Just a Lull in the Action?

Only 19 merger-and-acquisition deals were announced last week, with one transaction constituting more than half of the dollar volume.
Vincent RyanSeptember 12, 2011

Is the slowdown in North American merger-and-acquisition activity the calm before the storm or a true September swoon? Last week saw only 19 announced deals, down from 27 the previous week and 47 the week before that. On a year-to-date basis, the volume of M&A deals is falling behind last year’s, with 3,451 transactions announced this year versus 3,730 in 2010. On total value, 2011 is still ahead, with $992 billion worth of transactions announced.

The disclosed value of the deals announced last week was $6.4 billion. But one transaction made more than half of that: International Paper’s agreement to acquire Temple-Inland, the corrugated-packaging and building-materials company. Temple-Inland held off International Paper for months, but last week the parties agreed upon a $3.5 billion deal that represents a 52% premium to Temple-Inland’s stock price prior to International Paper’s first offer last June. International Paper is forecasting $300 million of synergies within 24 months of the deal’s closing.

The second-largest corporate tie-up was a marriage of Massachusetts-based biotech firms. PerkinElmer is acquiring Caliper Life Sciences in a deal valued at $557 million. The transaction is expected to close in the fourth quarter.

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An unsolicited bid was also at the heart of the week’s third-largest deal, Omnicare’s $441 million tender offer for PharMerica, a Louisville, Kentucky-based operator of pharmacies for long-term care facilities and nursing homes. PharMerica has adopted a shareholder-rights plan and is considering Omnicare’s bid.

There were only two other deals over $100 million in North America: Smiths Interconnect’s acquisition of Power Holdings from private-equity owner Bertram Capital Management for $145 million, and a Canadian interbank transaction that combined B2B Trust and MRS, companies that sell deposit and lending products to financial advisers.

Of course, the biggest-impact deal of last week may have been Google’s announcement that it is acquiring restaurant-review publisher Zagat. Google said Zagat — with its reviews of hotels, food, and shopping — would be a cornerstone of its “local” offering. Financial terms were not disclosed.