11.05.10 Friday BRIEF Mergers
Dealmakers Wary of Taxes Even After Election M&A Announcements Total By ALEX SHERMAN Target Acquirer Value Many companies are push- Name Name ($M) EDF SA Assets Multiple 9,303 ing to complete deals before Historical Capital Gains Tax Rates Turkiye Garanti Banco Bilbao Vizcaya 5,838 the end of the year even after 30.00% EXCO Resources Private Investor 5,183 a Republican victory in the Average Effective Tax Rate 25.00% Eversholt Rail Eversholt Investment 3,414 U.S. House of Representa- Shanghai Bailian Shanghai Friendship 2,532 20.00% tives to ensure they won't be US Oncology McKesson Corp 2,160 affected by any 2011 increas- 15.00% Sun Excel Invest Hopson Development 1,030 es in capital gains taxes. 10.00% Swissport Int'l PAI Partners 919 Bankers are still working 5.00% Art Technology Oracle Corp 844 “feverishly” to get deals done Regent Street Norges Bank 724 this year in case Congress 0.00% raises long-term capital gains 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 rates before the new term Source: Department of the Treasury, Office of Tax Analysis Most-Read M&A Stories begins, according to William Roman, managing director at Harris Williams & Co. in Boston. M&T to Acquire Wilmington Trust President Barack Obama has proposed raising long-term capital-gain rates to 20 percent BBVA to Buy Stake in Garanti Bank from 15 percent for individuals who earn more than $200,000 and couples that earn more than $250,000. The administration has also considered allowing the Bush income tax cuts to expire MGM Studios Files Bankruptcy for Americans in the top two tax brackets. Citigroup May Sell $570 Mln of CVC Stakes Obama said this week that he would meet with Speaker of the House-Elect John Boehner Potash Bid Proposed by Russia and Senate Minority Leader Mitch McConnell to extend cuts “that are important to encourage continued on next page Potash Options Traders Increasing Wagers Exco CEO Proposes $4.36 Billion Buyout Deal By Deal
Potash Share Price Shows Investors Still Expect Deal Recent Completed Deals
total By ALEX SHERMAN date target acquirer value The largest announced deal of the year McKesson Corp.’s bid $2.16 billion, includ- Nov 1 American Life MetLife 12,586 was blocked this week after the Canadian ing net debt, for US Oncology Inc., currently Nov 1 EDF SA Assets Multiple 9,303 government decided BHP Billiton Ltd.’s owned by private equity firm Welsh Carson Nov 1 E.ON US PPL Corp 7,625 $40 billion hostile bid for Potash Corp. of Anderson & Stowe. Nov 3 Turkiye Garanti Banco Bilbao 5,838 Saskatchewan Inc. didn’t provide a “net Average deal size fell to $214.6 million Nov 1 ING Summit Fund Multiple 1,911 benefit” to the country. The announcement during the first four days of November from failed to push the stock price below $140, a $501.8 million for the same four-day period signal that Potash shareholders anticipate a in October. deal may still get done. Anticipated Approvals The largest acquisition this week was a con- approval sortium deal among Hong Kong companies date target acquirer type to buy U.K. power grids from Electricity de Spotlight Nov 10 Mariner Energy Apache Corp Targ France SA for $9.3 billion. The biggest U.S. Lawyers Stewart Baker and Stephen Nov 10 Netezza Corp IBM Targ deal was Exco Resources Inc.’s proposed Heifetz on U.S. ap- management takeover for $5.18 billion includ- Nov 10 ExpressJet Skywest Targ provals of cross- Nov 8 Alloy Inc Multiple Targ ing net debt, the biggest management take- border deals. over offer for a public company since 2007. Nov 8 Daia Foods FP Corp Targ
Weekly yTD In Billions Weekly yTD Average Weekly yTD Deal Count 333 19,812 Volume $41 $1,710 Premium 16.46% 22.08% 11.05.10 mergers | Bloomberg Brief 2
Dealmakers Still Wary... continued from page 1 business to invest, and provide busi- nesses some certainty over the next U.S. Deal Count year or two,” without elaborating on 880 how negotiations may evolve. 860 “You’d look foolish if you let up off the 840 accelerator and the tax cut expired,” said Roman. He said he expects deal 820 volume to dip in February and March 800 before rising again into what “should 780 be a very strong second half” of 2011. 760 Fewer deals were announced world- 740 wide in October than in any other 720 month since August 2009, accord- 700 ing to data compiled by Bloomberg. U.S. volume, at $69.5 billion, was the Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 third-lowest monthly total this year. The Source: Bloomberg year's largest proposed deal, BHP Bil- liton Ltd.'s $40 billion hostile offer for Potash Corp. of Saskatchewan Inc., ner at law firm Sullivan & Cromwell “When there is significant uncertain- was blocked this week by the Cana- LLP in New York. While ambiguity over ty, even though all the other pre-condi- dian government. tax rules may lead to a pickup in deals tions are in place, deal flow is choppy,” October's decline can be attributed to in the near term, an extended increase Aquila said. “A constant flow of deals concern that U.S. unemployment will in M&A will only occur when executives will resume once companies are truly remain high and economic growth will are comfortable they know where the confident about the economic -condi slow, according to Frank Aquila, part- economy is headed, Aquila said. tions ahead.”
