Deals: Forget the Dropped Ones, and M&A Seems Strong

In our M&A Roundup for the week ended Oct. 12, biopharma and tech take the lead, but the tally excludes a growing list of withdrawn offers.

With your head still ringing from last week’s drubbing in the market — and the accompanying musical chairs in the financial-services sector — you might find it surprising that no U.S. banking deals were among the mergers and acquisitions of the seven days just past. Just as startling, perhaps: how healthy a week it was for transactions, featuring Eli Lilly & Co.’s $5.75-billion purchase of ImClone Systems Inc., and the $1.7-billion acquisition of a 56-percent stake in Advanced Micro Devices’ semiconductor manufacturing facilities by Abu Dhabi’s Advanced Technology Investment Co.

Of course, deals done exclude the impact of several big offers that were done in. Recent transactions ended by the bidder include Waste Management’s $6.73 billion bid for Republic Services, United Technologies’ $2.65-billion offer for Diebold Inc., and Vishay Intertechnology Inc.’s $1.7-billion proposal for International Rectifier Corp.

Also, there was less dealmaking last week than in the week prior, with 43 North American deals struck, down from 53, according to data provided to CFO.com by mergermarket. But the total value of last week’s agreements was a solid $12.72 billion. In the earlier seven days, the value of deals — led by Wells Fargo’s $15.1-billion Wachovia offer and $9-billion in Mitsubishi UFJ Financial Group bids for stakes in Morgan Stanley — was $28.19 billion.

For the year to date, the 3,067 deals struck so far in 2008 are worth $797.62 billion, still sharply off the pace of 2007, of course. At this time last year, 4,022 transactions tallied amounted to $1.34 trillion.

Eli Lilly and Co. to buy ImClone Systems Inc. for $5.75 billion

New York City-based ImClone, a biopharmaceutical company specializing in oncology care, definitively agreed to be acquired by Indianapolis-based biopharma Lilly for $70 a share, a premium of 7.8 percent. Both boards approved the merger, which is expected to close in the fourth quarter or next year’s first quarter.
Seller financial advisor: JPMorgan
Bidder financial advisor: Deutsche Bank; UBS
Seller legal advisor: Davis Polk & Wardwell (Advising JPMorgan); Katten Muchin Rosenman
Bidder legal advisor: Dewey & LeBoeuf (Advising UBS); Latham & Watkins

Bank of Nova Scotia to buy a 37-percent stake in CI Financial Income Fund from Sun Life Financial Inc. for $2.15 billion

Toronto-based Bank of Nova Scotia, also called Scotiabank, agreed to acquire the stake in Toronto-based wealth management company CI Financial Income Fund from Sun Life, a financial services firm also in Toronto. The price for 104,609,895 trust units is $20.95 per unit, a premium of 32.2 percent, although compared to the stock price one month before the announcement, the offer is at a discount of 1.49 percent. The transaction is expected to closed in the fourth quarter.
Seller financial advisor: Internal
Bidder financial advisor: Scotia Capital
Seller legal advisor: Torys
Bidder legal advisor: McCarthy Tetrault

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