Deals: Oracle Jumpstarts Activity

In our M&A Roundup for the week ended Jan. 20, its $6.63-billion BEA purchase leads a week-to-week doubling of deal volume.
Roy HarrisJanuary 22, 2008

Oracle Corp.’s agreement to pay $6.63-billion for enterprise application software company BEA Systems Inc. served as the cornerstone of an active week for mergers and acquisitions. There were 62 transactions worth a total of $15.03 billion, more than double the $7.31 billion represented in the prior week by its 43 deals.

Bain Capital’s buyout of child-care and education company Bright Horizons Family Solutions Inc., for $1.27 billion, was the second-largest transaction among the top 10 North American deals, according to data provided to CFO.com by mergermarket.

For the year to date, M&A volume has been $27.18 billion (in 174 deals), still just a shadow of early 2007, when there were $45.58 billion worth of transactions, 273 of them.

Oracle Corp. to buy BEA Systems Inc. for $6.63 billion

BEA’s definitive agreement to be acquired by Oracle was approved by boards of both California companies, BEA in San Jose and Oracle in Redwood City. Oracle’s $19.375-a-share price represents a premium of 24.4 percent for BEA, the enterprise application and service infrastructure software company. The implied equity value of the transaction is about $7.85 billion before taking into account BEA’s cash position. The transaction is expected to close by mid-year. BEA earlier received an unsolicited $17-a-share proposal from enterprise the giant Oracle, which develops, manufactures, markets, distributes, and services database, middleware, and application software. Oracle to acquire the Company for $17.00 per share. Carl Icahn, an 8.53-percent shareholder in BEA at the time, agreed with the company that it was worth more, and suggested an auction. After consulting with financial advisor Goldman Sachs, BEA had announced last October that it was prepared to authorize negotiations with third parties at an offer of $21 a share.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Internal
Seller legal advisor: Sullivan & Cromwell and Wachtell, Lipton, Rosen & Katz
Bidder legal advisor: Latham & Watkins

Bain Capital LLC to buy Bright Horizons Family Solutions Inc. for $1.27 billion

Bright Horizons, based in Watertown, Mass., signed a definitive agreement with private-investment giant Bain that is priced at $48.25 a share in cash, a premium of 47.1 percent. The Bright Horizons board has approved the take-private deal for the provider of employer-sponsored child care, early education, and work/life solutions, which manages more than 600 early care and family centers in the U.S., UK, Ireland, and Canada. Financing will be a combination of equity contributed by funds affiliated with Bain Capital, and debt financing that has been committed by Goldman Sachs Credit Partners LP and GS Mezzanine Partners V LP. The transaction is expected to close in the second quarter.
Seller financial advisor: Goldman Sachs & Co; and Evercore Group
Bidder financial advisor: Evercore Partners; and Internal
Seller legal advisor: Bass, Berry & Sims; and Shearman & Sterling
Bidder legal advisor: Ropes & Gray

Vistar Corp. to buy Performance Food Group Co. for $1.14 billion

Richmond, Va.-based Performance Food Group signed a definitive agreement to be acquired by Denver-based Vistar for $34.50 a share, a premium of 42.6 percent. The board of Performance Food, a food distribution company, has approved the merger. Food distributor Vistar is controlled by affiliates of Blackstone Group and Wellspring Capital Management. Under the deal terms, Performance Food is allowed to seek another buyer for 50 days, with the shopping period ends about March 8. The transaction is expected to close by the end of the second quarter.
Seller financial advisor: Evercore Partners
Bidder financial advisor: Wachovia; Goldman Sachs; and Credit Suisse
Seller legal advisor: Bass, Berry & Sims
Bidder legal advisor: Simpson Thatcher & Bartlett

Sun Capital Securities Group LLC to buy Kellwood Co. for $882 million

Sun Capital made a tender offer for Chesterfield, Mo.-based Kellwood, a marketer of women’s and men’s sportswear, infant apparel, and recreational camping products, that would pay $21 a share for Kellwood, a premium of 38.4 percent. Sun Capital, based in Boca Raton, Fla., is a private investment firm. The implied equity value of the transaction is about $542 million before including Kellwood debt to be assumed. In making the offer, Sun Capital said the $21 price would fall to $19.50 if Kellwood does not terminate its $60-million tender offer for its 7.875 percent senior notes due in July 2009. The alternative price reflects the reduction in the Company’s equity value that Sun Capital believes has resulted from the bond tender, as well as other initiatives Kellwood adopted since Sun Capital first disclosed its acquisition proposal.
Seller financial advisor: Banc of America Securities
Bidder financial advisor: Citigroup; and Credit Suisse
Seller legal advisor: McDermott Will & Emery
Bidder legal advisor: Kirkland & Ellis