Canada Takeovers Dispel ‘Hollowing Out’ Claim After Nixed Potash Bid
Canadian companies have been the country worth at least $541.4 Hejazi, professor of international more active buyers than sellers in billion since 2000. Foreign firms competitiveness with the Rotman global mergers over the past de- have bought 4,953 Canadian com- School of Management at the Uni- cade, countering claims of a “hol- panies during the same period in versity of Toronto. “That’s one piece lowing out” of corporate Canada transactions worth at least $604.3 of evidence that says there isn’t a after the federal government re- billion, according to data compiled hollowing out.” jected BHP Billiton Ltd.’s $40 bil- by Bloomberg. Canadian companies are also lion bid for Potash Corp of Sas- “Canadian companies have been paying less than foreign firms for katchewan Inc. expanding at a much faster rate their acquisitions. The average Canadian companies have com- abroad than foreign companies are disclosed deal size for Canadian pleted 6,406 takeovers outside investing in Canada,” said Walid firms buying abroad is $144.6 million, with an average premium of 24 percent. Foreign acquirers are paying a 34 percent premi- Cumulative Number of Deals um to buy Canadian companies, 7,000 6,406 with an average disclosed size of 6,000 Takeovers of Foreign $232.2 million. Companies by The takeovers include some deals Canadian Firms 4,953 5,000 in which terms weren’t disclosed
4,000 Takeovers of and excludes Canadian companies Canadian Firms by buying other Canadian firms. Foreign Firms 3,000 Industry Minister Tony Clement
2,000 said Nov. 3 that BHP’s bid for Potash Corp. doesn’t provide a “net benefit” 1,000 to the country, marking only the sec-
- ond time Canada has blocked a for- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 eign takeover since 1985. — Doug Alexander and Ilan Kolet 11.05.10 mergers | Bloomberg Brief 3
The Wire BloomberG News
■■Casey’s General Stores Inc. said talks a statement. Citigroup ranks sixth this year Wilmington share they own. on a takeover by 7-Eleven Inc. fell apart in advising on mergers and acquisitions after they failed to agree on price. The board involving Italian companies, according to ■■Exco Resources Inc. said its chief ex- decided a revised proposal from 7-Eleven of data compiled by Bloomberg. The top bank, ecutive officer has offered to buy all shares $43 a share in cash didn’t reflect the com- Morgan Stanley, advised on $24.7 billion of he doesn’t already own in a purchase that pany’s value and wasn’t in the best interest deals, compared with Citigroup’s $22.6 bil- values the company at about $4.36 billion. of shareholders, Casey’s said in a statement lion. Borghesi’s company advised Tiscali SpA CEO Douglas H. Miller said Dallas billion- Nov. 3. The offer totals $2.1 billion including on a possible sale in 2008 and is helping aire T. Boone Pickens, Oaktree Capital net debt. The $43 offer “would have been Kerself SpA, Italy’s biggest maker of photo- Management LP and Ares Management approved by the shareholders, who would voltaic cells, review its business structure. LLC, three of the four largest sharehold- not have been unhappy,” said Bill Kavaler, ers in Exco, are interested in joining him, an analyst at Oscar Gruss & Son Inc. with ■■Citigroup Inc. may sell about $570 mil- according to a letter released Nov. 1 by the a “hold” rating on the stock. “If you’re turning lion of investments with buyout firm CVC company. Miller is offering to pay $20.50 a down $43 because you want $50, I think Capital Partners Ltd., people with direct share in cash, a 38 percent premium over that’s having unrealistic expectations.” knowledge of the matter said to Bloomberg. the closing price on Oct. 29. For sale are about $250 million of interests ■■The Canadian government’s rejection in two Asia funds managed by CVC and 15 ■■McKesson Corp. agreed to buy US On- of BHP Billiton Ltd.’s $40 billion bid for million euros ($21 million) in a European cology Inc. for about $2.16 billion cash to Potash Corp. of Saskatchewan Inc. may fund, said one person who asked not to be expand its offerings for cancer patients. The hurt the country’s pro-trade image, deter named because the sale process is private. value of the deal includes US Oncology’s foreign investors and penalize companies Citigroup also is selling about 210 million debt, which was $1.08 billion as of June, investing overseas. “When companies look euros of stakes in more than a dozen Eu- according to data compiled by Bloomberg. at Canada, there’ll be a bit of a premium put ropean companies that were accumulated US Oncology is based in Woodlands, Texas, on the cost of capital,” said Jack Mintz, an as part of the bank’s role as co-investor on and owned by