M&A

Deals: Out with a Whimper, Not a Bang

In our M&A Roundup for the week ended Dec. 28, the year ends with only 21 transactions being signed, garnering a mere $1.1 billion. Will Rohm's gia...
Roy HarrisDecember 29, 2008

Dealmaking continued to dwindle as 2008 neared its last days, with only American International Group’s $742-million sale of its Hartford Steam Boiler holding company to Germany’s Muenchener Rueckversicherung Gesellschaft Aktiengesellschaft topping the $300-million mark.

The 21 deals done during the week ended Sunday totaled only $1.1 billion, in terms of the value to North American companies.

There was plenty of worry concerning one huge deal potentially coming undone — Dow Chemical’s $15.3-billion purchase of coatings and electronic products maker Rohm & Haas Co. It was said to depend on a $17.4-billion petrochemical joint venture between Dow and Kuwait, which Kuwait now has cancelled. During the day, however, reports circulated that because the Rohm & Haas transaction is fully financed by a one-year bridge loan and convertible preferred investments by billionaire Warren Buffett’s Berkshire Hathaway and the Kuwait Investment Authority, the Dow-Rohm transaction still might be completed.

Another undone deal — of another sort — weighed on the stock market: billionaire investor Kirk Kerkorian’s reported sell-off of the rest of his Ford Motor holding, a 133.5-million-share transaction that Kerkorian had suggested in recent months would occur. That represented about 6.09 percent of the troubled carmaker’s shares.

Among smaller deals that were done last week, there was some interesting defense-industry consolidation. Esterline Technologies Corp., an aerospace manufacturer based in Bellevue, Wash., is paying $173 million for Racal Acoustics Ltd., a personal-communications equipment maker for defense and avionics businesses being sold by Harrow, UK-based ECI Partners LLP. Also, Carson, Calif.-based aircraft and space components maker Ducommun Inc. is buying Coxsackie, N.Y.-based DynaBil Industries Inc. from DeltaPoint Capital Management LLC and HSBC Capital (USA) Inc. for $47 million in cash and notes. DynaBil makes sheet metal components and assemblies for the aerospace industry.

For the year to date, the $1.06 trillion of merger-and-acquisitions transactions was sharply off from the $1.50 trillion of deals done in the record year of 2007. In numbers, 3,845 deals were struck this year, down from 5,058, according to data provided to CFO.com by mergermarket.

Muenchener Rueckversicherung Gesellschaft Aktiengesellschaft to buy HSB Group Inc. from American International Group Inc. for $742 million

German insurance company Munich Re Group paid cash to acquire the Hartford, Conn.-based holding company for Hartford Steam Boiler Inspection and Insurance Co. from New York City-based AIG, the insurance and financial services group. Terms called for Munich Re to assume HSB’s $76 million of outstanding capital securities. The transaction which is expected to complete in the first quarter of 2009.
Seller financial advisor: Blackstone Group; Goldman Sachs; JPMorgan; Morgan Stanley
Bidder financial advisor: Citigroup
Seller legal advisor: Sullivan & Cromwell
Bidder legal advisor: Dewey & LeBoeuf

St. Jude Medical Inc. to buy MediGuide Inc. from Elbit Systems Ltd. and Vitalife Life Sciences Venture for $283 million

St. Paul-based medical technology and services developer St. Jude agreed to acquire Haifa, Israel-based MediGuide, a developer of medical tracking and imaging devices, from Elbit and Vitalife, both based in Tel Aviv. The cash price is in addition to assumption of liabilities totaling $17 million. St. Jude Medical will pay $138 million of the total amount in December; $111 million in November 2009; and up to $34 million in April 2010. The transaction was completed on Dec. 22.
Seller financial advisor: Not Available
Bidder financial advisor: Banc of America Securities
Seller legal advisor: Amit, Pollak, Matalon & Co. Advocates and Notary; Morrison & Foerster
Bidder legal advisor: DLA Piper; Dorsey & Whitney; Gibson Dunn & Crutcher

Esterline Technologies Corp. to buy Racal Acoustics Ltd. from ECI Partners LLP for $173 million