Sun Microsystems Inc. to buy MySQL AB for $800 million

Santa Clara, Calif.-based Sun, the network computing infrastructure, computer systems, software, and storage company, agreed to acquire MySQL AB of Uppsala, Sweden, a provider of database products, software, proactive monitoring tools, and premium support services. The transaction is in line with Sun’s strategy of driving adoptions of MySQL’s open-source database in more traditional applications and enterprises. After completion of the transaction, MySQL will be integrated into Sun’s Software, Sales and Service organizations. McSQL’s CEO, Marten Mickos, will join Sun’s senior executive leadership team. Under the deal terms, Sun will pay about $800 million in cash for all MySQL’s shares and assume about $200 million in options. The transaction is expected to close late in the third quarter or early in the fourth quarter of Sun’s fiscal 2008..
Seller financial advisor: Credit Suisse
Bidder financial advisor: Internal
Seller legal advisor: Fenwick & West
Bidder legal advisor: Vinge

Continental Energy Corp. to buy the natural gas operations of PNM Resources Inc. for $620 million

New York City-based Continental Energy, an oil and gas exploration company, agreed to acquire the natural gas operations of Albuquerque, N.M.-based energy holding company PNM for cash. The sale of the unit is part of PNM’s strategy of focusing on new investments and strengthen the company’s financial position. PNM expects to use proceeds to reduce debt, fund future investments, and for other corporate needs. PNM simultaneously agreed to acquire Continental’s regulated Texas electric delivery business, conditional on the sale of natural gas operations. The transactions is expected to be completed by the end of 2008.
Seller financial advisor: JP Morgan
Bidder financial advisor: Internal
Seller legal advisor: Troutman Sanders; Jackson Walker; and Snell & Wilmer
Bidder legal advisor: Cravath, Swaine & Moore; and Keleher & McLeod; Clark, Thomas & Winters; and Steptoe & Johnson

Founders Equity Inc. to buy C.L.B. Check Cashing Corp. and Pay-O-Matic Corp. for $500 million

FEF Cash Inc., an investment vehicle of New York City-based private equity company Founders Equity, agreed to acquire Syosset, N. Y.-based financial services provider Pay-O-Matic and Springfield Gardens, N.J.-based check-cashing, wire-transmission, and money-order company C.L.B. for an undisclosed price estimated to exceed $500 million. Terms call for both Pay-O-Matic and C.L.B. to operate under the name Pay-O-Matic. Funds provided by Founders Equity will help the combined group to expand its operations.
Seller financial advisor: The Bank of New York Mellon Corporation (advised Pay-o-Matic); Raich Ende Malter & Co. LLP (advised CLB)
Bidder financial advisor: None Used
Seller legal advisor: Not available
Bidder legal advisor: Morrison Cohen Singer & Weinstein

Terex Corp. to buy ASV Inc. for $439 million

Westport, Conn.-based Terex, a manufacturer of construction, mining, and other heavy equipment, has launched an offer to acquire Grand Rapids, Minn.-based ASV, a designer and manufacturer of rubber track all purpose crawlers and related accessories and attachments at a tender-offer price of $18 a share, representing a premium of about 46.5 percent. As of the agreement date ASV had net cash of $49 million. Caterpillar Inc. the manufacturer of construction and mining equipment, diesel, and natural gas engines and industrial gas turbines, owns 23.5 percent of ASV, and has given its consent for the tender. After completion, expected by the end of the first quarter, ASV will be merged with Terex Minnesota Inc. a holding subsidiary of Terex.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Internal
Seller legal advisor: Dorsey & Whitney
Bidder legal advisor: Fried Frank Harris Shriver & Jacobson ; Faegre & Benson

Cobham plc to buy SPARTA Inc. for $416 million

Wimborne, UK-based Cobham, a developer of aerospace and defense systems, agreed to acquire Lake Forest, Calif.-based SPARTA, an employee-owned intelligence and missile defense company on a debt and cash free basis. Terms call for $381 million to be paid on completion from Cobham’s existing cash and debt facilities, with a deferred payment of up to $35m paid over the next three years to holders of unvested options who remain with the company. After the acquisition SPARTA will be a separate strategic business unit within an expanded North America Cobham Division, and SPARTA’s management team will continue to run the business unit. The deal is expected to close in the second quarter.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Not available
Seller legal advisor: Latham & Watkins; and Gibson, Dunn & Crutcher
Bidder legal advisor: Jaeckle Fleischmann & Mugel

White Birch Paper Co. to buy SP Newsprint Co. from Cox Enterprises Inc., Media General Inc., and McClatchy Co. for $350 million

Greenwich, Conn.-based White Birch, a producer of paper and newsprint, agreed to acquire Atlanta-based SP from the three media companies that are now equal partners in SP: Cox of Atlanta, Media General of Richmond, Va., and McClatchy of Sacramento. The agreement calls for White Birch to acquire two U.S. newsprint mills and SP Recycling Corp., a provider of fiber and wood chips for paper manufacturing. SP Newsprint will operate as a subsidiary of White Birch, subject to certain consents. GE Capital Markets has provided funding for the transaction. The transaction is expected to close in the first quarter.
Seller financial advisor: TD Securities
Bidder financial advisor: Not available
Seller legal advisor: Not available
Bidder legal advisor: Not available

source: mergermarket