Deals: More Midmarket Resilience

In our M&A Roundup for the week ended Sept. 30, the value of transactions climbed slightly, to $13.1 billion.
Roy HarrisOctober 1, 2007

The Wall Street Journal may have chosen this week to declare that the M&A party is over. But resiliency in the North American market led to a second straight uptick in dealmaking — to 40 proposed transactions valued at a total of $13.1 billion.

That amount still is far below the average levels of $40 billion or so that prevailed through the end of July. But since then, weekly dealmaking often has plunged well below $10 billion. So the activity of the last two weeks has provided a bit of a lift, according to data provided to CFO.com by mergermarket.

Strength among the top 10 North American deals came from some familiar arenas: natural resources and commodities, and particularly in the form of middle-market Mid-East and Australian investment. The largest proposal was for the $4.55-billion purchase of PrimeWest Energy Trust by Abu Dhabi National Energy Co. Of the other two deals worth more than $1 billion, one was an Australian company’s $1.58-billion acquisition of recycler Metal Management Inc.

Bain Capital LLC’s nearly $2-billion acquisition of struggling 3Com Corp. was the week’s largest LBO. Remember the LBO?

The flurry of activity brought year-to-date dealmaking to $1.38 trillion, reflecting 3,504 transactions, compared to $1.07 trillion from 3,685 transactions through Sept. 30, 2006.

Abu Dhabi National Energy to buy PrimeWest Energy Trust for $4.55 billion

Calgary-based PrimeWest definitively agreed to be acquired by the United Arab Emirates company for $26.75 per unit, a premium of 34.2 percent. The boards of directors of both companies have approved the merger. Oil and gas royalty trust PrimeWest acquires, develops, produces, and sells natural gas, crude oil, and natural gas liquids, generating a monthly cash distribution for its unitholders. Government-owned Abu Dhabi National Energy supplies the emirate with electricity and potable water, and helps formulate, develop, and implement governmental water and electricity policy. If a superior offer emerges, Abu Dhabi National will have two days to make adjustments its offer. The transaction is expected to close shortly after the holders meeting, expected in late November.
Seller financial advisor: CIBC World Markets
Bidder financial advisor: TD Securities
Seller legal advisor: Paul Weiss Rifkind Wharton & Garrison; Stikeman Elliott
Bidder legal advisor: Heenan Blaikie; Latham & Watkins

Bain Capital to buy 3Com for $1.98 billion

Marlborough, Mass.-based 3Com definitively agreed to a bid by the Boston-based private equity firm of $5.30 a share, a premium of 44 percent. 3Com provides secure, converged networking on a global scale to businesses of all sizes. The transaction is expected to close in next year’s first quarter. Financing will come from Citigroup Global Markets Asia Ltd., UBS AG, the Hongkong and Shanghai Banking Corp. AMRO Bank N.V., and Bank of China (Hong Kong) Limited have provided firm financing commitments to Bain.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Citigroup; UBS
Seller legal advisor: Wilson Sonsini Goodrich & Rosati
Bidder legal advisor: Ropes & Gray

Sims Group Ltd. to buy Metal Management for $1.58 billion

Chicago-based Metal Management, a full-service metals recycler with 50 facilities in 17 states, is being bought by North Sydney-based Sims in an exchange of 2.05 Sims American Depositary Receipts for each Metal Management share, valued at $58.42, a premium of 19.6 percent. The combination will create a global recycling leader with revenue in excess of $6.8 billion. The combined company will be called Sims Metal Management. It will be based in Australia, with executive offices in New York and Chicago. Sims will keep its ASX listing, and will issue ADRs to be listed on the New York Stock Exchange, to Metal Management stockholders. The combined company’s senior management team will be comprised of executives from both Sims and Metal Management. The deal is expected to close in the 2008 first quarter.
Seller financial advisor: CIBC World Markets
Bidder financial advisor: UBS
Seller legal advisor: King & Spalding; Minter Ellison; Dewey Ballantine (Advising CIBC World Markets)
Bidder legal advisor: Baker & McKenzie

Onex Partners LP to buy Husky Injection Molding Systems Ltd. for $917 million

Husky Injection management agreed to sell in a management buyout backed by the private equity arm of Toronto-based Onex Molding Systems Ltd. for $8.13 per share, a premium of 7.9 percent. Robert Schad, chairman and founder of Husky, and wife Elizabeth Schad, have agreed to vote their total of 44 percent of the total share capital for the offer. Completion is expected by mid-December 2007, subject to court, shareholders, and normal regulatory approvals.
Seller financial advisor: Citigroup
Bidder financial advisor: Not Available
Seller legal advisor: Dewey Ballantine (Advising Citigroup)
Bidder legal advisor: Not Available

Orica Ltd. to buy Excel Mining Systems LLC from SPG Partners LLC for $670 million

