Deals: Holding Their Own

In our M&A Roundup for the week ending July 29, reports of the death of the deal proved exaggerated, as activity rose slightly from the prior week.

Merger and acquisition activity held up well in the face of concerns over weak credit markets and predictions of a retreat in dealmaking. The $46.34 billion in proposed M&A was slightly higher than the prior week’s level, with the largest deal being Transocean Inc.’s $17.28 billion agreement to buy GlobalSanteFe Corp.

Private equity players remained relatively restrained in the softening credit environment. Among the top 10 North American deals in the period ended July 29, four were leveraged buyouts, led by Cerberus Capital Management LP’s $5.43-billion purchase of United Rentals Inc. The total value of private deals reached $8.9 billion, according to data provided to CFO.com by mergermarket.

Year-to-date volume of proposed deals rose to $1.26 trillion, compared with $838.87 billion at the same time a year earlier. The $489.74 billion of private-equity activity compared with $183.15 billion between Jan. 1 and July 29, 2006.

It was an especially strong week in Healthcare M&A, with three of the top 10 deals being in that sector.

JPMorgan and Goldman Sachs each advised four of the deals to lead the adviser ranks.

Transocean to buy GlobalSantaFe for $17.28 billion

The definitive agreement between the two global offshore drilling contractors describes the combination as a merger of equals, with Transocean shareholders receiving $33.03 in cash and 0.6996-shares of the combined company. Each GlobalSantaFe share will garner $22.46 and 0.4757-share of the new company. The transaction represents a value of $74.77 for each share of GlobalSantaFe, based on an Transocean share price of $109.97, a premium of 0.04-percent. The aggregate total cash paid to both companies’ shareholders will be $15 billion, funded through a bridge loan due one year after closing. Transocean received a commitment letter from Goldman, Sachs & Co. and Lehman Brothers Inc. providing for the financing. Transocean expects to refinance the bridge loan with a mix of bank loans and debt securities. The combined company will be known as Transocean Inc., with Transocean shareholders retaining 66 percent ownership, and GlobalSantaFe holders the remaining 34 percent. Robert E. Rose, currently GlobalSantaFe’s Chairman, will serve as Transocean chairman, while Robert L. Long will continue as Transocean’s CEO, and Jon A. Marshall will assume the position of president and COO after the deal, which is expected to close by the end of the year.
Seller financial advisor: Lehman Brothers; Simmons and Company
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Maples & Calder; Skadden Arps Slate Meagher & Flom
Bidder legal advisor: Baker Botts; Latham & Watkins; Walkers

Siemens AG to buy Dade Behring Holdings Inc. for $6.81 billion

Dade, a producer of clinical diagnostics equipment, and Siemens, an engineering and electronics company, signed a definitive merger agreement calling for Siemens to acquire all Dade’s outstanding shares for $77 per share in cash, a 37.8-percent premiuim. The deal is expected to close in next year’s second quarter. Siemens is one of three major companies in the medical diagnostics industry—the others are General Electric and Philips—continuing to pursue active acquisition strategies as the business consolidates. The acquisition of Dade Behring follows the recent unsuccessful $8.1 billion bid by General Electric for two units of Abbott Diagnostics.
Seller financial advisor: Morgan Stanley
Bidder financial advisor: JPMorgan
Seller legal advisor: Kirkland & Ellis
Bidder legal advisor: Clifford Chance

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