private-equity firm Welsh economist and public policy expert at the CVC-led deals, another person said. Carson Anderson & Stowe. The pact is University of Calgary. “There’ll be a chill on expected to close by the end of the year. takeovers of Canadian companies.” Prime ■■Wilmington Trust Corp., the Delaware Minister Stephen Harper has campaigned bank founded by the du Pont family, agreed for Group of 20 countries to resist protec- to be acquired by M&T Bank Corp. after tionism and earlier this year abolished all posting six straight quarterly losses, for On The Move tariffs on imported machinery. about $351 million, or about half its Oct. 29 market value. The deal is “the best option ■■Arnaldo Borghesi, founder of Milan- for our shareholders, as well as our clients ■■Michael Abbott was named chief based Borghesi Colombo & Associati, and the employees,” according to a Wilmin- investment officer of Cornell University to is helping Citigroup Inc. expand its invest- gaton statement on Nov. 1. Investors will get replace James Walsh, who stepped down ment-banking business in Italy, according to 0.051 share of Buffalo-based M&T for each at the end of June. Abbott, a London na- continued on next page Snapshot BY Pratik M. Patel, data analyst
The Latin America and Caribbean region Changes in Capital Flows by Region, 2010 Vs. 2009 led the world with almost a threefold LatAm & Caribbean jump in capital inflows for mergers and
Middle East & Africa acquisitions so far this year, compared with the same period a year earlier. The Asia Pac (Emerging) Asia Pacific (Emerging) region had Eastern Europe the largest growth in outflows as its N. America companies made more foreign purchases. Asia Pacific (Developed) companies were W. Europe targeted less this year for acquisition, Asia Pac (Dev) with a 46% decrease in capital inflows, -50% 0% 50% 100% 150% 200% 250% 300% the largest of any region. Source: Bloomberg Inflow % Change Outflow % Change 11.05.10 mergers | Bloomberg Brief 4
The wire continued from page 3
tive, previously managed $2 billion previously was head of mergers and in hedge funds as chief executive acquisitions at Dresdner Kleinwort Banks May Lose $120 officer and head of the investment Group Ltd. Mln If Potash Deal Fails committee at Robeco-Sage. JPMorgan Chase & Co. and ■■Jan Sanders and Francois Vigne nine other banks may lose an ■■Seung W. Baik, a lawyer special- were hired as managing directors estimated $120 million in advisory izing in private-equity investing, was at the mergers and acquisitions fees should BHP Billiton Ltd.’s named partner of Goodwin Procter business of Societe Generale SA, $40 billion hostile bid for Potash LLP. The firm also appointed Andrew France’s second-largest bank. Sand- Corp. of Saskatchewan Inc. fail. H. Goodman, who specializes in ers, previously at HSBC Holdings The Canadian government on REIT investments, as partner. PLC, will be managing director for Nov. 3 blocked BHP’s offer, saying the global metals and mines busi- it didn’t provide the country a “net ■■Chan Tze-ching was named ness. Vigne, formerly at Credit Ag- benefit.” The banks would earn as senior adviser at CVC Capital ricole, will be managing director for much as $140 million in advisory Partners Ltd. He previously was Citi- construction and building materials. fees if the deal is successful and group Inc.’s Hong Kong chief country as little as $20 million if it fails, officer. ■■Gail C. Saracco and Michael T. according to estimates by research Blair joined Greenberg Traurig LLP firmFreeman Consulting. ■■Mariano Garcia-Valino was as shareholders in the law firm’s Chi- The proposed takeover would named president of Latin America for cago office. Saracco has experience be the largest deal this year. BHP Bausch & Lomb Inc. after serving as in private investment funds, mergers in September lined up $45 billion an operating partner with private-eq- and acquisitions and joint-venture of loans to fund the deal. It has 30 uity firmAdvent International Corp. transactions, the firm said in a state- days to appeal Canada's decision, ment. Blair focuses on public and at which point the government will ■■Eric Gleacher will give up his private merger, acquisition, divesti- make its final decision. BHP said it role as chief executive officer of ture and financing. would review its options. Gleacher & Co. and will return to New York-based JPMorgan, working full time with clients while ■■David Sola joined Houlihan Toronto-Dominion Bank, Banco remaining chairman. President and Lokey as a managing director in Santander SA, Barclays Plc, Chief Operating Officer Peter Mc- London, where he will focus on BNP Paribas SA, Royal Bank of Nierney was named interim CEO mergers and acquisitions. He was Scotland Group Plc and Cana- while