North America’s merger and acquisition volume nearly doubled last week, led by two purchases of U.S. pharmaceuticals companies — one by a Japanese pharma products maker and one by a UK-based cleaning products concern.
Leading the way in the top 10 deals of the week were the $3.4-billion sale of MGI Pharma Inc. of Bloomington, Minn., to Tokyo-based Eisai Co. Ltd. The second-largest transaction was Reckitt Benckiser Plc’s deal to buy Adams Respiratory Therapeutics Inc., of Chester, N.J., for $2.10 billion.
The 57 deals that were struck over the seven-day period totaled $14.67 billion, and raised the year-to-date total for North American M&A past $1.51 trillion, compared with $1.42 trillion in the period ending Dec. 16, 2006, according to data provided to CFO.com by mergermarket.
The results did not include two large deals announced early on Monday — Ingersoll-Rand Co.’s purchase of Trane Inc. and the consolidation of oil-and-gas concerns National Oilwell Varco Inc. and Grand Prideco Inc. — which alone top all of last week’s activity. That suggests the possibility of strong year-end strategic dealmaking that could help turn the tide from recent weeks of subpar M&A.
Eisai Co. Ltd. to buy MGI Pharma Inc. for $3.40 billion
MGI Pharma definitively agreed to an acquisition by Eisai, of Tokyo, for $41 a share, a premium of 22.6 percent. MGI, a biopharmaceutical company focused in oncology and acute care, acquires, researches, develops, and commercializes pharmaceutical products. Eisai, which also is engaged in the manufacturing and sale of pharmaceutical products, expect the transaction to significantly strengthen its oncology business and improve its likelihood of meeting revenue and earnings goals. Eisai intends to finance the acquisition through existing internal financial resources and through bank loan financing, and has secured commitment for the debt required to consummate the transaction. The transaction is expected to close in the first quarter of 2008.
Seller financial advisor: Lehman Brothers
Bidder financial advisor: JPMorgan
Seller legal advisor: Hogan & Hartson
Bidder legal advisor: Davis Polk & Wardwell (Advising JPMorgan); and Sullivan & Cromwell
Reckitt Benckiser Plc to buy Adams Respiratory Therapeutics Inc. for $2.10 billion
Adams Respiratory Therapeutics, of Chester, N.J., signed a definitive agreement with Reckitt, of Slough, England, and both boards have recommended the merger for $60 a share, a premium of 37.4 percent. Adams is a specialty pharmaceutical company focused on the late-stage development, commercialization, and marketing of over-the-counter and prescription pharmaceuticals for the treatment of respiratory disorders. Reckitt Benckiser makes and markets branded products in household cleaning and health and personal care, selling through over 60 operating companies into around 180 countries. Reckitt Benckiser will finance the transaction with cash on hand and existing credit facilities. The transaction is expected to close in late January or early February.
Seller financial advisor: Morgan Stanley
Bidder financial advisor: Merrill Lynch
Seller legal advisor: Alston & Bird
Bidder legal advisor: Arnold & Porter
Crown Ltd. to buy Cannery Casino Resorts LLC from Millennium Gaming Inc. and Oaktree Capital Management LP for $1.75 billion
Crown, a Victoria, Australia-based gaming concern, agreed to acquire Las Vegas-based Cannery Casino Resorts (CCR) on a debt-free and cash-free basis. The sellers are Oaktree Capital, a Los Angeles private equity firm, and Millennium, a racetrack and hotel owner and operator based in Lakewood, Colo. Under the agreement, for an acquisition cost of $49.6 million Crown will acquire 58 percent of CCR from Millennium and 42 percent from Oaktree. CCR operates four casinos in Nevada and western Pennsylvania, including the Cannery Hotel and Casino in North Las Vegas, Nevada Palace Casino on the Boulder Strip in East Las Vegas, Rampart Casino in West Las Vegas (operated under a management contract), and The Meadows Racetrack & Casino, a temporary facility in Pittsburgh. CCR is developing two casino/hotel complexes. Crown will fund the acquisition from its existing cash reserves, and expects the acquisition to be immediately accretive to its earnings per share. The acquisition provides Crown entry into the U.S. casino market. It is expected to close within 12 months of signing.
