Banks, financial companies, and insurers accounted for 60 percent of U.S. dealmaking last week — with the largest transaction being the Treasury Department’s $40-billion additional capital infusion into American International Group.
Indeed, government infusions do make big waves in the week’s results when they occur. The fifth-largest transaction was Treasury’s $298.7-million investment in San Francisco bank holding company UCBH Holdings Inc., in which the government accepted 298,737 newly issued Series C fixed-rate cumulative perpetual preferred shares and a warrant for up to 7,847,732 more shares.
Utility services holding company Exelon Corp. pulled off the second-largest deal of the week: a $12.60-billion exchange offer for NRG Inc., a wholesale power generation company, according to data provided to CFO.com by mergermarket.
For the sevem days ended Sunday, 36 North American deals were struck, totaling $54.54 billion, sharply up from the prior week’s $3.99 — when no U.S.-backed deals were recorded. For the year-to-date, 3,358 transactions worth $985.07 billion have now been reached, still far short of last year’s record 4,556 deals, worth $1.44 trillion, as of this time.
U.S. Department of the Treasury to buy an undisclosed economic interest in American International Group for $40 billion
Treasury agreed to invest $40 billion more in American International Group, the New York City-based insurance and financial services company in exchange for newly issued AIG perpetual preferred stock and warrants to acquire common shares equal to 2 percent of AIGs outstanding share capital. Terms call for AIG to issue 4 million senior preferred shares with a liquidation preference of $10,000 a share. The preferred has limited voting rights, but will rank senior to AIG common, will accumulate quarterly dividends at an annual rate of 10 percent, and will be payable if declared by AIG directors. AIG cannot declare or pay any dividends on common or preferred that ranks equal to or junior to the preferred stock issued to the Treasury, however. Further, Treasury will receive a 10-year warrant to acquire a certain amount of common stock equal to 2 percent of the outstanding share capital. The warrant has an initial exercise price of $2.50 per AIG common share, subject to customary anti-dilution adjustments.
Seller financial advisor: Blackstone Holdings; JPMorgan
Bidder financial advisor: Morgan Stanley
Seller legal advisor: Sullivan & Cromwell
Bidder legal advisor: Davis Polk & Wardwell
Exelon Corp. to buy NRG Energy Inc. for $12.60 billion
Chicago-based utility services holding company Exelon said it would launch an exchange offer for NRG’s outstanding shares. NRG is a Princeton, N.J.-based wholesale power generation company. Exelon offered 0.485-share for each NRG share, representing $25.46, a premium of 10.44 percent. The implied equity value of the transaction is about $5.9 billion.
Seller financial advisor: Citigroup; Credit Suisse
Bidder financial advisor: ABN AMRO; Barclays Bank; Lazard; UBS
Seller legal advisor: Kirkland & Ellis
Bidder legal advisor: Sidley Austin
Assured Guaranty Ltd. to buy the bond insurance business of Financial Security Assurance Holdings Ltd. from Dexia Group for $722 million
Hamilton, Bermuda-based Assured, a provider of financial guaranty services, definitively agreement to acquire the bond insurance operations of New York City-based financial guaranty and products provider Financial Security Holdings, from Brussels-based Dexia, a financial services company. Terms call for $361 million in cash and $361 million in stock.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: Banc of America Securities
Seller legal advisor: Cleary Gottlieb Steen & Hamilton
Bidder legal advisor: Mayer Brown
George Forrest International Afrique SPRL to buy Forsys Metals Corp. for $612 million
Oakville, Canada-based uranium producer Forsys definitively agreed to be acquired by George Forrest, a Congo-based investment holding company with interests in engineering and machine construction. Terms call for 77,170,231 Forsys shares to be purchased in a deal valuing the entire transaction at $654.41 million, a premium of 50.86 percent.
