M&A

Deals: A Pulse from Across the Pond

In our M&A Roundup for the week ended Nov. 2, excluding TARP deals, CenturyTel does the biggest transaction. But four of the top-10 transactions re...
Roy HarrisNovember 4, 2008

If one doesn’t count the Fed investments that were part of the Troubled Assets Relief Program — and we didn’t — the $11.52-billion combination of communications company Embarq Corp. with CenturyTel Inc. topped last week’s North American dealmaking. Lower down among the transactions, activity also increased among European companies in buying American firms — or big slices of them.

The nine TARP deals involved preferred stock warrants purchased by the Federal Reserve from Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street Corp., Wells Fargo, and Merrill Lynch. They were not included in our calculations because of difficulties valuing them. However, they will be reflected in next week’s data to be provided to CFO.com by mergermarket.

As for the European investments, the largest was by EDF Production UK Ltd., owned by a Parisian oil-and-gas concern, which bought an 80-percent stake in the North Sea operations of Houston-based ATP Oil & Gas for $422 million. Deals number 8, 9, and 10 — in the $28 million to $42 million range — involved buyers from Denmark, Switzerland, and the UK.

The CenturyTel-Embarq transaction assured that the latest week’s dealmaking would exceed the total of the prior week — when $5.99 billion of deals were done. The $13.55 billion worth of mergers and acquisitions last week occurred in 35 separate deals (excluding the TARP deals), only one more than in the prior week. (The largest deal that week was TARP-related: PNC National’s $4.54-billion deal for National City.)

For the year-to-date, 3,187 transactions have accounted for $828.45 billion of value, still sharply lower than the 4,330 deals, worth $1.40 trillion, over then same period of 2007.

CenturyTel Inc. to buy Embarq Corp. for $11.52 billion

Overland Park, Kan.-based Embarq, which provides communications for consumers and businesses, definitively agreed to be acquired by Monroe, La.-based CenturyTel, a provider of communications, high-speed Internet, and entertainment services in small-to-mid-size cities through broadband and fiber transport networks. The deal is a tax free, stock-for-stock transaction approved by both boards. Terms call for 1.37 Century share to be exchanged for each Embarq share. The $40.42-a-share value offers a 35.9-percent premium. The implied equity value is about $5.76 billion for the transaction, expected to close in next year’s second quarter.
Seller financial advisor: JPMorgan
Bidder financial advisor: Banc of America Securities; Barclays Bank; Merrill Lynch; Morgan Stanley; Wachovia
Seller legal advisor: Cravath Swaine & Moore; Morris Nichols Arsht & Tunnell; Simpson Thacher & Bartlett (advising JPMorgan)
Bidder legal advisor: Dewey & LeBoeuf (advising Barclays Bank); Jones, Walker, Waechter, et. al.; Sullivan & Cromwell (advising Merrill Lynch); Wachtell Lipton Rosen & Katz; Weil Gotshal & Manges

Loews Corp. to buy CNA Financial Corp. for $1.25 billion

New York City-bases conglomerate and holding company Loews agreed to acquire the nonvoting cumulative senior preferred shares of Chicago-based CNA Financial, a Loews insurance subsidiary. The shares will accrue cumulative dividends at an annual rate of 10 percent, payable quarterly, for the first five years after issuance. No dividends will be paid to common stock holders while the new preferred stock is outstanding. About $1 billion in proceeds from the issuance of shares will be used to increase the statutory capital of Continental Casualty Co., a principal CNA insurance subsidiary. The transaction is expected to closed in the fourth quarter of 2008.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

EDF Production UK Ltd. to buy an 80-percent stake in the North Sea assets of ATP Oil & Gas Corp. from ATP Oil & Gas (UK) Ltd. for $422 million

London-based EDF, which is oil and gas exploration services and is a subsidiary of Paris-based EDF International SA, agreed to acquire the stake in the British North Sea assets of ATP, based in Guilford, UK, and a subsidiary of Houston-based ATP Oil & Gas. The transaction is expected to close at the end of the year.
Seller financial advisor: Scotia Capital
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Trans-India Acquisition Corp. to buy 80 percent of Solar Semiconductor Ltd. for $300 million

