Deals: A Good Start on Holiday Shopping

Vivendi-Activision video-game combination leads a surge of strategic buying, followed by Philips Electronics $2.75 billion bid to become the bigges...
Vincent RyanDecember 3, 2007

Correction: An earlier version of this story incorrectly identified Stifel, Nicolaus & Company as the financial advisor to Citadel Investment Group in its acquisition of ETrade. It has been corrected to read “none.” CFO.com regrets the error.

Consumers might not be streaming into retail stores, but corporate buyers are off and running in the pre-winter-holiday period.

The monster, $8.1 billion tie-up of French communications group Vivendi SA and U.S. videogame maker Activision led the top ten North American deals last week, a flurry of merger activity that was worth $21.47 billion, up almost fourfold from the prior seven-day period.

Vivendi’s complex deal with Activision comes in the last month of a record sales year for video game developers and a particular sparkling one for Activision, which publishes three of the eight best-selling video games in the U.S. In the transaction, Activision will buy Vivendi’s game unit and Vivendi will in turn acquire a controlling stake in the new company, Activision Blizzard. Activision Blizzard will have combined pro-forma revenue of $3.8 billion, besting next-year’s revenue forecast for the largest independent videogame publisher, Electronic Arts.

Not counting the Vivendi-Activision transactions, there were three other $1 billion-plus deals, — according to data provided to CFO.com by mergermarket — including Royal Philips Electronics’ $2.75 billion takeover of rival Genlyte Group, a transaction that Philips almost pulled out of in October. In an the largest all-U.S. deal, Cigna Corp. acquired Great-West Healthcare’s health and group insurance businesses for $1.5 billion.

The 48 announced deals last week, up from 24 in the prior seven-day period, increased year-to-date transaction values to $1.48 trillion, up from the $1.36 trillion in deals signed through Dec. 2, 2006. In total, 4,515 deals have been announced in 2007, 300 more than in the same period last year.

Will the holiday buying spirit become infectious and push 2007 levels even higher? We’ll have to wait and see.

Activision Inc to buy Vivendi Games Inc from Vivendi SA for $8.12 billion

Activision, the Santa Monica, California-based video-game publisher will acquire Los Angeles-based video-game publisher Vivendi Games, from Vivendi SA, the Paris-based provider of media and telecommunication services. Shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock at $27.50 per share. Within five business days after the deal closes, which is expected sometime in the first half of 2008, the company will be renamed Activision Blizzard and will launch an all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 per share. The tender offer will be funded by Activision Blizzard’s cash on hand at closing, including the cash received from the Vivendi share purchase. Vivendi has agreed to acquire additional new issued shares from Activision Blizzard for up to an additional $700 million, the proceeds of which would also be used to fund the tender offer.

Seller financial advisor: Goldman Sachs
Bidder financial advisor: Allen & Company
Seller legal advisor: Gibson Dunn & Crutcher
Bidder legal advisor: Skadden Arps Slate Meagher & Flom; and Wachtell Lipton Rosen & Katz

Vivendi SA to buy Activision Inc. (9.1 percent stake) for $1.34 billion

As described above, Vivendi SA, the Paris-based digital entertainment group, will acquire up to 69.2 million newly issued shares in Activision, a Santa Monica, Calif.-based publisher of interactive entertainment, for a total cash consideration of $1.73 billion.

The transaction is part of a wider combination that sees Vivendi Games being merged into a wholly owned subsidiary of Activision. Concurrent with the merger, Vivendi will also acquire newly issued shares in Activision, bringing its total ownership in Activision to 52 percent on a fully diluted basis.
Seller financial advisor:Allen & Company
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Skadden Arps Slate Meagher & Flom; and Wachtell Lipton Rosen & Katz
Bidder legal advisor: Gibson Dunn & Crutcher

Koninklijke Philips Electronics NV to buy Genlyte Group Inc for $2.75 billion

Royal Philips Electronics will acquire Genlyte Group in an all-cash tender offer. Louisville, Ky.-based Genlyte designs, manufactures, and sells lighting fixtures, controls and related products for the commercial, residential and industrial markets in North America. Amsterdam-based Royal Philips Electronics is the parent company of the Philips Group and has four divisions: medical systems, domestic appliances and personal care, consumer electronics, and lighting. The $9.50-per-share offer provides a premium of 52 percent based on Genlyte’s closing share price on November 23. The transaction is expected to close in the first quarter of 2008.
Seller financial advisor:JPMorgan; and Sagent Advisors
Bidder financial advisor:Goldman Sachs
Seller legal advisor:McDermott Will & Emery
Bidder legal advisor:Sullivan & Cromwell

Cigna Corp. to buy Great-West Healthcare from Great-West Life and Annuity Insurance Company for $1.5 billion

