Deals: As Merrill Goes, So Goes the Week

In our M&A roundup for the period ended Sept. 21, the Bull's sale to B of A shows up, but not AIG's arrangement with the Fed.

The Week That Shook the Street certainly left its mark on North America’s dealmaking tally. It topped out at $60.26 billion for the seven days ended Sept. 21, on the strength of Bank of America’s $44.35-billion deal to purchase Merrill Lynch. But the total would have been truly astronomical had it included that other buyer: the U.S. government, which plunked down $85 billion to take control of 80 percent of American International Group.

As it was, the high overall value of the week’s 51 deals owed itself to B of A, and to the $9.52-billion purchase of Constellation Energy Group by Berkshire Hathaway’s MidAmerican Energy Holdings. Other than that — and that little AIG deal — there wasn’t a single billion-dollar transaction to be found, according to data provided to by mergermarket.

Down in the bottom half of the top 10 deals was Barclays Capital’s purchase of the North American investment banking and capital markets operations of Lehman Brothers Inc. That price: $250 million.

In the prior week, 28 deals that were struck, totaling $15.39 billion. For the year through Sept. 21, 2,766 transactions have led to total mergers and acquisitions of $738.67 billion. That contrasts with 3,758 deals worth $1.30 trillion at this point during the record year of 2007.

Bank of America Corp. to buy Merrill Lynch for $44.34 billion

Merrill, the legendary New York City-based provider of investment, financing, insurance, and related services, agreed to be acquired by B of A, based in Charlotte, N.C., in an exchange of 0.8595 of a B of A share for each Merrill share. The $29-a-share value offers a premium of 70 percent. The transaction is expected to close in the first quarter of 2009.
Seller financial advisor: Merrill Lynch
Bidder financial advisor: Banc of America Securities; Fox-Pitt Kelton Cochran Caronia Waller; J.C Flowers & Co
Seller legal advisor: Cravath Swaine & Moore; Shearman & Sterling
Bidder legal advisor: Debevoise & Plimpton; Wachtell Lipton Rosen & Katz

MidAmerican Energy Holdings Co. to buy Constellation Energy Group Inc. for $9.52 billion

Baltimore-based Constellation Energy, which does business through subsidiaries that include Baltimore Gas & Electric Co., tentatively agreed to accept $26.50 a share from Des Moines-based MidAmerican Energy, controlled by Berkshire Hathaway. Billionaire investor Warren Buffett controls Berkshire. Boards of both Constellation and MidAmerican approved the agreement at that price, which provides a 7-percent premium. The implied equity value of the transaction is about $4.73 billion. The transaction is expected to close in the second quarter of 2008.
Seller financial advisor: Morgan Stanley; UBS
Bidder financial advisor: Not Available
Seller legal advisor: Kirkland & Ellis
Bidder legal advisor: Willkie Farr & Gallagher

El Paso Pipeline Partners LP to buy a 20-percent stake in Colorado Interstate Gas Co. and a 15-percent stake in Southern Natural Gas Co. from El Paso Corp. for $736 million

Houston-based El Paso Pipeline, an owner and operator of natural gas transportation pipelines, storage and other midstream assets, agreed to acquire an additional 30-percent stake in Colorado Interstate, and an additional 15-percent stake in Southern National Gas. Colorado Springs, Colo.-based Colorado Interstate is a natural gas supplier, while Southern, based in Birmingham, Ala., is privately held and engaged in the transportation of natural gas. The seller, also of Houston, provides natural gas and related energy products. The transaction is expected to close by Sept. 30.
Seller financial advisor: Not Disclosed
Bidder financial advisor: Not Disclosed
Seller legal advisor: Not Disclosed
Bidder legal advisor: Not Disclosed


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