the company searches for a co-head of European M&A at UBS dian Imperial Bank of Com- permanent replacement. Investment Bank. He also managed merce are BHP’s advisers on the Softbank Europe Ventures and was a deal, according to data compiled ■■James Kern was appointed head managing director at Arma Partners, by Bloomberg. Potash Corp. is ad- of global finance of financial ins- a technology-focused M&A boutique vised by Bank of America Corp., tutions group and specialty finance in Europe. Goldman Sachs Group Inc. and investment banking for the Americas Royal Bank of Canada. at Nomura Holdings Inc. Kern previ- ■■Igor Panshensky joined Moskow In addition to advisory fees, ously worked at JPMorgan Chase & office of Dechert LLP as partner. financing banks can get as much Co. and Bear Stearns Cos. He is a commercial lawyer with as $190 million to arrange loans, experience advising on mergers according to Freeman. Most of the ■■Timothy Main, co-head of and acquisitions. loan fees may have already been JPMorgan Chase & Co.’s financial paid, Freeman said. institutions group, joined the board ■■Douglas Wendell and David While the target’s defense advis- of directors of Brown & Brown Inc., Mastrangelo were hired by Jeffer- ers in a hostile situation may be the Daytona Beach, Florida-based ies Group Inc. from Citigroup Inc. as paid their full fee if the deal fails, insurance broker. Main has been at managing directors in the company’s it’s unclear in a situation where the New York-based JPMorgan for more global technology investment-bank- government blocks the transaction, than 23 years. ing group, according to the company said New York-based Freeman. and people familiar with the situation. Under the Investment Canada ■■Marie-France Mathes joined Wendell, who spent the previous 12 Act, the federal government can Emerging Capital Partners, a years at Citigroup, will be based in block any transaction valued private-equity firm that raised more Waltham, Massachusetts, reporting at C$299 million ($296 million) than $1.8 billion to invest in Africa, as to Phil Berkowitz and Paul Crisci, or more for not providing a “net head of investor relations. co-heads of Jefferies’ U.S. technolo- benefit” to the country. Canada has gy investment banking group, Jeffer- reviewed and approved 1,637 ap- ■■John McIntyre was hired by ies said in a statement. Mastrangelo plications between June 30, 1985, Royal Bank of Scotland Plc to head will start in January, said the people, and Sept. 30 this year. its corporate finance unit in Europe, who asked not to be named because — by Brett Foley the Middle East and Africa. He his hire isn’t yet public. 11.05.10 mergers | Bloomberg Brief 5
commentary Ray Murphy, Guest Columnist
BHP’s Rejected Potash Bid Has Merger Arbs Seeking Clues to Outcome
Canada’s rejection of BHP Billiton the Act,” he wrote. “Canada has a In response, BHP promised it would Ltd.’s $40 billion hostile bid for Pot- long-standing reputation for welcom- continue to try to work with the minis- ash Corp. of Saskatchewan Inc. has ing foreign investment. The Govern- ter to make additional concessions in led merger arbitrageurs to examine ment of Canada remains committed order to earn a better outcome. the government’s statement for clues to maintaining an open climate for One puzzling part of the develop- on its final verdict. investment.” ment is why BHP did not press the Tony Clement, Canada’s Minister Several of the comments in the Minister to enter into a neutral exten- of Industry, announced on Nov. 3 the statement are of particular interest to sion of the review process. decision and a 30-day extension for merger arbs. The IC statute provides for such a the review of the transaction, surpris- First, the minister’s intentional use of mechanism even though it is not the ing the merger arbitrage community the “at this time” phrase raises hopes preferred option. The IC itself pro- and leaving it uncertain about likely he will change his decision. motes the possibility on its website: next steps. Second, the mention of BP’s oppor- “Further extensions are permitted Canada’s blocked bid is only the if both the investor and the Minister second one in the last 25 years, the agree to the extension. If no approval last one being Alliant Techsystems or notice of extension is received Inc.’s 2008 bid for MacDonald within the applicable time then the Dettwiler & Associates Ltd.’s space investment is deemed approved. It is business. According to Investment not unusual for the Minister to extend Canada, the minister reviews foreign Canada the initial 45 day review period by an takeovers of Canadian companies to ‘‘ additional 30 days to permit full con- ensure that the proposed transaction has kept sideration of the investment.”
