithium to extend its offering of data analytics, advanced targeting, and media buying strategies. Completion is expected in the fourth quarter of 2007.
Seller financial advisor: Evercore Partners
Bidder financial advisor: Internal
Seller legal advisor: Wilson Sonsini Goodrich & Rosati; Ropes & Gray; Howard Rice Nemerovski Canady Falk & Rabkin
Bidder legal advisor: Latham & Watkins; Skadden Arps Slate Meagher & Flom

source: mergermarket