Deals: A Copy Cat Play with Merck in Wings

In our M&A Roundup for the week ended March 8, another solid combination of resources, energy, and pharma deals — on the eve of today's Schering-Plough announcement.

As yet another pharmaceutical blockbuster was waiting in the wings — with Merck Co. getting ready for a $41-billion cash-and-stock combination with Schering-Plough Corp. — the rest of the North American dealmaking drama was developing as a copy of the prior seven days. Cross-border, middle-market transactions ruled the day, with natural resources, energy, and pharma being the industries of choice.

The long-discussed Merck-Schering deal likely will establish itself as the cornerstone of next week’s merger report. A Thomson Reuters summary listed it as the sixth-largest pharma acquisition ever, and second-largest this year, behind Pfizer’s deal for Wyeth. But for the week ended March 8, the $1.70-billion purchase by India’s Sterlite Industries Ltd. of the operating assets of Tucson-based Asarco LLC had to stand as the leading transaction — and the only one exceeding $1 billion, according to data provided to CFO.com by mergermarket.

The 32 deals struck last week before Merck-Schering totaled $4.38 billion, down a bit from the prior week’s 35 transactions worth $5.90 billion. For the year-to-date, 363 transactions now have been worth $139.9 billion, less than half the number than at the same time last year — but with a 38-percent greater value, thanks to Pfizer-Wyeth and other pharma transactions.

Sterlite Industries (India) Ltd. to buy operating assets from Asarco LLC for $1.70 billion

Tuticorin, India-based Sterlite, a copper smelting, mining, and refining business — which is a subsidiary of London-based metal-mining company Vedanta Resources Plc — agreed to acquire substantially all the operating assets of Tucson-based copper-miner Asarco for $1.1 billion in cash and $600 million through a promissory note to be paid back over nine years. The note will be non-interest bearing, and involves payment of $20 million from the end of second year for seven years. The balance of $460 million will be paid at the end of nine years. If the annual average of daily copper prices increases beyond $6,000 per ton, payment for that year will increase proportionately, subject to a maximum of $66.67 million, and the terminal payment will be reduced, keeping the total payment constant at $600 million. Assets acquired include three copper mines; associated mills; a copper smelter in Arizona; a precious metals plant in Texas; and a copper refinery, rod, and cake plants. The transaction is expected to close on April 15.
Seller financial advisor: Barclays Bank
Bidder financial advisor: Royal Bank of Scotland Group
Seller legal advisor: Baker Botts
Bidder legal advisor: Shearman & Sterling

Crescent Point Resources LP and TOG Partnership to buy non-core Saskatchewan assets of Talisman Energy Canada from Talisman Energy Inc. for $562 million

The buyers are Crescent Point, an investment holding company that is a subsidiary of Calgary, Canada-based oil and gas income trust Crescent Point Energy Trust, the Calgary, Canada, based oil and gas income trust, and Calgary-based investment holding company TOG Partnership, an oil-and-gas explorer that is a subsidiary of Calgary-based TriStar Oil & Gas Ltd. The seller is Calgary-based Talisman, an oil and natural gas exploration company. Terms call for Crescent Point and TriStar to acquire 50 percent each in the acquired asset for $280 million. The transaction is expected to close by June 1.
Seller financial advisor: FirstEnergy Capital
Bidder financial advisor: BMO Capital Markets; Macquarie Group; RBC Capital Markets
Seller legal advisor: Osler, Hoskin & Harcourt
Bidder legal advisor: Macleod Dixon

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