is of “net benefit” to Canada. Since the minister was effectively The standard of review is quite the door open willing to grant BHP another 30 days
broad and the process has long in which to continue negotiations, it involved political as well as economic to more is not clear why BHP did not make a calculations. Transparency into the ‘‘ greater attempt to avoid the con- review process is very limited. crete ruling and instead enter into BHP had been in negotiations with negotiations with a fairly customary extension of the the government for approximately two review period. months and the consensus thinking BHP Billiton. The arbitrage community tentatively in the arbitrage community was that concluded that BHP may have simply the company would be able to secure miscalibrated its chances for approval approval with a set of undertakings in the review process, and the Cana- and commitments. Such an outcome dian government may have wanted is the most common result in govern- tunity to “make any additional repre- to get a political marker in place while ment reviews. sentations and submit any undertak- the review continues. “At this time, I am not satisfied that ings” during the 30-day review period Potash responded to the Minister’s the proposed transaction is likely to indicates that the Minister has kept decision by reiterating its view that the be of net benefit to Canada,” Clem- the door open for BHP to negotiate. BHP offer is inadequate. Throughout ent’s statement said. “I came to this Third, the use of “a final decision” af- the history of the deal there have decision after a careful and rigorous ter the supplemental review highlight- been rumors that there are other review of the proposed transaction. At potential bidders for the company. No ed the possibility that the Minister has the end of that period, I will make a bidder has surfaced yet. an open mind about what BHP could final decision. With the regulatory development this offer to make clearance palatable. He also said he’s prohibited by week, any potential bidder must now confidentiality provisions of the Invest- Finally, there is the policy point expect a regulatory review process at ment Canada Act from discussing the about Canada’s “long-standing repu- least as difficult BHP’s. review publicly. tation for welcoming foreign invest- ment.” Merger speculators are hopeful Ray Murphy is the owner and editor of “I will provide an explanation of the ArbJournal, an online research service for reasons behind my final decision that this statement is an indication that merger arbitrage and event-driven invest- at the time that decision is made, in the Minister is wary of establishing a ment funds. Reach him at raymurphy@ accordance with the provisions of negative precedent on the IC front. arbjournal.com. 11.05.10 mergers | Bloomberg Brief 6
Private Equity
Wellspring Raises commitments for infrastructure pools, piled by Bloomberg. Stocks outside $1.2 Billion for Fund mezzanine lending and credit deals, the financial industry are trading at the Greg Feldman, co-founder of Well- and may pitch its first large buyout most attractive levels ever when com- spring Capital Management LLC, fund since 2006 early next year. Black- paring cash flow and corporate bond said the fundraising environment has stone Group LP this year raised $13.5 yields. So far this quarter, buyout firms gradually improved, as his firm closed billion for its sixth buyout fund, 40 per- spent 44 percent of the capital invest- its fifth and largest fund at $1.2 billion. cent less than its previous pool. KKR ed in deals in which they buy publicly Wellspring Capital Partners V will stick hasn’t said how much it plans to seek traded companies. That’s the highest with the firm's strategy of investing in for the successor to its current $17.6 percentage since the buyout boom transactions of $50 million to $2 billion. billion pool. Private-equity funds raised ended almost three years ago, accord- “The opportunities exist, you just have $57 billion in the third quarter, 16 per- ing to Pitchbook Data. to be patient, and you have to be dis- cent more than previous quarter, when — Jason Kelly, Cristina Alesci ciplined,” Feldman said. Wellspring’s commitments fell to a seven-year low, and Laura Marcinek fourth fund, completed in 2006, was according to Preqin Ltd. $1 billion. — Jason Kelly and Cristina Alesci MGM Bankrupt, Rejects — Jason Kelly Lions Gate, Icahn Bid Carlyle Sees Profits, Metro-Goldwyn-Mayer Inc. on