Deals: Blame Canada

In our M&A Roundup for the week ending July 6, the year-to-date record of $100-billion-plus in activity is led by the biggest deal ever north of the border.

More than $100 billion worth of deals were announced last week, making it the most active of the year so far for North American M&A. The survey of the week’s top ten deals was dominated by two enormous buyouts, however: the $48-billion purchase of Montreal-based telecommunications giant BCE Inc. — Canada’s largest deal ever — and Blackstone Group Holdings LLC’s $25.6-billion LBO of Hilton Hotels Corp.

Overall, LBOs accounted for $84.8 billion of the week’s transactions, according to data provided to by mergermarket.

Canadian activity remained strong in the mining sector as well as in telecom, as evidenced by the $3.6-billion purchase of AUR Resources Inc. by Toronto-based Teck Cominco Ltd.

The BCE deal launched several Canadian investment banks into the top 20 entering the second half. Business at Citigroup, the leader in global and North American activity for the first half, remained healthy, however. It advised four deals last week, more than any other institution.

Teachers Private Capital; Madison Dearborn Partners LLC; and Providence Equity Partners Inc. to buy BCE for $48 billion

The definitive agreement, approved by BCE directors, offers $40.11 per BCE share, a premium of 6 percent. Completion depends on approvals under the Competition Act of Canada, and for the transfer of BCE’s broadcast license and other approvals. The investment group anticipates requiring BCE, Bell Canada, and Bell Mobility to redeem outstanding redeemable debentures maturing up to August 2010, with the acquisition debt financing becoming an obligation of BCE and being guaranteed by some BCE subsidiaries. Equity ownership of BCE will be: Teachers Private Capital will own 52 percent of BCE, with Providence owning 32 percent and Madison Dearborn 9 percent, and other Canadian investors 7 percent. Close is expected in the first quarter of 2008.
Seller financial advisor: BMO Capital Markets; CIBC World Markets; Goldman Sachs; Greenhill & Co; RBC Capital Markets
Bidder financial advisor: Citigroup; Deutsche Bank; Royal Bank of Scotland Group; TD Securities
Seller legal advisor: Blake Cassels & Graydon; Davies Ward Phillips & Vineberg; Lenczner Slaght Royce Smith Griffin; Stikeman Elliott; Sullivan & Cromwell
Bidder legal advisor: Cahill Gordon & Reindel (Advising Citigroup; Deutsche Bank; Royal Bank of Scotland Group; and TD Bank Financial Group as debt providers); Goodmans; Weil Gotshal & Manges

Blackstone to buy Hilton for $25.6 billion

Hilton Hotels’ definitive agreement to be acquired by Blackstone has been approved by Hilton directors. Shareholders in the hotel operator, based in Beverly Hills, Calif., will receive $48.50 a share, a premium of 32 percent. The transaction is expected to close in the fourth quarter. The termination fee for the transaction is $560 million, 3.03 percent of the deal’s value, with a per-share increase of$1.44 required to cover this fee in any superior offer.
Seller financial advisor: UBS
Bidder financial advisor: Banc of America Securities; Bear, Stearns & Co; Deutsche Bank; Goldman Sachs; Morgan Stanley
Seller legal advisor: Sullivan & Cromwell
Bidder legal advisor: Herbert Smith, Gleiss Lutz, Stibbe; Simpson Thacher & Bartlett


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