Seller financial advisor: CIBC World Markets
Bidder financial advisor: Not Available
Seller legal advisor: McCarthy Tetrault
Bidder legal advisor: Aird & Berlis
U.S. Department of the Treasury to buy an undisclosed economic interest in UCBH Holdings for $299 million
Treasury has agreed to invest $298.7 million in San Francisco-based UCBH, the holding company for United Commercial Bank, in exchange for 298,737 newly issued Series C fixed-rate cumulative perpetual preferred shares and a warrant to acquire up to 7,847,732 UCBH common shares. Terms of call for the Series C preferred shares to pay cumulative dividends at an annual rate of 5 percent for the first five years and 9 percent thereafter. The stock will not be redeemable for the first three years. The warrant for the common will have an exercise price of $5.71 per share, and is exercisable upon issuance. It will expire in ten years. Proceeds will be treated as Tier 1 capital and will increase UCBH’s total risk-based capital ratio of from 12.5 percent to 15 percent as of Sept. 30. The bank will use the funds to support its lending activities.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available
American Capital Strategies Ltd. to buy a 32.30-percent stake in European Capital Ltd. for $158 million
Bethesda, Md.-based private equity and alternative asset management firm American Capital launched an offer to acquire the 32.3 percent of London-based European Capital that it does not already own. European Capital, an investment and private equity firm, is managed by European Capital Financial Services (Guernsey) Ltd., the France-based private equity firm. Terms call for European Capital holders to receive 0.333-share of new American Capital stock for each share they hold, a value of $4.58 a share, a premium of 107.8 percent. The acquisition is expected to close in the first quarter next year.
Seller financial advisor: Lexicon Partners
Bidder financial advisor: Citigroup
Seller legal advisor: Linklaters
Bidder legal advisor: Arnold & Porter; Slaughter and May
Independent Bank Corp. to buy Benjamin Franklin Bancorp for $124 million
Rockland, Mass.-based Independent, holding company of Rockland Trust Co., definitively agreed to acquire Franklin, Mass.-based holding company Benjamin Franklin Bancorp in an exchange of 0.59-share of Independent for each Franklin share, of $17.55 a share, a premium of 20.8 percent. The transaction is expected to close in the second quarter next year.
Seller financial advisor: Keefe Bruyette & Woods
Bidder financial advisor: Robert W. Baird & Co
Seller legal advisor: Foley Hoag
Bidder legal advisor: Hogan & Hartson
Pennsylvania Commerce Bancorp Inc. to buy Republic First Bancorp for $110 million
Philadelphia-based Republic First, the holding company of Republic First Bank, definitively agreed to be acquired by Pennsylvania Commerce, the Harrisburg, Pa.-based holding company of Pennsylvania Commerce Bank. The transaction, which will form Metro Bancorp Inc., calls for a 0.36-share of Pennsylvania Commerce common, with a ceiling of 0.38 and floor of 0.34, to be exchanged for each Republic First Bank share. The value of about $10 a share represents a premium of 14.3 percent. The transaction is expected to close in the first quarter of 2009.
Seller financial advisor: Sandler O’Neill & Partners
Bidder financial advisor: Keefe Bruyette & Woods
Seller legal advisor: Pepper Hamilton
Bidder legal advisor: Mette, Evans and Woodside
Affymetrix Inc. to buy Panomics Inc. for $73 million
Santa Clara, Calif.-based Affymetrix, a producer of technology for analyzing complex genetic information, agreed to acquire Fremont, Calif.-based Panomics, a provider of products for genetic, protein, and cellular analysis applications. The transaction is expected to close by the end of the year.
Seller financial advisor: Thomas Weisel Partners Group
Bidder financial advisor: Achelous Partners
Seller legal advisor: Morrison & Foerster
Bidder legal advisor: Davis Polk & Wardwell
Unico Holdings to buy Perrigo Co. for $49 million
Lake Worth, Fla.-based private-label health and personal care products maker Unico definitively agreed to be acquired by Perrigo, an Allegan, Mich.-based manufacturer of over-the-counter pharmaceuticals and nutritional products for the private label market.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available
source: mergermarket