M&A

Deals: A Calgary Stampede

In our M&A Roundup for the week ended Dec. 9, companies in the Alberta city are involved in 3 of the 10 largest deals during what otherwise was a s...
Roy HarrisDecember 10, 2007

Only two of last week’s top 10 deals involved purely U.S.-based transactions, with Canadian companies at the center of most mergers and acquisitions, and Alberta’s Calgary alone involved in three of them.

In a slow week, with 40 North American transactions producing a total volume of $7.44 billion, the top agreement was Agrium Inc.’s $2.61-billion purchase of Colorado-based UAP Holding Corp., a distributor of agricultural and non-crop products. Agrium’s home? Calgary, of course.

The biggest all-U.S. deal was Macrovision Corp.’s $2.18-billion purchase of Gemstar-TV Guide International Inc., according to data provided to CFO.com by mergermarket. The only other billion-dollar transactions were the $1.52-billion combination of two Calgary energy trust companies — Enerplus Resources Fund to buy Focus Energy Trust — and Seoul’s SK Telecom Co.’s purchase of nearly 40 percent of fellow South Korean telecommunications provider Hanaro from a group of owners that included American International Group.

In all, the week’s dealmaking brought year-to-date transaction values in North America to $1.49 trillion, compared with $1.40 trillion through Dec. 9, 2006. If the year’s M&A ends with a December whimper, as many predict, the 2008 total would barely top the $1.50 trillion mark that seemed such a sure thing amid the feverish activity of the first half.

Agrium Inc. to buy UAP Holding Corp. for $2.61 billion

Greeley, Colo.-based UAP signed a definitive agreement to be acquired by Agrium Inc., of Calgary, Alberta, and both boards approved a deal in which Agrium would pay $39 a share, a premium of 30.4 percent. UAP is an independent distributor of agricultural inputs and non-crop products. Agrium is a retail supplier of agricultural products and services in North and South America, and also produces and markets agricultural nutrients and industrial products. The acquisition will enable Agrium to expand its geographic base and capitalize on the strong outlook for agriculture markets, and is expected to be slightly accretive to Agrium earnings per share in the first year, and significantly accretive thereafter. Annual synergies are expected to be approx. $115 million by 2010, with most captured in 2009. Although there are no financing conditions, Agrium has bridge and term loan commitments in place to fund the deal, and plans to arrange financing of $1.25 billion in equity, with the balance in public and bank term debt to replace the bridge loan. The transaction is expected to close in early 2008.
Seller financial advisor: JPMorgan
Bidder financial advisor: RBC Capital Markets
Seller legal advisor: Goodmans; and Wachtell Lipton Rosen & Katz
Bidder legal advisor: Blake, Cassels & Graydon; and Paul Weiss Rifkind Wharton & Garrison

Macrovision Corp. to buy Gemstar-TV Guide International Inc. for $2.18 billion

Los Angeles-based Gemstar-TV Guide signed a definitive agreement to be acquired by Macrovision, of Santa Clara, Calif., for $6.35 a share, or in an exchange of 0.2548 shares for each Gemstar share, subject to a proration limit of $1.55 billion cash. The premium for the media, entertainment, and technology company that develops, licences, markets, and distributes products for video consumers would be 6.19 percent. News Corp., which owns about 41 percent of Gemstar common, has agreed to vote its shares for the transaction. When completed, Macrovision holders will own about 53 percent of the combined company, and former Gemstar holders the rest. Closing is expected by early next second quarter. Gemstar announced plans to seek strategic alternatives on July 9. On July 19, 8.4-percent holder Citadel LP announced its support of the strategic alternatives and noted that it believed that certain strategic investors, as opposed to financial investors, might more fully realize the strategic value of Gemstar’s assets given the company’s competitive position in the marketplace.
Seller financial advisor: UBS
Bidder financial advisor: JPMorgan
Seller legal advisor: Wachtell Lipton Rosen & Katz; and Latham & Watkins
Bidder legal advisor: Heller Ehrman

Enerplus Resources Fund to buy Focus Energy Trust for $1.52 billion

Calgary-based Focus Energy, a natural gas weighted energy trust, signed a definitive agreement to be acquired by Enerplus in an exchange of 0.425 of an Enerplus share for each Focus share, valuing Focus at $17.37 a share, a premium of 7.35 percent. Enerplus, also of Calgary, is an open-end crude oil investment trust. The transaction is expected to close in mid- to late February.
Seller financial advisor: CIBC World Markets; and Scotia Capital
Bidder financial advisor: BMO Capital Markets; and RBC Capital Markets
Seller legal advisor: Burnet, Duckworth & Palmer
Bidder legal advisor: Blake, Cassels & Graydon