Nov. KKR's $2.5 Billion May Bargain Cash Flow 3 filed a Chapter 11 bankruptcy peti- Signal Fundraising Thaw Ample corporate cash flows and tion in Manhattan federal court after KKR & Co. is set to raise more than cheap stock valuations are helping rejecting a takeover bid by Lions Gate $2.5 billion for new funds in the sec- fuel a rebound in buyouts, led by Car- Entertainment Corp. and Carl Icahn. ond half of this year, as firms seize on lyle Group and Bain Capital LLC. It has creditor support for a prepack- a rebound in deals to attract investor The firms last month announced three aged plan to extinguish about $4 billion cash. Investors have committed $700 takeovers of public companies valued of debt and install managers from Spy- million to a fund focused on China that at a combined $8 billion, almost half glass Entertainment Group Inc. has a target of $1 billion, KKR said on the volume of all buyouts in last year’s — Linda Sandler, Dawn McCarty a conference call Nov. 3. It has won fourth quarter, according to data com- and Tiffany Kary
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Deal Roster
Christopher Brown and Patrick Shan- billion takeover of Syniverse Holdings Inc., tor, also based in Charlotte. Kelly has helped non of Latham & Watkins LLP teamed up on Oct. 28. Latham & Watkins also advised close deals with several other private equity with Carlyle Group as advisers to its $3.78 Carlyle on that deal. firms, including Charlotte-based Pamlico billion dollar announced takeover of Com- Alston & Bird LLP represented Wash- Capital and Nautic Partners LLC in Provi- mScope Inc. on Oct. 25. Brown and Shan- ington-based Carlyle in its purchase of dence, Rhode Island. non have advised Carlyle several times CommScope and advised Syniverse in On Oct. 29, CommScope Inc. was sued before, helping to finance the private-equity its transaction. Mark Kelly leads Alston's by a shareholder over claims the buyout firm's $2.66 billion deal for Sequa Corp. and private-equity practice and has represented undervalues the company. Carlyle's offer for its $1.27 billion acquisition of Open Solu- leveraged buyout and venture capital firms the Hickory, North Carolina-based telecom tions Inc., both in 2007. since 1988. He represented Carlyle in its equipment maker represented a 36 percent Founded by William Conway Jr., Daniel acquisition of OpenLink Financial Inc. from premium to the company's closing price D'Aniello and David Rubenstein, Carlyle TA Associates Inc. in 2009. Kelly developed on Oct. 22. The deal, if completed, would Group is this year's most acquisitive private- his relationship with Carlyle through Clau- be the largest takeover in the industry in at equity firm, with 30 announced takeovers. dius “Bud” Watts IV, Carlyle's Technology least two years, according to data compiled The firm announced another deal, a $2.58 Buyout Group head and a managing direc- by Bloomberg. — By Alex Sherman
Seller: CommScope Inc. Buyer: The Carlyle Group Investment Bank Allen & Co. Carlyle Group Deal Team Georg Schloendorff Bud Watts Cam Dyer David Mosca Patrick McCarter Law firm Gibson, Dunn & Crutcher LLP Investment Bank J.P. Morgan Chase Lois Herzeca Law Firms Alston & Bird LLP Before coming to Allen & Eduardo Gallardo Mark Kelly Co., Schloendorff worked as a managing director Joerg Esdorn (finance) Lee Rimler Dyer worked with Alston at Banc of America Se- Stephen Fackler (benefits) John Baron (tax) curities and a director at & Bird’s Mark Kelly on Michael Collins (benefits) John Latham (litigation) Salomon Smith Barney. Carlyle’s sale of Sippican Romina Weiss (tax) Inc. to Lockheed Martin Scott Hilsen (litigation) Corp. in 2004 Peter Sullivan (antitrust) Mark Vasco (litigation) Mike Stevens (benefits) Peter Alexiadis (antitrust) Blake MacKay (benefits) David Kennedy (intellectual property) Chris Gregg (intellectual Herzeca has advised property) CommScope in transac- Kelly first advised Carlyle tions since the company’s Gary Ivey (corporate in 2004. IPO in 1997. transactions & securities) Beverlee Silva (environmental) David Jacobs (global finance & debt products) Tom Crocker (international trade & regulatory) Latham & Watkins LLP Shannon represented Christopher Brown Carlyle on financing for Patrick Shannon $6.3 billion takeover of Marc Williamson Manor Care Susanne Zuehlke (antitrust) K a r e n B r i n k m a n n ( r e g u l a t o r y ) 11.05.10 mergers | Bloomberg Brief 8
Across the street Bloomberg news
