Deals: Life after the Mega-deal

In our M&A Roundup for the week ended Aug. 19, only four transactions top $1 billion, and total activity seems relatively grounded at $8 billion.

Dealmaking in 2007 has hit a distinct plateau, though it is at a far lower level than the $50-billion-plus weekly totals that became almost routine during the year’s first half.

Our regular review of last week’s top ten deals in North America reveals that mergers and acquisitions totaled $8 billion, up from $6.49 billion the prior week, while bringing year-to-date activity to $1.31 trillion, according to data provided to by mergermarket.

That stratospheric-seeming total for the year to date was achieved thanks to a robust first-half of dealmaking that reflected easy credit markets and the hunger of private equity to tap them. But the gap between this year’s total and last year’s $909.81-billion total through Aug. 19 no longer seems quite so vast as year-to-year gaps earlier in the year, when weekly deal activity sometimes knocked on the door of $100 billion.

Four deals topped $1 billion, led by real-estate investment trust Behringer Harvard REIT I Inc. buying IPC US Real Estate Investment Trust for $1.4 billion, and Netherlands-based Aegon NV picking up two Merrill Lynch life-insurance units for $1.3 billion. The third-largest was Orlando-based Darden Restaurants Inc.’s $1.26-billion purchase of Atlanta-based RARE Hospitality International Inc., which operates LongHorn steakhouses and the Capital Grille Bugaboo Creek restaurant chains.

Behringer Harvard to buy IPC US Real Estate Investment Trust for $1.4 billion

The $9.75-a-share offer price represents a premium of 4.8 percent over IPC’s $9.30 per share price one day before the announcement, although it is a discount of 12 percent from the prevailing price a month prior. The price will include any declared and unpaid monthly distributions and 6.67 cents per unit, pro rated on the basis of the number of days that have passed in the month in which the closing occurs. Closing is expected in late October or early November.
Seller financial advisor: Banc of America Securities; RBC Capital Markets
Bidder financial advisor: Internal
Seller legal advisor: Davies Ward Phillips & Vineberg
Bidder legal advisor: Baker & McKenzie; Shefsky & Froelich

Aegon to buy Merrill Lynch Life Insurance Co. and ML Life Insurance Co. of New York from Merrill Lynch for $1.3 billion

Aegon, a life-insurance and pension firm agreed to acquire the Merrill Lynch insurance companies for cash, with Merrill Lynch continuing to serve the insurance needs of clients through its core distribution and advisory capabilities. Merrill Lynch also will continue to offer its flagship Merrill Lynch Investor Choice Annuity product, although Aegon is acquiring it as well as part of the transaction. Under the terms of the agreement, Aegon’s Transamerican companies will provide support to the Merrill Lynch financial advisor network. The transaction is expected to close before the end of the fourth quarter.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Internal
Seller legal advisor: Debevoise & Plimpton
Bidder legal advisor: LeBoeuf, Lamb, Greene & MacRae


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