M&A

Deals: The Power and the Money

In our M&A Roundup for the week ended Dec. 22, four energy deals and three banking transactions dominate the North American top 10 as the final wee...
Roy HarrisDecember 22, 2008

Energy and banking dominated the North American acquisition environment as the tail-end of the year began twitching to mark a 2008 that just about gave out midway through.

The $4.50-billion sale to Paris-based EDF Development Inc. of a half interest in the nuclear energy business of the Warren Buffett-controlled Constellation Energy Group Inc. led the way among the four transactions in power-related businesses. Among banks, Buffalo-based M&T Bank Corp.’s $344-million purchase of Baltimore-based Provident Bankshares Corp. raised the loudest voice in a trio of deals, according to data provided to CFO.com by mergermarket.

Among the transactions not in either category: MGM-Mirage’s $775-million sale of the giant Treasure Island Las Vegas casino-and-hotel resort to a company controlled by private investor Phil Ruffin, and the $255-million sale of TV Guide Online Inc. by Macrovision Solutions Corp. to Allen Shapiro and One Equity Partners LLC.

In all, the 46 deals were struck, with the $8.26 billion value approaching twice the $4.80-billion worth of the prior week’s 33 transactions. For the year-to-date, 3,780 deals now have accounted for $1.06 trillion of M&A in North America, sharply off from last year’s $1.49 trillion done at this time, with the 2007 record year-end approaching.

EDF Development Inc. to buy a 49.99 percent stake in Constellation Energy Nuclear Group LLC from Constellation Energy Group Inc. for $4.50 billion

Paris-based EDF Development Inc., a wholly owned subsidiary of EDF Group (Electricit de France S.A), agreed to acquire the stake in Baltimore-based Constellation Energy Nuclear Group LLC, which constitutes Calvert Cliffs Nuclear Power Plant in Maryland, Nine Mile Point Nuclear Station, and R.E. Ginna Nuclear Power Plant in New York. The seller is a unit of Constellation Energy Group, which is generates, distributes, and supplies electricity to commercial and industrial customers. EDF will acquire a number of Series B non-convertible cumulative preferred shares of Constellation Energy for a total consideration of $1.0 billion, to be credited against the price. The companies have entered into a two-year asset-put option agreement allowing Constellation Energy to sell up to $2 billion of non-nuclear generation assets to EDF, while EDF has provided a $600 million interim backstop liquidity facility to Constellation. The transaction is expected to close in six to nine months.
Seller financial advisor: Credit Suisse; Morgan Stanley; Rothschild; UBS
Bidder financial advisor: JPMorgan
Seller legal advisor: Kirkland & Ellis
Bidder legal advisor: Skadden Arps Slate Meagher & Flom

Phil Ruffin to buy Treasure Island Hotel & Casino from Mirage Casino-Hotel for $775 million

Nevada-based Ruffin Acquisition LLC, wholly owned by private investor Phil Ruffin, acquired Treasure Island Hotel & Casino in Las Vegas from Mirage, a subsidiary of Las Vegas-based MGM-Mirage, engaged in the leisure industry, for $500 million in cash and $275 million in secured notes bearing 10 percent interest, $100 million of which is payable before 175 days or around six months after closing, and with $175 million payable within two years of completion. The notes will be secured by the assets of Treasure Island and will be senior to other financing activities. The acquisition is expected to close by the end of the second quarter of 2009.
Seller financial advisor: Internal
Bidder financial advisor: Internal
Seller legal advisor: Christensen, Glaser, Fink, Jacobs, Weil & Shapiro
Bidder legal advisor: Brownstein Hyatt Farber Schreck; Munger Tolles & Olson

Nexen Inc. to buy a 15-percent stake in joint venture assets, including Long Lake Project, from OPTI Canada Inc for $594 million

Calgary-based energy company Nexen agreed to acquire the working interest in the joint-venture assets from Calgary-based OPTI Canada, an oil sands development company. Joint venture assets include including Phase 1 of the Long Lake Project, future phase reserves and resources, and future phases of development. Nexen then will have a 65-percent interest in all the joint-venture lands.
Seller financial advisor: Credit Suisse; TD Securities
Bidder financial advisor: Not Available
Seller legal advisor: Davies Ward Phillips & Vineberg (advising Credit Suisse)
Bidder legal advisor: Blake, Cassels & Graydon

M&T Bank Corp. to buy Provident Bankshares Corp. for $344 million

Baltimore-based commercial banking services company Provident Bankshares definitively agreed to be acquired by Buffalo-based commercial and retail banking services concern M&T. Both boards approved a merger in an exchange of 0.171625-share of M&T for each Provident share, a $10.25 value that provides a premium of 76.7 percent.
Seller financial advisor: Sandler O’Neill & Partners
Bidder financial advisor: Keefe Bruyette & Woods
Seller legal advisor: Kilpatrick Stockton; Sullivan & Cromwell
Bidder legal advisor: Wachtell Lipton Rosen & Katz