Cohen Watches as Kravis followed the example of the Oracle of officer of NewY ork-based WL Ross & Sells $50 Million of Art Omaha by auctioning a charity lunch Co., which specializes in reorganizing Steven A. Cohen, founder of SAC for 1.4 Million rupees ($31,517). The distressed companies. He Capital Advisors LP and art collector week-long online auction, which end- received a bachelor’s degree from Founder, watched from a sky box on ed Nov. 2, attracted 90 bids on EBay Yale University in 1959, and went to Nov. 3 as Christie’s International held Inc.’s Indian website, raising money Harvard Business School in Boston for its New York Impressionist and modern for the Children’s Movement for Civic his MBA degree because Yale didn’t art sale. The auction totaled $231.4 mil- Awareness. EBay spokeswoman Dee- have a business school at the time, lion with commissions, triple Christie’s pa Thomas said the winner, a stock- Ross said. year-ago tally of $74.2 million. market analyst based in the western — Oliver Staley Henry Kravis was one of the top sell- Indian state of Gujarat, wished to re- ers with $50 million of art sales, people main anonymous. Jhunjhunwala, 50, familiar with the transactions said. will meet the winner and as many as Liverpool’s Broughton Kravis parted with four works, includ- nine guests for a three-hour lunch at a five-star restaurant to be agreed by Seeks Profit in Sports ing a 1913 cubist Juan Gris painting Liverpool Chairman Martin Brough- of a fragmented violin and guitar. The him and the top bidder, EBay said on its website. ton will team up with his son to invest canvas sold for a record auction price in sports after leaving his post upon of $28.6 million to an anonymous Eu- — Pooja Thakur the sale of the 18-time English soc- ropean collector. The four works said cer champion. Broughton oversaw to belong to Kravis were described the 300 million-pound ($487.6 million by Christie’s as hailing from “a dis- Ross Gives $10 Million to Yale Business School sale of Liverpool to the owners of the tinguished private collection.” A KKR Boston Red Sox. Broughton will work The billionaire Wilbur Ross will do- spokeswoman didn’t return an e-mail two days a week with his son Michael nate $10 million for a library in Yale last night seeking comment. and Nic Couchman, a lawyer with 20 School of Management’s new build- — Lindsay Pollock and Philip Boroff years experience in the industry, to ing. The gift will help fund construction find profits in sports. Their Sports- In of the $189 million facility, scheduled to vestment Partners, which was delayed ‘India’s Buffett’ Auctions open in 2013. Yale University, in New for six months because of Broughton’s Haven, Connecticut, announced the Charity Lunch on EBay role in Liverpool’s sale, will start meet- Billionaire investor Rakesh Jhun- pledge Nov. 4 in an e-mail. Ross, 72, a ing potential backers this month. jhunwala, who was named India’s trustee of the Yale School of Manage- Warren Buffett by Forbes magazine, ment, is chairman and chief executive — Tariq Panja
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Deal Arbitrage Spreads for select M&A deals with U.S.-listed targets
Deal Size Announced Expected Offer Per Announced LAST Target Current Last Spread Target Acquirer ($M) Date Completion Date Share Premium in % Price Premium % Spread Move TALECRIS BIOTHER GRIFOLS SA 3,919.78 06/07/10 12/31/10 28.69 54.74 23.63 21.42 5.06 0.07 EXCO RESOURCES I N/A 5,183.24 11/01/10 20.5 37.71 18.98 8.01 1.52 - BUCKEYE GP HOLDI BUCKEYE PARTNERS 2,720.89 06/11/10 12/31/10 45.82 30.42 44.43 3.14 1.39 -0.3 MCAFEE INC INTEL CORP 6,593.67 08/19/10 48 52.32 47.32 1.44 0.68 0.01 PENN VIRGINIA GP PENN VIRGINIA RE 1,525.05 09/21/10 27.06 11.73 26.4 2.49 0.66 -0.86 SYNIVERSE HOLDIN Private 2,583.21 10/28/10 03/31/11 31 34.06 30.4 1.97 0.6 0.1 ALLEGHENY ENERGY FIRSTENERGY CORP 9,216.11 02/11/10 04/30/11 23.98 36.15 23.55 1.82 0.43 -0.64 NEWALLIANCE BANC FIRST NIAGARA FI 1,522.73 08/19/10 06/30/11 13.62 23.83 13.24 2.84 0.38 -0.05 T-3 ENERGY SERVI ROBBINS & MYERS 407.07 10/06/10 34.94 23.17 34.57 1.07 0.37 -0.11 AIRTRAN HOLDINGS SOUTHWEST AIR 1,049.68 09/27/10 06/30/11 7.75 73.2 7.47 3.75 0.28 -0.06 GYMBOREE CORP BAIN CAPITAL LLC 1,673.27 10/11/10 11/22/10 65.4 45.9 65.15 0.38 0.25 -0.07 QWEST COMMUNICAT CENTURYLINK INC 22,161.55 04/22/10 06/30/11 7.16 12.49 6.92 3.52 0.24 -0.06 L-1 IDENTITY SOL SAFRAN SA 1,582.23 09/20/10 03/31/11 12 31.13 11.79 1.78 0.21 0.02 ENTERPRISE GP ENTERPRISE PRODU 8,841.36 09/07/10 12/31/10 64.77 14.27 64.59 0.28 0.18 -0.29 BMP SUNSTONE COR SANOFIVENTIS 449.61 10/28/10 10 28.97 9.82 1.83 0.18 - ALBERTO-CULVER UNILEVER NV 3,589.41 09/27/10 37.5 20.63 37.33 0.46 0.17 -0.07 BOWNE & CO INC RR DONNELLEY & S 451.37 02/23/10 11.5 78.96 11.35 1.32 0.15 0 PACTIV CORP Private 5,945.19 08/17/10 12/31/10 33.25 8.58 33.14 0.33 0.11 0.05 AGA MEDICAL HOLD ST JUDE MEDICAL 1,293.17 10/18/10 11/17/10 20.8 44.93 20.69 0.53 0.11 0.1 KING PHARMACEUTI PFIZER INC 3,312.50 10/12/10 11/19/10 14.25 45.69 14.16 0.64 0.09 -0.01