SK Telecom Co. to buy a 38.89-percent stake in Hanaro Telecom Inc. from American International Group Inc., Newbridge Capital Group LLC, and TVG Capital Partners for $1.17 billion

Seoul-based SK, a wireless telecommunications services provider, agreed to acquire 91.4 million shares of Hanaro, a Seoul-based telecommunications service and broadband internet access provider, in an auction from AIG, Newbridge, and TVG. New York-based AIG is the insurance and financial services company, while Newbridge is a Fort Worth-based private equity company, and TVG Capital is a Hong Kong-based private equity firm. The cash price of $12.86 per share, valuing all of Hanaro at $3.02 billion, represents a discount of around 2 percent. SK’s bid was pitted those from companies that included Macquarie Bank and The Carlyle Group, the New York-based private equity firm. The acquisition will add television programming to SK, and make it the largest shareholder of Hanaro, at 43.6 percent. AIG, Newbridge, and TPG acquired the Hanaro stake in 2003 for about $632 billion.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: UBS
Seller legal advisor: Shin & Kim
Bidder legal advisor: Not Available

Bruker BioSciences Corp. to buy Bruker BioSpin Inc., Bruker Biospin Invest AG, and Bruker Physik GmbH for $922 million

Billerica, Mass.-based Bruker BioSciences, which provides life science, materials research, and industrial X-ray analysis tools, agreed to acquire the companies of Bruker BioSpin group, the Rheinstetten, Germany-based company engaged in designing, manufacturing, and distributing life science tools based on magnetic resonance. The seller is the Laukien family, and the price is $388 million in cash and issuance of 52.5 million shares valued at $9.29 per share. Bruker BioSpin includes the U.S.-based Bruker BioSpin Inc., Swiss-based Bruker Biospin Invest AG, and German-based Bruker Physik GmbH. For the companies, Bruker BioSciences paid $100 million, $534.17 million, and $288.1 million, respectively. On completion of the acquisition, a new combined entity, consisting of Bruker BioSciences and the Bruker BioSpin Group, will be integrated and renamed Bruker Corp. The combined entity is expected to generate about $900 million in revenue and employ 3,700. Prior to the transaction, the Laukien family held a 52 percent stake in Bruker BioSciences. After the current acquisition of Bruker BioSpin Group, the family is expected to own approximately 69 percent in the enlarged share capital of Bruker Corp. The $388.1 million cash portion of the whole transaction has been financed from internal resources at Bruker BioScience, with $47 million and the remaining $341.1 million coming from a senior credit facility provided by joint lead arrangers JP Morgan and Citigroup. The senior credit facility is expected to consist of a $150-million term loan and a revolving credit facility of up to $230 million. The acquisition, which aims to consolidate all the technological and core competencies under one roof, is expected to be accretive to operating profits and cash flow position of Bruker BioSciences and is expected to generate additional revenue and cost synergies from cross-selling opportunities, sourcing efficiencies, shared administrative overheads, and other integration. The acquisition is expected to close in early 2008.
Seller financial advisor: Internal
Bidder financial advisor: Bear, Stearns & Co
Seller legal advisor: CMS
Bidder legal advisor: Dewey & LeBoeuf

Aeroplan Income Fund to buy Loyalty Management Group Ltd. from Warburg Pincus LLC for $759 million

Montreal-based Aeroplan, a fund created to indirectly acquire and hold interests of the outstanding limited partnership units of Aeroplan LP, the loyalty marketing company, agreed to acquire London-based Loyalty Management. Sellers are New York-based private-equity firm Warburg, along with UK-based investor Sir Keith Mills, and Loyalty’s management. Loyalty Management develops, owns, and operates customer loyalty programs. Terms call for $36 million in working capital adjustments in a deal that also subject to a hold-back of $63.2 million, conditional on the outcome of the company’s litigation regarding the outstanding Value Added Tax. For the year ended Sept. 30, Loyalty reported revenues of $384.2 million and EBITDA of $43.8 million. The transaction will be financed through Aeroplan’s cash on hand, its existing $99.97 million acquisition facility, and a $299.9-million bridge loan provided by RBC Capital Markets. The acquisition is in line with Aeroplan’s strategy of making a foray into the growing loyalty marketing market in the UK. It is expected to be accretive to distributable cash, and will provide the acquirer with businesses in retail and financials services, along with data analytics skills beyond travel services. The transaction is expected to close by the end of this year.
Seller financial advisor: Internal
Bidder financial advisor: RBC Capital Markets
Seller legal advisor: Lovells; McCarthy Tetrault; and Freshfields Bruckhaus Deringer
Bidder legal advisor: Stikeman Elliott

