M&A

Deals: Healthier, Thanks to Health Care

In our M&A Roundup for the week ended April 13, big transactions involving an Alcon stake, and Millennium Pharma, and LifeCell provide a needed boost.
Roy HarrisApril 14, 2008

Two deals involving pharmaceuticals companies, and one targeting a soft-tissue products marketer, dominated a heated-up merger-and-acquisition scene last week. An extra jolt came from the infusions that a struggling subprime mortgage lender received — something that seems more than likely to continue.

The largest transaction was Novartis AG’s $10.06-billion agreement to buy 24.85 percent of eye-care products maker Alcon Inc. from Nestle SA. That was followed by Japanese firm Takeda Pharmaceutical Co. Ltd. agreeing to buy Millennium Pharmaceuticals Inc. for $7.55 billion.

Number three was private equity firm TPG LLP’s $2-billion investment in struggling lender Washington Mutual Inc. But after that came another life-sciences transaction: Kinetic Concepts buying LifeCell Corp. for $1.71 billion

The number of deals fell to 51 from 82, according to data provided to CFO.com by mergermarket. But the overall value of transactions climbed to $18.05 billion from the prior week’s $14.37.

Private equity made a healthy appearance, with 11 deals with reported values totaling $2.49 billion.

Lots of deals remain in the buzz in this new week, including a Delta Air Lines/Northwest Airlines merger said to be near, while movie-rental company Blockbuster Inc. confirmed it had bid for Circuit City Inc. for as much as $1.3 billion — a hostile offer that seems sure to drag out in contention.

Last week’s dealmaking brought the year-to-date total to $172.28 billion, in 1,052 deals, still far below the record pace of 1,492 deals worth $469.69 billion at this point in 2007.

Novartis AG to buy 24.85 percent of Alcon Inc. from Nestle SA for $10.60 billion

Basel, Switzerland-based health-care solutions provider Novartis agreed to pay Nestle for the stake in Hunenberg, Switzerland-based Alcon, which develops and makes pharmaceuticals, consumer eye-care products, and surgical equipment. Nestle, of Vevy, Switzerland, provides food and beverage products. The transaction is expected to close in June.
Seller financial advisor: Citigroup; Credit Suisse
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Pestalozzi Lachenal Patry; Sullivan & Cromwell; Blake, Cassels & Graydon; Cravath Swaine & Moore; Howrey
Bidder legal advisor: Allen & Overy; Baer & Karrer; Heller Ehrman White & McAuliffe; Kaye Scholer; Latham & Watkins

Takeda Pharmaceutical Co. Ltd. to buy Millennium Pharmaceuticals Inc. for $7.56 billion

Cambridge, Mass.-based Millennium is a biopharmaceutical company focused on discovering, developing, and commercializing medicines for cancer, inflammatory bowel diseases, and other inflammatory diseases. It signed a definitive agreement to be acquired by Osaka, Japan-based Takeda Pharmaceutical, a global pharmaceutical company, at $25 a share, or a premium of 52.9 percent. Its plan is to use Millennium flagship product Velcade to help Takeda toward its goal of becoming a global leader in oncology. The implied equity value of the transaction is about $8.12 billion, including cash assumed in the deal, which is expected to close in the second quarter.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: UBS
Seller legal advisor: WilmerHale
Bidder legal advisor: Edwards Angell Palmer & Dodge

TPG LLP to buy an undisclosed interest in Washington Mutual Inc. for $2. billion

Fort Worth-based private equity firm TPG agreed to acquire the undisclosed economic interest in Seattle-based Washington Mutual, a bank involved in consumer banking, mortgage lending, commercial banking, consumer finance, and financial services, through a consortium formed by undisclosed investors and many of WaMu’s top institutional shareholders. They will purchase $7 billion of WaMu securities, with TPG contributing $2 billion. The $8.75-a-share represents a discount of 33.46 percent.
Seller financial advisor: Goldman Sachs; Lehman Brothers
Bidder financial advisor: Credit Suisse
Seller legal advisor: Simpson Thacher & Bartlett
Bidder legal advisor: Cleary Gottlieb Steen & Hamilton