Melbourne, Australia-based Orica, a mining, fertilizer, chemicals, and consumer products company, agreed to pay an amount calculated at 8.8 times EBITDA of Bowerston, Ohio-based Excel Mining, which produces roof support for the coal and hard rock mining industries. Seller SPG Partners will fund the acquisition from Orica’s existing debt facilities. Excel generates annual revenues in excess of $240 million and employs 325 people. The transaction will be immediately accretive to EPS, and will generate cost benefits of $50 million a year after three years for Orica. The deal provides an opportunity for Orica to expand its product offering and enables its customers to have access to complete range of products. The acquisition is expected to close in the fourth quarter, subject to regulatory approval.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Not Available
Seller legal advisor: Simpson, Thatcher & Bartlett
Bidder legal advisor: Not Available

Teck Cominco Ltd. to buy 11.25 percent of Fording Canadian Coal Trust from Ontario Teachers Pension Plan for $590 million

Vancouver, Canada-based Teck Cominco, a diversified mining and refining company focused on zinc, gold, and copper, agreed to pay $36 per Fording Canadian unit, a discount of 4.38 percent, to Ontario Teachers Pension Plan for the stake in the Calgary, Canada-based open-ended mutual fund trust and royalty trust with interests in coal mining properties. Teck Cominco acquired the units for investment purposes and has no plans to acquire any additional units of Fording. The transaction is expected to close on Oct. 1.
Seller financial advisor: Not Available
Bidder financial advisor: CIBC World Markets
Seller legal advisor: Internal
Bidder legal advisor: Internal

Bristol Myers Squibb Corp. to buy Adnexus Therapeutics Inc. from Atlas Venture, Flagship Ventures, HBM BioVentures AG, Polaris Venture Partners, and Venrock Associates for $415 million

New York-based Bristol Myers Squibb, the maker of pharmaceuticals and health care products, agreed to pay the consortium $415 million for Adnexus, excluding earnouts of $75 million payable in three increments of $25 million based on certain regulatory performance. Waltham, Mass.-based Adnexus is a drug developer. Flagship is based in Cambridge, Mass.; Polaris in Waltham, Mass., Venrock Associates in New York, and HBM in Baar, Switzerland. The transaction is line with Bristol Myers’s growth strategy and complements investments in biologics companies that have manufacturing capabilities in New York and Massachusetts.
Seller financial advisor: Lehman Brothers
Bidder financial advisor: Morgan Stanley
Seller legal advisor: WilmerHale (Wilmer Cutler Pickering Hale and Dorr); Cooley Godward Kronish
Bidder legal advisor: Cravath Swaine & Moore

EchoStar Communications Corp. to buy the remaining majority stake in Sling Media Inc. from DCM-Doll Capital Management, Hercules Technology Growth Capital Inc., and Mobius Venture Capital for $380 million

Englewood, Colo.-based EchoStar, a satellite communications and digital television services provider, agreed to pay in cash and options to acquire Sling Media, a San Mateo, Calif.-based manufacturer and distributor of electronic products related to digital media entertainment. The sellers are venture capital firms, with Hercules based in Palo Alto, Calif., Mobius based in Superior, Colo., and DCM-Doll Capital Management based in Menlo Park, Calif. The acquisition allows Echostar to offer innovative and convenient entertainment approaches to DISH network customers and to its customer base. Closing is expected by December.
Seller financial advisor: Goldman Sachs; Allen & Company
Bidder financial advisor: Internal
Seller legal advisor: Gunderson Dettmer Stough Villeneuve Franklin & Hachigian
Bidder legal advisor: Sullivan & Cromwell

Emerson Electric Co. to buy the Embedded Communications Computing business of Motorola Inc. for $350 million

St. Louis-based Emerson, the diversified technology company, has agreed to acquire the Embedded Communications Computing (ECC) business of Motorola Inc, the listed Schaumburg, IL based wireless, broadband and automotive communications technology company, for a cash consideration of $350m. Upon completion of the transaction, Motorola’s ECC business will become part of Emerson Network Power. The acquisition will increase Emerson’s ability in embedded computing, in the telecommunications and other industries and will have greater capabilities with advanced new technologies and expand applications. The disposal marks Motorola’s focus on its core business and technologies while providing capital to drive further growth. The transaction is subject to customary closing conditions and regulatory approvals and is is expected to be completed by the end of 2007.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Penn West Energy Trust to buy Vault Energy Trust for $340 million

Penn West, a Calgary-based conventional oil and natural gas producing income trust, agreed to pay $4.24 per unit, a premium of 9 percent, for Vault, a Calgary-based energy income trust. The price is net of $163.5 million of debt. Terms call for Penn to issue 0.14 units for each Vault unit and exchangeable shares. The transaction is subject to approval of the Toronto Stock Exchange, approval of at least two thirds of Vault unitholders, and court and regulatory approval, and is expected to close in December.
Seller financial advisor: Scotia Capital; CIBC World Markets
Bidder financial advisor: Internal
Seller legal advisor: Gowling Lafleur Henderson
Bidder legal advisor: Burnett Duckworth & Palmer

source: mergermarket