A sudden rush of billion-plus-dollar deals led to one of the bigger weeks for mergers and acquisitions in this otherwise dreary first quarter. There seemed to be little suggestion, though, that this was the beginning of a full-scale upturn.
Led by British publisher Reed Elsevier Group plc’s $4.17 billion offer for identification and credentialing software company ChoicePoint Inc. — a deal that carried a premium of 48.5 percent — the week contained 37 deals totaling a healthy $12.35 billion, according to data provided to CFO.com by mergermarket.
That brought year-to-date volume to $65.43 billion, based on 488 transactions. In the prior week, 59 deals were struck, although their volume totaled only $7.5 billion. There was only one billion-dollar deal among them.
We noted last week that private equity had accounted for a strong segment of the North American dealmaking: nine of the transactions, worth $1.98 billion. However, private equity retreated again in the most-recent seven days, with only three deals reported, worth $198 million.
The comparisons with last year’s record M&A pace remained dramatic. For the year-to-date in 2007, $241.15 billion of deals — 790 in all — already had been struck. That’s nearly four times the total so far this year. The 488 transactions this year contrasts with 790 in the similar swath of 2007.
The M&A community remains attentive to some big potential deals that are in the buzz — led by a possible blockbuster stemming from Microsoft’s $40-billion-plus hostile pursuit of Yahoo. U.S. airlines have been at the center of some speculation. And globally, in the continually active mining sector, the tussle by BHP Billiton for control of Rio Tinto suggests there could be much more M&A fallout ahead.
The deal summary also missed by a day Sunday’s $2-billion bid by Electronic Arts for gamemaker Take-Two.
Reed Elsevier Group plc to buy ChoicePoint Inc. for $4.17 billion
Alpharetta, Ga.-based Choicepoint, a provider of identification and credential verification software, definitively agreed to be acquired by London-based Reed Elsevier Group plc, a publisher and information provider. Both boards approved the merger for $50 per Choicepoint share, a premium of 48.5 percent. The implied equity value of the transaction is about. $3.6 billion, considering the debt to be assumed. The transaction is expected to close in the summer.
Seller financial advisor: Goldman Sachs; and Wachovia
Bidder financial advisor: JPMorgan Cazenove; Morgan Stanley; and UBS
Seller legal advisor: Wachtell Lipton Rosen & Katz
Bidder legal advisor: Sullivan & Cromwell
WebMD Health Corp. to buy HLTH Corp. for $2.17 billion
Elmwood Park, N.J.-based HLTH Corp. definitively agreed to be merged into its 84-percent owned WebMD Health Corp. subsidiary, with both boards approving the merger. HLTH also said it intends to divest its ViPS and Porex businesses, which have received interest from potential strategic buyers, although the divestitures are not dependent on the merger and do not require shareholder approval. HLTH provides healthcare related services and products through its WebMD, ViPS, and Porex businesses. New York-based WebMD provides health information services to consumers, physicians, healthcare professionals, employers, and health plans through public and private online portals and health-focused publications. The merger is expected to capitalize WebMD with about $700 million in cash and investments. Terms call for $6.89 in cash and 0.1979 of a WebMD share to be exchanged for each HLTH share, with the $12.625 total offering a premium of 25.6 percent. The implied equity value is about $2.31 billion, not considering HLTH’s cash position. This cash portion may be subject to downward adjustment based on the amount of proceeds received from the disposition of HLTH’s investment in certain auction rate securities (ARS). HLTH currently has about $195 million worth of ARS, which excludes any held by WebMD. If either ViPS or Porex has not been sold at the time the merger is ready to be consummated, WebMD may issue up to $250 million in redeemable notes to HLTH shareholders in lieu of a portion of the cash consideration otherwise payable in the merger. The merger will eliminate both the controlling class of WebMD stock held by HLTH and WebMD’s existing dual-class stock structure. WebMD’s share count will be reduced by 20 percent and HLTH shareholders will own approximately 80 percent of WebMD when the deal is complete. WebMD’s senior management team will remain in place under CEO Wayne Gattinella. The transaction is expected to close in the second or third quarter.
Seller financial advisor: Raymond James & Associates
Bidder financial advisor: Morgan Joseph
Seller legal advisor: O’Melveny & Myers
Bidder legal advisor: Cahill Gordon & Reindel