Last week, like the one before it, was an enormous period for mergers and acquisitions, led by a giant deal involving a Canadian company. This time, though, the company was Alcan Inc., which snubbed Alcoa Inc. and agreed to be gobbled up by Australia’s Rio Tinto Ltd. for $42.67 billion. (In the prior week, the $48-billion buyout of Montreal-based BCE Inc. dominated the deal-making.)
Within the total of $70.45 billion of transactions last week, buyout activity was relatively quiet among North America’s top ten deals, according to data provided to CFO.com by mergermarket. Still, two multi-billion-dollar buyouts made the top ten: the $9.67-billion purchase of Huntsman Corp. by the Hexion Specialty Chemicals Inc. unit of private-equity firm Apollo Management LP, and Carlyle Group’s $2.7 billion bid for diversified manufacturer Sequa Corp.
As CFO.com changes the end point being used in reporting on weekly M&A, the period being used for last week’s calculations actually was nine days, from Friday, July 7, through Sunday, July 15. (We previously used the seven-day period ended Friday.) In the future, the week used in calculations for the Monday M&A Roundup will be the seven days ended on Sunday.
The 50 deals last week lifted year-to-date activity to $1.15 trillion, compared with $779.99 billion for the same period of 2006. The average deal this year is substantially larger, with the 2007 dollar total covering 2,478 separate deals, while last year there were 2,640.
Rio Tinto to buy Alcan for $42.67 billion
Holders in Alcan, parent of an international group involved in the aluminum, engineered products, and packaging industries, will receive $101 a share in cash, a premium of 12.7 percent, although the premium is 37.9 percent over Alcoa’s May offer of $73.25 a share. Rio Tinto will finance the deal through newly committed bank facilities. A breakup fee of $1.05 billion was included in the agreement. The combined aluminum product group, to be named Rio Tinto Alcan, will have pro forma EBIDTA at about $16.5 billion and assets of $44.1 billion. The transaction is expected to close by the end of 2007. Alcan had rejected Pittsburgh-based Alcoa’s offers, and terminated discussions after the Canadian company was unhappy with Alcoa’s proposed confidentiality/standstill agreement.
Seller financial advisor: JPMorgan; Morgan Stanley; UBS; RBC Capital Markets
Bidder financial advisor: Deutsche Bank; CIBC World Markets
Seller legal advisor: Sullivan & Cromwell; Freshfields Bruckhaus Deringer; Ogilvy Renault; Latham & Watkins (Advising JPMorgan)
Bidder legal advisor: Clifford Chance (Advising Deutsche Bank); Linklaters; McCarthy Tetrault; Goodmans (Advising Deutsche Bank)
Hexion Specialty Chemicals to buy Huntsman for $9.76 billion
The offer by the Apollo Management portfolio company, the world’s largest thermosetting resins maker, is under review by Huntsman’s transaction committee. The deal for Salt Lake City-based Huntsman, which makes and markets differentiated, inorganic, and commodity chemical products, calls for a price of $27.25 per share, a premium of 7.95 percent over the June 26 offer price of $25.25 from Basell NV. (Later, Apollo announced that it had increased its definitive proposal to $28 per share.)
Seller financial advisor: Merrill Lynch; Cowen & Co.
Bidder financial advisor: Credit Suisse; Deutsche Bank
Seller legal advisor: Vinson Elkins; Sherman Sterling
Bidder legal advisor: Wachtell Lipton Rosen & Katz; Morgan Lewis Bockius; O’Melveny & Myers
Gerdau Ameristeel Corp. to buy Chaparral Steel Co. for $3.96 billion
Midlothian, Texas-based Chaparral’s definitive agreement calls for Tampa-based Gerdau Ameristeel, a unit of Brazil’s largest steelmaker, Gerdau S.A., to pay $86 per share, a premium of 15.42 percent. The boards of both companies have approved the merger. The transaction is expected to close later this year. Chaparral had been pursuing strategic alternatives since April 25. The company retained Goldman, Sachs & Co. to assist in the review.
Seller financial advisor: Goldman Sachs
Bidder financial advisor: JPMorgan
Seller legal advisor: Wachtell Lipton Rosen & Katz; Sullivan & Cromwell
Bidder legal advisor: Simpson Thacher & Bartlett; Torys
Carlyle Group to buy Sequa for $2.65 billion
The definitive agreement, approved by New York-based Sequa’s directors, calls for a price of $175 per share, a premium of 54.16 percent for the company, which has seven discrete operating units in aerospace, automotive, metal coating, specialty chemical, industrial machinery, among other industries. The executors of the estate of Norman E. Alexander and other entities own or control Class A and Class B shares of Sequa representing about 54 percent of its voting power, and have agreed to vote all their shares for the transaction, which is expected to close in the fourth quarter.