EFG Eurobank Ergasias SA and EFG International to buy Marble Bar Asset Management LLP from Lehman Brothers for $517 million

Zurich-based EFG, a provider of alternative asset management services, and Athens-based Eurobank, the banking and financial services company, have agreed to acquire London-based Marble Bar, an investment manager specializing in long and short equity strategies, and serving institutional and ultra-high-net-worth individual clients. Marble Bar’s assets under management are about $4.4 billion, and its anticipated net profit for 2008 of at least $80 million to $100 million. Terms call for EFG International sister company Eurobank to participate with a minority stake of 9.99 percent. Of the total consideration, the amount due to Marble Bar partners and staff is around $400 million net of tax, to be invested in Marble Bar’s funds with a staggered lock-up for a period of six years. Expected future payments are in the range $300 million to $800 million, subject to performance over six years. A conditional provision for long-term equity incentives exists for key partners, involving an equity stake of up to 20 percent. The transaction is in line with the company’s strategy of achieving low volatility and low correlation to equity markets through low-leverage funds, a high level of diversification, and a targeted performance in the 12 to 15 percent range, net of fees. Terms are consistent with EFG International’s publicly stated acquisition criteria, in this case a price-earnings ratio of less than 10. Completion is expected in early 2008.
Seller financial advisor: Internal
Bidder financial advisor: EFG Eurobank Ergasias
Seller legal advisor: Jones Day
Bidder legal advisor: Faegre & Benson; Kaye Scholer; Kaye Scholer; and Lewis Silkin

Revus Energy ASA to buy Palace Exploration Co. (UK) Ltd. from Palace Exploration Co. for $285 million

Stavanger, Norway-based Revus, an oil and gas exploration and production company, agreed to acquire the London-based Palace subsidiary of Palace Exploration, a Tulsa, Okla.-based oil and gas exploration company. Terms call for none of Palace’s employees to be transferred. Further, the board of Palace UK will resign when the transaction is completed, and not receive any benefits. The acquisition will be funded through a $150-million underwritten debt facility from Royal Bank of Scotland, with the balance financed through a combination of existing cash, debt, and new equity. The acquisition will allow Revus to gain a substantial position along the UK Continental Shelf. The transaction is expected to close in next year’s first quarter.
Seller financial advisor: Not Available
Bidder financial advisor: First Securities; and SEB Enskilda
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

TriStar Oil & Gas Ltd. to buy Bulldog Resources Inc. for $204 million

Calgary-based energy firm TriStar agreed to acquire Calgary-based Bulldog, an oil and gas company, for a stock consideration that includes debt. Terms provide for TriStar to issue 0.59 of a share for each Bulldog share, a premium of 9.5 percent over the $6.69-a-share Bulldog price. Integrating the companies would bring together owners of oil pools in the southeast Saskatchewan core area, and is in line with the TriStar’s expansion strategy. Completion is expected on Feb. 28.
Seller financial advisor: Macquarie Bank; and Tristone Capital
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Gulfport Energy Corp. to buy a 50-perecent stake in the Permian Basin assets of ExL Petroleum LP for $85 million

Oklahoma City-based Gulfport, an oil and gas exploration company, agreed to aquire the 50-percent working interest in the Permian Basin assets of the Midland, Texas-based ExL, also an oil and gas exploration. Gulfport plans to fund the acquisition through a mix of equity and debt financing. The assets consists of 4,100 acres net to Gulfport’s proposed interest with current production of about 800 net barrels of oil per day from about 32 wells. The other 50 percent rights are being acquired by Windsor Permian LLC, the U.S.-based investment vehicle formed by Wexford Capital LLC, a private equity firm. The acquisition is in line with Gulfport’s strategy of broadening its oil-focused portfolio, and is expected to close by Dec. 20.
Seller financial advisor: Internal
Bidder financial advisor: None used
Seller legal advisor: Porter & Hedges
Bidder legal advisor: Akin Gump Strauss Hauer & Feld

source: mergermarket

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