Seller financial advisor: Deutsche Bank
Bidder financial advisor: Macquarie Securities; and Global Leisure Partners
Seller legal advisor: Munger Tolles & Olson
Bidder legal advisor: Skadden Arps Slate Meagher & Flom
North American Energy Alliance LLC to buy Con Edison Energy Massachusetts Inc., Lakewood Cogeneration Plant, Newington Energy LLC, Ocean Peaking Power, and Rock Springs Generation Facility from Consolidated Edison Development for $1.48 billion
North American Energy Alliance, is a holding company with interests in power generation, and is a subsidiary of two other companies: New York-based Allcapital US LLC, a finance company focusing on rail, infrastructure, property, and shipping, and Industry Funds Management Pty Ltd (IFM), a Victoria, Australia-based fund manager. Allcapital US is a subsidiary of Allco Finance Group Ltd., a Sydney, Australia-based financial services provider. North American will acquire power generation assets from New York-based Consolidated Edison Development, a holding company that is part of Consolidated Edison Inc. The acquisition is in line with Allco’s energy strategy of investing in power generation projects and related infrastructure. Under the terms of the agreement, Allcapital will invest $287.3 million and take a 37.6-percent stake in North American Energy Alliance, with the remaining 62.4-percent being acquired by Industry Funds Management. The transaction was financed from debt provided by Barclays plc, and is expected to provide cash proceeds of $667 million to Con Edison. Proceeds will be used to repay existing debt and remaining proceeds will be invested in its businesses. The acquisition is expected to close by the middle of 2008.
Seller financial advisor: Morgan Stanley; and UBS
Bidder financial advisor: Internal
Seller legal advisor: Paul Hastings Janofsky & Walker
Bidder legal advisor: Shearman & Sterling
TSX Group Inc. to buy the Montreal Exchange for $1.29 billion
The Montreal Exchange, engaged in the trading of standardized financial derivatives products, definitively agreed to be acquired by TSX, a Canada corporation that owns and operates the Toronto Stock Exchange, the TSX Venture Exchange, the Natural Gas Exchange Inc., and Shorcan Brokers Limited. The boards of directors of both companies have approved the merger for $39.50 a share in cash or 0.7784 of a share of TSX for each share of Montreal, a premium of 5.41 percent. The Montreal Exchange offers individual and institutional investors, in Canada and elsewhere, a range of risk management products. TSX also owns Equicom. Annual cost synergies of $25 million are targeted, with synergies to be achieved through optimizing technology platforms, rationalizing premises and data centers, and reducing corporate costs. TSX plans to satisfy the cash portion of the purchase through available cash and a three-year, $430-million term facility, and a three-year, $50-million revolving credit facility underwritten by BMO Capital Markets and Caisse Centrale Desjardins. The transaction is expected to close in the first quarter of 2008. The Montreal Exchange Inc. confirms it is engaged in discussions with the TSX Group on a possible future business combination.
Seller financial advisor: Citigroup
Bidder financial advisor: BMO Capital Markets; and Desjardins Securities
Seller legal advisor: Ogilvy Renault
Bidder legal advisor: Davies Ward Phillips & Vineberg
ON Semiconductor Corp. to buy AMIS Holdings Inc. for $1.09 billion
Pocatello, Idaho-based AMIS Holdings signed a definitive agreement to be acquired by Phoenix-based ON Semiconductor in an exchange of 1.15 shares of ON for each AMIS share. The price equates to $10.14 a share, a premium of 37.8 percent. The boards of directors of both companies approved the merger between AMIS, a designer and maker of mixed signal semiconductor products, and ON, a global supplier and manufacturer of power and data management semiconductors and standard semiconductor components. Up to $50 million in pre-tax savings in 2009 was identified, which may be achieved through the integration of AMIS and the combination of infrastructures. After completion, ON will issue about 104 million shares of common on a fully diluted basis to complete the transaction. ON and AMIS stockholders will own about 74 percent and 26 percent, respectively. In connection with the transaction, AMIS’s board of director has increased its share repurchase authorization from 30 million to 50 million shares. The transaction is expected to close in the first half of 2008.