Chicago-based Trans-India Acquisition, engaged in merger, capital stock exchange, and asset acquisition of one or more companies, agreed to acquire the stake in Solar, a privately-held Sunnyvale, Calif.-based company that designs, develops, manufactures, and markets solar photovoltaic products. Payment will be in Trans-India common, valued at $8 per share. The price will be adjusted to reflect any debt levels in excess of $50 million at closing. The price will be increased by as much as $100 million, or decreased by as much as $175 million, based on net income.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Hayden Bergman Rooney
Bidder legal advisor: Cozen O’Connor

ProAssurance Corp. to buy Podiatry Insurance Co. of America for $120 million

Birmingham, Ala.-based medical professional liability insurer ProAssurance agreed to acquire Podiatry Insurance, a privately held Nashville-based company that provides professional liability insurance for podiatric physicians. The transaction is expected to close during next year’s first quarter.
Seller financial advisor: Raymond James & Associates
Bidder financial advisor: Fox-Pitt Kelton Cochran Caronia Waller
Seller legal advisor: Sidley Austin
Bidder legal advisor: Burr & Forman

Odyssey Investment Partners LLC to buy SM&A for $109 million

Odyssey, a New York City-based private equity firm, agreed to pay cash for Newport Beach, Calif.-based SM&A, a management consulting firm. Terms call for an offer price of $6.25 per share, representing a premium of 159 percent. The transaction was approved by SM&A’s board, and is expected to close by next year’s first quarter.
Seller financial advisor: Wedbush Morgan Securities
Bidder financial advisor: Not Available
Seller legal advisor: Bingham McCutchen; Munger Tolles & Olson
Bidder legal advisor: Gibson, Dunn & Crutcher

Private investors Sunil Dharod, Andy Patel, and Wellington D. Yu to buy 66 company-owned Applebee’s restaurants from DineEquity Inc. for $63 million

Glendale, Calif.-based restaurant chain DineEquity agreed to sell the Applebee’s restaurants, in New Mexico and Texas, to the private investors. Wellington Yu, president of Peterson Group Inc., a private, Kansas-based real estate development and management firm, agreed to acquire 22 restaurants in Houston. Sunil Dharod, president of Dallas-based Synned Inc., a real estate management firm, agreed to acquire 37 restaurants in Dallas. And Andy Patel, president of Mina Inc., a Boynton Beach, Fla.-based restaurant management firm, agreed to acquire 7 restaurants in Albuquerque.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Danisco A/S to buy Agtech Products Inc. for $42 million

Copenhagen-based Danisco, a developer and producer of food ingredients, feed ingredients, sweeteners and sugar, agreed to acquire the private, Waukesha, Wis.-based Agtech, an agricultural biotechnology company, in a transaction expected to close by the end of the year.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Logitech International SA to buy SightSpeed Inc. for $30 million

Romanel-sur-Morges, Switzerland-based IT company Logitech agreed to acquire Berkeley, Calif.-based SightSpeed, a provider of internet video communications services for businesses and consumers, for cash in a transaction expected to close by the end of this month.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

GlaxoSmithKline plc to buy Genelabs Technologies Inc. for $28 million

Brentford, UK-based healthcare group GlaxoSmithKline agreed to acquire Redwood City, Calif.-based biopharmaceutical company Genelabs for $56.789 million excluding assumption of about $29 million of net cash. Terms call for a price of $1.30 a share, representing a premium of 465.22 percent on the closing price of $0.27 per share of Genelabs as on 28 October 2008, being the last trading day prior to announcement and a premium of around 176.595 percent on the closing price of $0.47 per share as on 26 September 2008, being the last trading day one month prior to announcement. The transaction is subject to customary conditions and is expected to close in December 2008.
Seller financial advisor: Not Disclosed
Bidder financial advisor: Not Disclosed
Seller legal advisor: Not Disclosed
Bidder legal advisor: Not Disclosed

source: mergermarket

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