Kinetic Concepts to buy LifeCell Corp. for $1.71 billion

Branchburg, N.J.-based LifeCell definitively agreed to be acquired by San Antonio-based Kinetic Concepts, a global medical technology company that manages advanced wound care and therapeutic surfaces. Boards of both companies approved the merger. LifeCell manufactures, processes, and markets biological soft tissue repair products made from human and animal tissue. The acquirer said it wants to achieve global leadership in the area, and to diversify the Kinetic Concepts revenue stream while combining research and development capabilities and increasing the operating-room and acute- care businesses. The $51-a-share price offers a premium of 18 percent. The transaction is expected to close in the second quarter.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: JPMorgan
Seller legal advisor: Fried Frank Harris Shriver & Jacobson; Lowenstein Sandler PC
Bidder legal advisor: Cravath Swaine & Moore LLP; Skadden Arps Slate Meagher & Flom

CCC Information Services Group Inc. to merge with Mitchell International Inc. for $1.40 billion

Chicago-based CCC, software, communications systems, and Internet and wireless services provider and portfolio company of Investcorp, agreed to merge with San Diego-based Mitchell. CCC is part of a Manama, Bahrain-based private equity firm. Mitchell is an information, workflow, and performance management company owned by Los Angeles-based private equity concern Aurora Capital Group.
Seller financial advisor: Watch Hill Partners
Bidder financial advisor: Goldman Sachs, Watch Hill Partners
Seller legal advisor: Gibson, Dunn & Crutcher
Bidder legal advisor: Gibson, Dunn & Crutcher

Apax Partners to buy TriZetto Group Inc. for $1.34 billion

Newport Beach, Calif.-based TriZetto, which has information technology products and services targeted to the health-care payer industry and third-party benefits administrators, definitively agreed to be acquired by private-equity group Apax Partners for $22 a share, a 24.5-percent premium. The TriZetto board has approved the merger. Apax invests in technology and telecom; media, retail, and consumer; health care, and financial and business services. The implied equity value of the transaction is about. $944 million, not including debt. The transaction is expected to take between four to six months to close.
Seller financial advisor: UBS
Bidder financial advisor: Deutsche Bank
Seller legal advisor: Not available
Bidder legal advisor: Kirkland & Ellis

TPG LLP to buy 50 percent of SIA International Ltd. for $800 million

Fort Worth-based TPG agreed to acquire the stake in Moscow-based SIA, a distributor of pharmaceutical products, from Igor Rudinsky, the CEO of the SIA. The acquisition is expected to close in July.
Seller financial advisor: Vanguard
Bidder financial advisor: PricewaterhouseCooper; Morgan Stanley
Seller legal advisor: Monastyrsky, Zyuba, Stepanov & Partners
Bidder legal advisor: Cleary Gottlieb Steen & Hamilton

Nuance Communications Inc. to buy eScription Inc. for $363 million

Burlington, Mass.-based Nuance, a developer of voice-browsing products and development tools for telephone access, agreed to acquire Needham, Mass.-based eScription, which provides computer aided medical transcription technology, in a deal expected to close in the third quarter.
Seller financial advisor: Jefferies & Company
Bidder financial advisor: Thomas Weisel Partners Group
Seller legal advisor: Mintz Levin Cohn Ferris Glovsky & Popeo
Bidder legal advisor: Latham & Watkins

Advantage Partners LLP to buy GST AutoLeather Inc. from SILLC Holdings LLC for $300 million

Tokyo-based private equity firm Advantage Partners plans to acquire Southfield, Mich.-based GST AutoLeather from SILLC Holdings LLC, a holding company that is a subsidiary of Citigroup.
Seller financial advisor: Lazard
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Not available
Bidder legal advisor: Not available

Konica Minolta Business Solutions U.S.A. Inc. to buy Danka Office Imaging Co. from Danka Business Systems plc for $240 million

Ramsey, N.J.-based office printing machines company Konica Minolta Business, a subsidiary of Tokyo-based Konica Minolta Holdings Inc., agreed to acquire St. Petersburg, Fla.-based Danka Office Imaging from London-based Danka Business Systems, a distributor of photocopiers, network printers, and multifunction devices. The deal is expected to close by June 30.
Seller financial advisor: Houlihan Lokey
Bidder financial advisor: Mitsubishi UFJ Securities Co
Seller legal advisor: Skadden Arps Slate Meagher & Flom
Bidder legal advisor: Milbank Tweed Hadley & McCloy

source: mergermarket

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