M&A Deals: Outside the Beltway

In our new weekly merger and acquisition roundup, midsize transactions in industrials, financial services, and technology dominated.
Vincent RyanAugust 2, 2011

(Data for the following is provided to CFO by mergermarket.)

The fight in Congress over the U.S. debt ceiling is not the only high-stakes wrestling match in progress. Plenty of corporate officers and boards of directors are in negotiations over possible acquisitions, with the target’s shareholders balking at the offers on the table.

A big battle looms in insurance, for example, as reinsurer Validus Holdings is trying to grab Transatlantic Holdings from the tentative grip of Allied World Assurance. Transatlantic rejected a hostile bid from Validus and is instituting a poison-pill plan. At the same time, Peabody Energy and ArcelorMittal have also gone the unfriendly route, bidding for Macarthur Coal (Australia) in what would be a $5 billion-plus transaction. Meanwhile, in the world of brewing, it looks like SABMiller’s quest to go Down Under with the purchase of Foster’s Group is near an end. SABMiller has not topped its initial June bid, which the Foster’s board rejected.

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While big deals are stalling, though, plenty of midsize and small transactions were completed last week. In North America, there were 58 announced deals, with 27 of them having an aggregate disclosed value of $11 billion, according to data provided by mergermarket. (The other 31 did not disclose terms.)

Year-to-date, there have been 2,770 recorded deals in 2011; 1,540 of those deals have a total value of $825.1 billion. (For 1,230 of those deals, the value was undisclosed.) The number of deals is down from a year ago, but the disclosed value is up 38%.

Here’s a sampling of North American transactions announced last week:

U.S. industrials are seeking ways to expand. Cooper Industries, a Dublin-based manufacturer of electrical products, agreed to acquire Martek Power, a Torrance, Calif.-based maker of custom power supplies, converters, and inverters for $114 million, inclusive of debt. Illinois Tool Works, meanwhile, acquired Despatch Industries, a $200 million (revenue) maker of industrial ovens and furnaces, while Otis Elevator,  a unit of United Technologies, acquired Marshall Elevator. And industrial giant DuPont agreed to buy Innovalight, a developer of ultrathin-film power modules for solar power residential and consumer applications.

On the tech front, Oracle agreed to acquire InQuira, providers of a software platform for knowledge-based management, natural language search, and analytics, for an undisclosed amount. Oracle will use Inquira’s tools to deliver a cross-channel customer support offering. Groupon, meanwhile, was active during its IPO quiet period, acquiring Zappedy, a provider of application software for merchants, for $10.3 million. And in a much larger deal, HIS agreed to buy Seismic Micro-Technology from JMI Equity and Technology Crossover Ventures for $500 million. Seismic Micro-Technology sells seismic and geological interpretation software.

Besides the Transatlantic drama, financial services buzzed with tie-ups. Bethesda, Md.-based Eagle Bancorp swallowed up Alliance Bankshares of Chantilly, Va., for $31.2 million in shares, and Wintrust Financial, Lake Forest, Ill., agreed to purchase Elgin State Bancorp for $13.8 million. Bank Midwest and American Momentum Bank gobbled up distressed bank assets in Colorado and Florida, respectively, and FirstAtlantic Bank scooped up Center Bank of Jacksonville. Finally, in an unlikely cross-sector marriage, United Federal Credit Union acquired Griffiths Savings Bank.

What strategics want to buy, of course, financial sponsors will sell for the right price. Last week saw a number of exits by private-equity firms, in addition to the aforementioned sale by JMI Equity and Technology Crossover Ventures. U.K.-based Compass Partners International exited its overseas investment in Drake Beam Morin, a U.S.-based career transition and talent development solutions firm. The buyer was Adecco SA (Switzerland). In a sponsor-to-sponsor transaction, Falfurrias Capital Partners agreed to sell Bojangles Restaurants Inc. to Advent International. On the medical front, OMERS private equity (Canada) bought Accelerated Rehabilitation Centers from Gryphon Investors. Gryphon and Accelerated management acquired the physical and occupational therapy company in 2008 and in three years doubled its number of clinics. Finally, Weber-Hydraulik (Germany) bought Atlanta-based Hyco International for an undisclosed amount from Centre Partners Management. Weber-Hydraulik was seeking a base of operations in the U.S.

Financial sponsors did do some investing. New Mountain Capital bought a majority stake in banking data firm SNL Financial, and Graham Partners acquired Chelsea Building Products, a manufacturer of window and door systems for homes and offices. The seller was Tessenderlo Chemie NV, a Belgium-based diversified chemical products manufacturer.