Bellevue, Wash.-based Esterline, a manufacturing company serving the aerospace and defense markets, agreed to acquire private Racal, a Harrow, UK-based manufacturer of specialist personal communications equipment for the defense and avionics sectors. The seller, London-based ECI Partners, is a private equity firm. The deal is expected to close within 30 to 45 days.
Seller financial advisor: Hawkpoint Partners
Bidder financial advisor: Jefferies & Company
Seller legal advisor: Jones Day; SJ Berwin
Bidder legal advisor: Perkins Coie; Taylor Wessing

Wipro Technologies to buy Citi Technology Services Ltd. from Citigroup Inc. for $127 million

The Bangalore, India-based IT service company that is a subsidiary of Wipro Ltd. agreed to pay cash for Mumbai-based Citi Technology Services, a Citigroup unit that is engaged in infrastructure and technology outsourcing business. Terms call for Wipro and Citi to further agree to deliver Technology Infrastructure Services and Application Development and Maintenance services for a period of six years. The transaction is expected to close by March 2009.
Seller financial advisor: Citigroup
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

FMC Technologies Inc. to buy a 45-percent stake in Schilling Robotics LLC from Schilling Robotics Employee Stock Ownership Plan for $116 million

Houston-based FMC, which serves the energy, food processing, and air transportation industries, agreed to acquire the stake in Davis, Calif.-based Schilling from the ESOP in a transaction expected to close before Dec. 31.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Harmonic Inc. to buy Scopus Video Networks for $48 million

Ha’ayin, Israel-based digital-video developer and marketer Scopus definitively agreed to be acquired by Sunnyvale, Calif.-based Harmonic, which provides video products. Terms call for $5.46 cash per Scopus share, offering a premium of 41.9 percent and an implied equity value of about $76.4 million. The transaction is expected to close in the first quarter of 2009.
Seller financial advisor: Thomas Weisel Partners Group
Bidder financial advisor: Deutsche Bank
Seller legal advisor: Goldfarb, Levy, Eran, Meiri, Tzafrir & Co; Skadden Arps Slate Meagher & Flom (advising Thomas Weisel Partners Group)
Bidder legal advisor: Wilson Sonsini Goodrich & Rosati

Ducommun Inc. to buy DynaBil Industries Inc. from DeltaPoint Capital Management LLC and HSBC Capital (USA) Inc. for $47 million

Carson, Calif.-based aircraft and space components and assemblies maker Ducommun agreed to acquire the private, Coxsackie, N.Y.- based DynaBil, which makes sheet metal components and assemblies for aerospace industry, for cash and notes.
Seller financial advisor: Houlihan Lokey
Bidder financial advisor: Internal
Seller legal advisor: Internal
Bidder legal advisor: Internal

Piramal Healthcare Ltd. to buy MINRAD Inc. for $45 million

Orchard Park, N.Y.-based MINRAD, which is in the acute-care medical devices and pharmaceuticals business, definitively agreement to be acquired by Mumbai-based Piramal, a pharmaceutical and healthcare company. Terms call for each of 49.302 million MINRAD shares to be purchased for 12 cents in cash, a premium of 100 percent. In addition, Piramal agreed to acquire MINRAD’s 8-percent senior secured convertible notes, worth $30.84 million. The transaction is expected to close in the in the first quarter of 2009.
Seller financial advisor: Barclays Bank
Bidder financial advisor: UBS
Seller legal advisor: Desai & Diwanji; Hodgson Russ
Bidder legal advisor: Ashurst; Reed Smith; Waller Lansden Dortch & Davis

LaBarge Inc. to buy Pensar Electronic Solutions LLC for $45 million

St. Louis-based LaBarge, which provides electronic components for manufacturing, acquired private, Appleton, Wis.-based Pensar, which makes electronic circuit boards.
Seller financial advisor: William Blair & Company
Bidder financial advisor: Internal
Seller legal advisor: Internal
Bidder legal advisor: Internal

Tadano America Holdings Inc. to buy SpanDeck Inc. from William E. Mitchell for $38 million

Houston-based Tadano, a subsidiary of Tokyo-based Tadano Ltd., and a holding company with interests in making and selling crawler cranes, agreed to acquire Franklin, Tenn.-based SpanDeck, a maker and seller of crawler cranes with a telescoping booms. The seller is an American private investor, and the price includes assumption of debt.
Seller financial advisor: Not Available
Bidder financial advisor: Nomura Holdings
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

source: mergermarket