Deals: Cracking the $40 Billion Ceiling

In our M&A Roundup for the week ended June 8, Alltel sure can hear Verizon now, as its $28b bid leads transactions to the biggest week of the year — though just barely.

Verizon Wireless Inc.’ $28.10-billion acquisition of Little Rock, Ark.-based Alltel Corp. led North American dealmaking to its first $40-billion-plus week of 2008. In all, three transactions worth more than $3 billion were signed, and six more than $1 billion.

Alltel, now owned by private equity concern Atlantis Holdings, will be coming out of the private world a mere seven months after its leveraged buyout at $27.5 billion. The partners involved with its purchase were TPG Capital and a unit of Goldman Sachs Group, and the lenders who financed the LBO were led by an arm of Goldman Sachs, Citigroup, Barclays PLC, and Royal Bank of Scotland Group.

The other two $3-billion transactions in North America’s top 10, according to data provided to CFO.com by mergermarket, were J.M. Smucker Co.’s purchase of the Folgers coffee brand from Procter & Gamble Co. for $3.30 billion, and oilfield services company Smith International’s acquisition of Houston neighbor W-H Energy Services.

Dealmaking came close to the $40-billion mark in the week April 28, when the activity was led by confectioner Mars Inc.’s $22.64-billion purchase of gum-maker Wm. Wrigley Jr. Co. How close did the week’s total come? Very, with 74 deals adding up to $39.994 billion.

Last week’s 60 transactions, totaling $40.27 billion, brought year-to-date M&A to 1,553 deals worth $382.90 billion. That compares with 2,335 transactions valued at $836.59 billion and the land-office dealmaking business as of June 8, 2007.

Verizon Wireless Inc. to buy Alltel Corp. from Atlantis Holdings LLC for $28,10 billion

Basking Ridge, N.J.-based network operator Verizon Wireless agreed to acquire Alltel Corp. from private-equity firm Atlantis Holdings. Alltel, based in Little Rock, is the voice and data services provider. The transaction is expected to close by the end of the year.
Seller financial advisor: Citigroup ; Goldman Sachs; Royal Bank of Scotland Group
Bidder financial advisor: Morgan Stanley; UBS
Seller legal advisor: Wachtell Lipton Rosen & Katz; Cleary Gottlieb Steen & Hamilton ; Ropes & Gray
Bidder legal advisor: Debevoise & Plimpton; Milbank Tweed Hadley & McCloy

J. M. Smucker Co. to buy Folgers from Procter & Gamble Co. $3.30 billion

Cincinnati-based P&G agreed to split off Folgers, the coffee brand that is part of its food and beverage division, while simultaneously merging the company with Orrville, Ohio-based food company Smucker.. The transaction is expected to close in the fourth quarter.
Seller financial advisor: Blackstone Group Holdings ; Morgan Stanley
Bidder financial advisor: Banc of America Securities ; William Blair & Company
Seller legal advisor: Cadwalader, Wickersham & Taft ; Jones Day
Bidder legal advisor: Calfee, Halter & Griswold ; Latham & Watkins ; Weil Gotshal & Manges

Smith International Inc. to buy W-H Energy Services Inc. for $3.02 billion

Houston-based oilfield service company W-H Energy Services moved to merge with Houston-based Smith International, a supplier of products and services to the oil and gas exploration and production industries. The board of directors of both the companies approved the deal at $56.10 a share in cash and 0.48-share of Smith for each W-H share, a premium of 9.36 percent. The transaction is expected to be completed in third quarter of 2008.
Seller financial advisor: UBS
Bidder financial advisor: JPMorgan
Seller legal advisor: Bracewell & Giuliani; O’Melveny & Myers
Bidder legal advisor: Simpson Thacher & Bartlett; Wachtell Lipton Rosen & Katz

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