Deals: Welcome Back, Private Equity

In our M&A Roundup for the week ended Oct. 28, it makes at least a limited return in the form of four billion-dollar deals to boost overall dealmak...
Roy HarrisOctober 29, 2007

Four private-equity deals of $1 billion or more gave a boost to the week’s acquisition activity, bringing the value of North American dealmaking to $11.28 billion. In the prior week there were the same number of transactions — 36 — but their total worth was 18 percent lower.

The leading deal was the $6.67-billion sale of Washington-state utility Puget Energy Inc. to a consortium of Australian and Canadian interests led by Macquarie Bank Ltd. In the second-largest buyout, Houston-based heating, ventilation, and air conditioning (HVAC) company Goodman Global Inc. went to Hellman & Friedman LLC for $2.56 billion. In the third of the 10 largest North American deals last week, investor Kirk Kerkorian’s Tracinda Corp. bought 16 percent of San Antonio-based energy company Tesoro Corp. for $1.4 billion, according to data provided to CFO.com by mergermarket.

The week’s deals brought year-to-date M&A activity to $1.40 trillion, compared to $1.15 trillion through Oct. 28, 2006. There have been 3,796 proposals so far in 2007, down from 4,038 at the same time last year.

Macquarie Bank, Canada Pension Plan Investment Board, British Columbia Investment Management Corp., and Alberta Investment Management to buy Puget Energy for $6.67 billion

The consortium of “infrastructure investors” offered $30 a share for Bellevue, Wash.-based Puget Energy, a premium of 25.3 percent. Puget’s board has definitively agreed to the deal. Puget is the parent company of Puget Sound Energy, a regulated utility that provides electric and natural gas service primarily to western Washington’s Puget Sound region. The Macquarie Infrastructure Partners unit of Australia’s Macquarie Bank has joined with the Toronto-based Canadian pension-plan board and the Victoria-based British Columbia Investment Management and Alberta-based Alberta Investment Management for the deal. It provides Puget with $5 billion in capital over the next five years. The transaction is expected to close in next year’s second half.
Seller financial advisor: Morgan Stanley
Bidder financial advisor: Macquarie Bank
Seller legal advisor: Dewey & LeBoeuf; Perkins Coie
Bidder legal advisor: Latham & Watkins

Hellman & Friedman to buy Goodman Global for $2.56 billion

The board of Goodman Global, the second-largest U.S. HVAC concern making producers for residential and light commercial use, approved the deal with San Francisco-based Hellman & Friedman. The price was $25.60 a share, a premium of 17.2 percent. Stockholders with a majority of Goodman’s outstanding shares have agreed to vote in favor of the transaction, which will be financed with $1.1 billion in commitments for senior secured credit facilities from Barclays Capital, Calyon New York, GE Commercial Finance, and certain vehicles managed by GSO Capital Partners LP, along with $500 million in commitments for senior subordinated financing from vehicles managed by GSO and Farallon Capital Management LLC. The transaction is expected to close in the next first quarter.
Seller financial advisor: Goldman Sachs; JPMorgan
Bidder financial advisor: Internal
Seller legal advisor: O’Melveny & Myers; Sullivan & Cromwell (Advising Goldman Sachs)
Bidder legal advisor: Simpson Thacher & Bartlett

Tracinda to buy 16 percent of Tesoro for $1.4 billion

The Beverly Hills, Calif.-based investment vehicle owned by U.S. entrepreneur Kerkorian made the cash offer of $64 per share for 21.9 million Tesoro shares. The offer represents a discount of 11.9 percent on the share price as of Oct. 25, but a premium of 28.8 percent over the closing price on Sept. 26, a month prior to the announcement. Tracinda already holds about 5.5 million shares, or roughly 4 percent, or Tesoro.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Fulbright and Jaworski
Bidder legal advisor: Christensen, Glaser, Fink, Jacobs, Weil & Shapiro

Apollo Management LP to buy Regent Seven Seas Inc.from Carlson Cos. for $1 billion

Purchase, N.Y.-based private equity firm Apollo won an auction to acquire Fort Lauderdale, Fla.-based cruise operator Regent. Seller Carlson is a Minnetonka, Minn.-based leisure services concern. DVB Bank AG has provided debt to finance the transaction. CVC Global Capital and KSL Capital Partners are other parties who were interested in this transaction.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