Cigna, the listed Philadelphia-based insurance company, has agreed to acquire Greenwood, Village, Colo.-based Great-West Healthcare, for cash. Cigna would inject $400 million of additional capital to support Great-West Healthcare. The acquisition comprises Great-West Healthcare’s entire portfolio of health and group insurance businesses along with the associated information technology infrastructure. The transaction is in line with Cigna’s strategy to establish and expand itself in the middle market and broaden Cigna’s geographical reach and distribution network in western regions of the U.S. The deal is is expected to be completed by the first half of 2008.
Seller financial advisor:Goldman Sachs
Bidder financial advisor:Banc of America Securities
Seller legal advisor:Dewey & LeBoeuf
Bidder legal advisor:Jones Day; Shearman & Sterling (Advising Banc of America Securities); and Skadden Arps Slate Meagher & Flom

TPG LLP to buy Axcan Pharma Inc for $1.02 billion

Axcan Pharma Inc., a Quebec-based specialty pharmaceutical company focused on gastroenterology, will be acquired by TPG Capital, the global buyout group of private investment firm TPG for $23.35 per share. That’s a premium of 28.3 percent based on Axcan’s November 28 closing share price. The transaction will be financed through a combination of equity contributed by TPG Capital and its affiliates as well as debt financing that has been committed by Bank of America and HSBC. The transaction is not contingent on financing commitments.
Seller financial advisor:Merrill Lynch
Bidder financial advisor:Banc of America Securities
Seller legal advisor: Stikeman Elliott; and Latham & Watkins
Bidder legal advisor:Ropes & Gray; and Davies Ward Phillips & Vineberg

VeraSun Energy Corp. to buy US BioEnergy Corp. for $954 million

VeraSun Energy Corp, of Brookings, South Dakota, will acquire US BioEnergy Corp of Inver Grove Heights, Minnesota. Both companies are ethanol producers. The all-stock deal represents a value of $8.62 for each share of US BioEnergy, a premium of 7.4 percent based on US BioEnergy’s closing share price on November 28. Existing VeraSun shareholders will represent about 60 percent of the shareholders after the merger.
Seller financial advisor:UBS
Bidder financial advisor:Morgan Stanley
Seller legal advisor:Skadden Arps Slate Meagher & Flom; and Covington & Burling (Advising UBS)
Bidder legal advisor:Cravath Swaine & Moore

National Australia Bank Limited to buy Great Western Bancorp. Inc from Hamann Family for $798 million

National Australia Bank Limited (NAB), the Melbourne, Australia-based bank, will acquire the Omaha, Nebraska based holding company of Great Western Bank from the Hamann family. Great Western Bank has assets of $3.4 billion and operates more than 100 branches. The acquisition will allow NAB to expand its operations in the U.S., especially in the agribusiness sector. Jeff Erickson will continue as CEO of Great Western Bank. The acquisition is subject to U.S. and Australian regulatory approvals and is expected to be completed in the second quarter of 2008.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Williams Partners LP to buy a stake in Wamsutter LLC from Williams Companies Inc. for $750 million

Williams Partners, the Tulsa, Oklahoma- based natural gas distribution company, has agreed to acquire a stake in Wamsutter, a natural gas gathering operation. Under the terms of the agreement, Williams Partners will acquire 100 percent of the Class A membership interest in Wamsutter and 50 percent of the initial Class C units. The transaction will be immediately accretive to distributable cash flow of Williams Partners. Williams Partners will finance the purchase with a combination of debt and equity. Williams Companies spun off Williams Partners in 2005, but still retains a majority stake. Antitrust regulators have already approved the transaction.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Internal
Bidder legal advisor: Internal

Telus Corp. to buy Emergis Inc. for $676 million

Telus has agreed to acquire Emergis, a Longueuil, Canada-based company, through a takeover bid. Emergis develops automated health-related claims processing systems, health record systems, pharmacy management systems, and loan document processing and registration systems. Telus provides data, Internet protocol, voice, and wireless services in Central and Eastern Canada. The offer provides a premium of 18.9 percent based on Emergis’s closing share price on November 28.
Seller financial advisor: Desjardins Securities; and Genuity Capital Markets
Bidder financial advisor: JPMorgan
Seller legal advisor: Stikeman Elliot
Bidder legal advisor: Osler Hoskin & Harcourt

Citadel Investment Group LLC to buy ETrade Financial Corp. (19.99 percent stake) for $444 million

Citadel Investment Group LLC, the Chicago-based investment company, has agreed to acquire a stake in ETrade, the provider of trading, investing, banking and lending for retail and institutional customers. The inferred offer price of $5.28 per share is the same as ETrade’s closing share price on November 28 and represents a discount of 52.6 percent on the share price one month prior to the announcement. The agreement is part of Citadel’s investment in ETrade, whereby ETrade is to receive $2.5 billion in cash in exchange for senior unsecured notes, common stock, and the sale of its entire asset-backed securities portfolio. The consideration includes a contribution by funds managed by BlackRock Inc. Citadel is expected to nominate one representative on ETrade’s board of directors. ETrade has $227 million of assets under management. The transaction is expected to close in January 2008..
Seller financial advisor: Evercore Partners; and JPMorgan
Bidder financial advisor: none
Seller legal advisor: Davis Polk & Wardwell
Bidder legal advisor: Fried Frank Harris Shriver & Jacobson

source: mergermarket