Mitsubishi UFJ Trust and Banking Corp. to buy NikkoCiti Trust and Banking Corp. from Citigroup Inc. for $280 million

Tokyo-based Mitsubishi UFJ, a trust and banking services provider that is part of Mitsubishi UFJ Financial Group Inc. acquired Tokyo-based NikkoCiti, a provider of investment trust and banking services, from New York City-based Citigroup for cash. The acquisition is expected to close on April 1.
Seller financial advisor: Citigroup
Bidder financial advisor: Mitsubishi UFJ Securities; Morgan Stanley
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

Allen Shapiro and One Equity Partners LLC to buy TV Guide Online Inc. from Macrovision Solutions Corp. for $255 million

New York City-based private equity concern One Equity Partners, and California based private investor Allen Shapiro agreed to acquire New York City-based TV Guide Online, the TV Guide Network, from Santa Clara, Calif.-based Macrovision, a digital entertainment technology provider. The $255 million price is subject to a working capital adjustment at closing, and up to an additional $45 million payable in earn-outs through 2012. The agreement also includes the TV Guide Online business (tvguide.com) and certain indemnifications, and the deal is expected to close no later than April 1.
Seller financial advisor: UBS
Bidder financial advisor: Not Available
Seller legal advisor: Cooley Godward Kronish; Latham & Watkins (advising UBS)
Bidder legal advisor: Not Available

MP Thrift Investments LP to buy an undisclosed economic interest in Flagstar Bancorp Inc. for $255 million

Troy, Mich.-based Flagstar Bancorp agreed to have MP Thrift Investments LP, a New York City-based private equity fund of MatlinPatterson Global Advisers LLC, invest in return for an undisclosed economic interest. Terms call for MatlinPatterson to purchase 250,000 shares of convertible participating voting preferred stock, and after the receipt of approvals Flagstar will issue 312,500,000 common shares at a conversion price of 80 cents per share. Management includes Thomas Hammond, Flagstar chairman; Mark Hammond, its CEO. They will invest $2 million each in the acquisition, while other members of management will invest $1 million. The transaction is subject to shareholder approval.
Seller financial advisor: Keefe Bruyette & Woods
Bidder financial advisor: Sandler O’Neill & Partners
Seller legal advisor: Kutak Rock; Skadden Arps Slate Meagher & Flom (advising Keefe Bruyette & Woods)
Bidder legal advisor: Sullivan & Cromwell

Columbus Acquisition Corp. to buy Integrated Drilling Equipment Company for $249 million

New York City-based Columbus Acquisition, incorporated for mergers and acquisitions, agreed to acquire private Spring, Texas-based Integrated Drilling, a provider of products and services related control systems, in a reverse takeover. Under the terms of the agreement, Columbus will pay $43m in cash and will issue its common stock worth of $50m. Columbus will also issue its common stock worth of $156m as an earn outs, if IDE will achieve EBITDA of $55m for the year ending 31 December 2009 and EBITDA of $78m for the year ending 31 December 2010. The transaction is subject to certain customary closing conditions, approval from the IDE’s shareholders and Columbus’s shareholders and is expected to complete in the second quarter of 2009.
Seller financial advisor: European American Equities; M1 Capital; Roth Capital Partners
Bidder financial advisor: Citigroup; Ladenburg Thalmann & Co; Lazard; Solebury Capital Group
Seller legal advisor: Pryor Cashman Sherman & Flynn
Bidder legal advisor: Skadden, Arps, Slate, Meagher & Flom

Rembrandt Enterprises Inc. to buy Golden Oval Eggs LLC from Goeca LP, Goemca Inc., and Midwest Investors of Iowa Cooperative for $212 million

Goeca LP and Goemca Inc., both privately held, Renville, Minn.-based companies, along with Midwest Investors of Iowa Cooperative and all shareholders of Golden private Renville-based egg producer Golden Oval Eggs, agreed to sell Golden Oval Eggs to Rembrandt Enterprises. It is a private, Rembrandt, Iowa-based egg producer and agribusiness company. The transaction is expected to close in early 2009.
Seller financial advisor: Green Holcomb and Fisher; Keybanc Capital Markets
Bidder financial advisor: Internal
Seller legal advisor: Jones Day
Bidder legal advisor: Internal

Star Energy Group plc to buy Marathon Oil Ireland Ltd. from Marathon Oil Corp. for $180 million

London-based Star, an integrated energy company, agreed to acquire he Marathon Ireland unit, involved in the exploration and production of gas, from Houston-based Marathon. Terms of the agreement call for Star, wholly owned by Petroliam Nasional Berhad, to pay the $180 million excluding any purchase price adjustments at closing. The agreement does not include Marathon Oil’s 18.5-percent interest in the Corrib natural gas development. The transaction is expected to be completed in the first quarter of 2009.
Seller financial advisor: Not Available
Bidder financial advisor: Not Available
Seller legal advisor: Not Available
Bidder legal advisor: Not Available

source: mergermarket

4 Powerful Communication Strategies for Your Next Board Meeting