NIKE Inc. to buy Umbro Plc for $641 million

The Beaverton, Ore.-based sportswear manufacturer and supplier agreed to acquire all share capital of Cheshire, U.K.-based Umbro for $4 a share, consisting of $3.96 cash and 3.98 cents in a previously declared dividend, a premium of 18.2 percent, and of 62.5 percent over the closing price on the last trading day prior to the announcement that Umbro had been approached. The transaction will be funded by existing cash resources.
Seller financial advisor: JPMorgan Cazenove
Bidder financial advisor: Merrill Lynch
Seller legal advisor: Lovells
Bidder legal advisor: Baker & McKenzie

Wal-Mart Stores Inc. to buy at least 37.9 percent of Seiyu Co. for $430 million

Bentonville, Ark.-based Wal-Mart agreed to buy the stake in the Tokyo-based chain of stores for $1.22 a share, a 60.9 percent premium. The offer price values all of Seiyu at $1.139 billion. Wal-Mart now owns 50.9 percent of Seiyu. It will acquire all outstanding preferred B shares and C preferred shares. Wal Mart wants to own more than two-thirds of Seiyu common with this tender offer
Seller financial advisor: Merill Lynch
Bidder financial advisor: Citigroup; Dresdner Kleinwort; UBS; Nikko Cordial Securities
Seller legal advisor: Mori Hamada & Matsumoto
Bidder legal advisor: Not Available

Omniture Inc. to buy Visual Sciences LLC for $369 million

Orem, Utah-based Omniture, a provider of online business optimization software, agreed to acquire San Diego-based Visual Sciences in an exchange of 0.49 shares of Omniture common for each share, and $2.39 cash, a premium of 3.9 percent. In 2006, WebSideStory Inc., a provider of on-demand web analytics and internet search services, acquired Visual for $57.3 million. After this acquisition, Visual stockholders will own 13.7 percent of the combined company on a pro forma basis. The combined company will be able to provide enhanced products and services, accelerate investments, and exploit new opportunities. It is expected to close in early to mid 2008.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Credit Suisse
Seller legal advisor: O’Melveny & Myers (Advising Goldman Sachs)
Bidder legal advisor: Not Available

Cisco Systems Inc. to buy Navini Networks Inc. from Arcapita Inc., Austin Ventures LP, Granite Ventures LLC, Intel Capital, Investor AB, Lehman Brothers Private Equity, Sequoia Capital, and Sternhill Venture Management for $330 million

San Jose-based Cisco, the telecom, network, and internet equipment manufacturer, agreed to buy the San Jose-based wireless broadband networking equipment company from its previous owners, based in the U.S. and in Sweden. Terms call for payment in cash and assumed options. The acquisition is in line with Cisco’s strategy of expanding WiFi and WiFi-Mesh portfolios and IP Next-Generation Network vision to enable it to deliver any service to any device over any network and provide premium end-to-end connected experience. The acquisition will enable Cisco to open IP-based broadband wireless architectures and accelerate the rollout of new applications and services. The acquisition is expected to close in the second quarter of Cisco’s 2008 fiscal year.
Seller financial advisor: Citigroup
Bidder financial advisor: Internal
Seller legal advisor: Wilson Sonsini Goodrich & Rosati
Bidder legal advisor: Fenwick & West

Inverness Medical Innovations Inc. to buy Alere Medical Inc. from TA Associates Inc. for $302 million

Waltham, Mass.-based Inverness, a manufacturer of diagnostic products, agreed to buy the Reno, Nev.-based provider of health and care management services from Boston-based TA for $125 million cash and $177 million in common stock. TA had backed the management of Alere Medical in acquiring the company for $175 million in April. This acquisition complements Inverness Medical’s cardiac diagnostic technologies and will also provide them with an opportunity to enter the disease management industry. Alere revenues are expected to be approximately $77 million in 2007. Completion is expected prior to the end of the year.
Seller financial advisor: JPMorgan
Bidder financial advisor: Covington Associates
Seller legal advisor: Not Available
Bidder legal advisor: Foley Hoag

Calumet Specialty Products Partners LP to buy Penreco from ConocoPhillips Co. and M. E. Zukerman Energy Investors Inc. for $240 million

Calumet a producer of specialty hydrocarbon products, agreed to acquire Penreco, a producer and marketer of chemical specialties, from ConocoPhillips and Zukerman Energy. In 2006 Penreco had sales of $432 million. The acquisition will be financed with a combination of borrowings, and through the issuance of common units. In 2001, Zukerman, an investment company, acquired a 50-percent stake in Penreco from Pennzoil–Quaker State Co. for an undisclosed amount. This latest transaction is expected to close in the fourth quarter.
Seller financial advisor: Internal
Bidder financial advisor: Merrill Lynch; Schnitzius & Vaughan
Seller legal advisor: Internal
Bidder legal advisor: Fulbright and Jaworski

source: mergermarket