Seller financial advisor: Evercore Partners
Bidder financial advisor: Citigroup; JPMorgan; Lehman Brothers
Seller legal advisor: Cahill Gordon & Reindel; Debevoise & Plimpton; Hartman & Craven; Hughes Hubbard & Reed (Advising Evercore Partners)
Bidder legal advisor: Latham & Watkins
Caisse de Depot et Placement du Quebec, Westmont Hospitality Group, and InnVest Real Estate Investment Trust to buy Legacy Hotels Real Estate Investment Trust for $2.26 billion
Canada’s Legacy Hotels REIT signed a support agreement to be acquired by the consortium for $12.60 a share, a premium of 5 percent, and of 12 percent over Legacy’s price before announcing a search for strategic alternatives on Feb. 28. Fairmont Hotels & Resorts Inc, which owns about 20.4 percent of Legacy, entered into a lockup agreement with the consortium to tender all of its shares in the merger..
Seller financial advisor: Morgan Stanley; RBC Capital Markets
Bidder financial advisor: Avington International
Seller legal advisor: Blake Cassels & Graydon
Bidder legal advisor: Davies Ward Phillips & Vineberg; Fasken Martineau
Graphic Packaging Corp. to buy Altivity Packaging LLC from TPG for $1.77 billion
Graphic Packaging, a maker of consumer and industrial packaging, had announced a strategy to expand its product portfolio and customer base. Both companies have similar operating philosophies, allowing the acquisition to create synergies and economies of scale valued at $90 million. The new company will operate as Graphic Packaging Holding Co., and is expected to trade on NYSE. The combined entity will have 86 manufacturing facilities and 15,600 employees across five continents. The transaction is expected to be completed in the fourth quarter of 2007.
Seller financial advisor: Banc of America Securities
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Simpson Thacher & Bartlett
Bidder legal advisor: Alston & Bird; Paul Weiss Rifkind Wharton & Garrison (Advising Exor Group, minority investor in Graphic Packaging Corporation)
Energizer Holdings Inc. to buy Playtex Products Inc. for $1.75 billion
St. Louis-based Playtex has signed a definitive agreement in which Dover, Del.-based Energizer will pay $18.30 per share, a premium of 20.32 percent. The transaction is expected to close in the fall of 2007.
Seller financial advisor: Lehman Brothers
Bidder financial advisor: Banc of America Securities
Seller legal advisor: Morgan Lewis & Bockius
Bidder legal advisor: Bryan Cave; Latham & Watkins
Royal Bank of Scotland Group plc to buy a majority stake in Sempra Commodities from Sempra Energy for $1.35 billion
The U.K. financial services provider and Sempra Energy will form a joint venture by investing $1.355 billion and $1.3 billion respectively. This joint venture will acquire Sempra Commodities, to be called RBS Sempra Commodities LLP, and to be based in the U.K. The transaction is expected to be completed by the end of the year. It is subject to approvals by the U.K. Financial Services Authority, the U.S. Federal Reserve Board, the Federal Energy Regulatory Commission as well as the Commodities Futures Trading Commission.
Seller financial advisor: Lazard
Bidder financial advisor: PricewaterhouseCoopers Corp Fin
Seller legal advisor: Sullivan & Cromwell; Slaughter & May
Bidder legal advisor: Simpson Thacher & Bartlett
Coventry Health Care Inc. to buy Florida Health Plan Administrators LLC for $685 million
Florida Health Plan is the U.S.-based holding company of Vista Healthplan Inc. The acquisition is expected to be earnings accretive from 8 cents per share to 11 cents per share in 2008. Vista will enable CHC to exploit new markets. Vista serves 295,000 members and has annual revenues of approximately $1.2 billion. Completion of the transaction, which is expected to close in 90 to 180 days, is subject to customary closing conditions as well as regulatory approvals.
Seller financial advisor: UBS
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Dechert
Bidder legal advisor: Bass Berry & Sims
Google Inc. to buy Postini Inc. for $625 million
The internet search-engine operator signed a definitive agreement for the acquisition of Postini, the on-line communications security concern. Postini will become a wholly-owned subsidiary of Google. Google will continue to support Postini customers and invest in Postini products. The agreement is subject to customary closing conditions and is expected to close by the end of the third quarter 2007.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Not Available
Seller legal advisor: Fenwick & West
Bidder legal advisor: Wilson Sonsini Goodrich & Rosati