Seller financial advisor: Credit Suisse
Bidder financial advisor: Goldman Sachs
Seller legal advisor: DLA Piper
Bidder legal advisor: Davis Polk & Wardwell
Regency Energy Partners LP to buy CDM Resource Partners LP from Carlyle/Riverstone Global Energy and Power Fund II LP for $655 million
Dallas-based Regency, a natural gas services provider, agreed to acquire CDM, a Houston-based provider of turnkey solutions for establishing natural gas compression systems. The seller, Carlyle/Riverstone, is an investment fund run by New York-based private equity firms Carlyle Group and Riverstone Holdings. The transaction will enable Regency to strengthen its market position as a large-horsepower natural gas compression provider, will increase its customer bases, and will save costs, improve operations, and allow expansion into South Louisiana, Barnett Shale, and the Arkoma Basin. The acquisition is expected to be immediately accretive to cash available for distribution. It will be funded by bank debt of $446 million, deferred-pay limited partner units of $205 million, and a capital contribution of $4 million. CDM’s management team, Riverstone Holdings L.L.C., , and Carlyle Group will hold deferred-pay limited partner units issued, with capital contributions being made by general partners of Regency. Regency will retain the management, and CDM employees will continue to provide their services as CDM operates as subsidiary of Regency. The transaction is expected to close in January.
Seller financial advisor: Not Available
Bidder financial advisor: UBS
Seller legal advisor: Vinson & Elkins; and Thompson & Knight
Bidder legal advisor: Andrews Kurth
Evraz Group SA to buy Claymont Steel Holdings Inc. for $413 million
Claymont Steel definitively agreed to be acquired by Moscow-based Evraz, with the boards of both companies approving the merger. Claymont Steel is based in Claymont, Del., and is a non-union mini-mill that makes and sells custom discrete steel plate in North America. Evraz and its subsidiaries are involved in production and distribution of steel and related products. The sale is for $23.50 a share, a premium of 6.8 percent.
Seller financial advisor: Jefferies & Company
Bidder financial advisor: A BILLION AMRO
Seller legal advisor: Morgan Lewis & Bockius
Bidder legal advisor: Cleary Gottlieb Steen & Hamilton
Iomega Corp. to buy ExcelStor Great Wall Technology Ltd. and Shenzhen ExcelStor Technology Limited from Great Wall Technology Co. Ltd for $306 million
San Diego-based Iomega, a computer storage company, agreed to acquire the two units of Great Wall Technology, a Shenzhen, China-based information technology services provider. ExcelStor Great Wall is a Cayman Islands-based manufacturer of digital storage technologies. ExcelStor, also of Shenzhen, is a designer and manufacturer of digital technologies. The deal is for a cash and stock. ExcelStor Great Wall is 61.7-percent held by Great Wall Technology and 38.3-percent held by ExcelStor Group. ExcelStor Technology is 61.7-percent held by Great Wall Technology and 38.3-percent held by ExcelStor Holdings of the British Virgin Islands. The agreement calls for Iomega to pay $500,000 in cash and to issue a minimum of 84 million of its shares and a maximum of 88.76 million shares in the transaction, making Great Wall a large Iomega shareholder. The acquisition is in line with Iomega’s global strategy of acceleratinge growth and strengthening its capabilities in the personal computer, peripherals, external storage, storage networking, and consumer electronics industries by investing in businesses providing established, non-overlapping distribution channels. The transaction is expected to complete by mid-2008.
Seller financial advisor: Not Available
Bidder financial advisor: Thomas Weisel Partners
Seller legal advisor: Jones Day
Bidder legal advisor: Not Available
Teradyne Inc. to buy Nextest Systems Corp. for $291 million
North Reading, Mass.-based Teradyne, a supplier of automatic test equipment through its NAC Equipment Corp. subsidiary, has agreed to acquire Nextest, a San Jose-based designer and manufacturer of flash memory test products. The cash price of $20 per share, including assumption of net cash of $67.88 million, represents a premium of 66.8 percent. Nextest expects to be able to minimize test costs and improve growth of business. The transaction should strengthen Teradyne’s System-On-Chip product offerings and help it develop its market into the flash memory test segment. The acquisition is expected to be slightly dilutive to 2008 GAAP EPS and slightly accretive to 2008 non-GAAP EPS after excluding the purchase accounting impacts. The transaction is expected to be completed in the first quarter of 2008.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Goldman Sachs
Seller legal advisor: Heller Ehrman
Bidder legal advisor: WilmerHale (Wilmer Cutler Pickering Hale and Dorr)