League Tables
Global Financial Advisers Global Legal Advisers
2010 Year-to-Date 2010 Year-to-Date
MKT VOLUME DEAL MKT VOLUME DEAL Financial FIRM rank SHARE USD (Mln) COUNT legal FIRM rank SHARE USD (Mln) COUNT Morgan Stanley 1 21.5 367,121 257 Skadden Arps Slate Meagher & Flom 1 12.30 210,418 165 Goldman Sachs & Co 2 19.6 335,522 243 Sullivan & Cromwell 2 10.11 172,966 122 Credit Suisse 3 17.6 301,340 165 Simpson Thacher & Bartlett 3 8.63 147,541 126 JP Morgan 4 17.2 293,744 196 Cleary Gottlieb Steen & Hamilton 4 7.69 131,492 87 Barclays Capital 5 14.3 245,312 118 Wachtell Lipton Rosen & Katz 5 7.30 124,818 45 Deutsche Bank AG 6 12.6 216,106 166 Latham & Watkins LLP 6 7.08 121,041 178 Bank of America Merrill Lynch 7 11.9 203,814 179 Linklaters LLP 7 6.76 115,700 136 Citi 8 11.6 198,461 129 Dewey & LeBoeuf LLP 8 6.08 104,061 69 UBS 9 10.8 184,729 161 Shearman & Sterling LLP 9 6.01 102,853 104 Lazard LLC 10 9.6 163,725 130 Allen & Overy LLP 10 5.99 102,447 135 Rothschild 11 6.1 104,337 152 Freshfields Bruckhaus Deringer 11 5.55 94,963 159 BNP Paribas Group 12 5.9 100,410 72 Stikeman Elliott 12 5.32 91,002 82 Nomura Holdings Inc 13 5.6 95,417 141 Davis Polk & Wardwell 13 5.22 89,303 80 Societe Generale 14 4.2 72,440 22 Weil Gotshal & Manges LLP 14 4.58 78,331 103 Blackstone Group 15 3.8 64,548 29 Vinson & Elkins LLP 15 3.93 67,192 56 Evercore Partners Inc 16 3.8 64,444 31 Gibson Dunn & Crutcher 16 3.89 66,477 97 HSBC Bank PLC 17 3.3 57,244 55 Blake Cassels & Graydon LLP 17 3.86 65,940 97 Perella Weinberg Partners 18 3.3 55,955 18 Clifford Chance LLP 18 3.62 61,861 75 Greenhill & Co 19 3.1 53,802 41 Fried Frank Harris Shriver & Jacobson 19 3.54 60,576 42 Banco Santander SA 20 2.8 48,357 35 Cravath Swaine & Moore 20 3.37 57,692 49 Source: Bloomberg As of: 11/04/2010 Source: Bloomberg As of: 11/04/2010 Excludes terminated deals. Excludes terminated deals. 11.05.10 mergers | Bloomberg Brief 10
Q: Is that more active Q: Does CFIUS' workflow move in spotlight than normal? lockstep with the M&A markets or Baker: It's about what the Bush ad- are there different factors at work? Stewart Baker and Stephen Heifetz, ministration was doing towards the Baker: There are other factors at partners at law firmSteptoe & Johnson end. It's been more about continuity work, but you can't have investment LLP, discuss with Bloomberg Law's Lee than discontinuity. reviews without investment. When Pacchia how foreign acquirers of U.S. M&A work picks up, CFIUS does assets should prepare for review by the Heifetz: Emphasize that in addition too. In the wake of the Dubai Port federal government's Committee on For- to the deals that CFIUS has scut- World disaster and the CNOOC eign Investments in the United States, tled, there are cases in which they episode, people began to think which reviews transactions that may affect will insist on risk mitigation mea- anything could be overturned on na- national security. sures. If they think there are national tional security grounds and rushed security concerns, they may not to file. Filings probably hit a peak in want to kill the deal, but they may 2008 and have declining since then. Q: What is CFIUS and what does want some assurances, typically Whenever there is a scare or politi- it do? from the acquirer, about measures cally driven investment scandal, you Baker: CFIUS is a foreign invest- it will take to put the U.S. national see people taking out an insurance policy by filing with CFIUS. ment review process, many coun- security bureaucracy at ease. tries have them, and ours has been Heifetz: For that reason, last year around since the 1970s. It's more the number of filings fell below 100 of a committee than an agency. We for the first time in a while. They sometimes say when people get in have, however, picked up signifi-
serious trouble trying to get their cantly in the last year. investment through CFIUS that Whenever there
the companies have "contracted is a scare, Baker: And the decline of the dollar CFIUS." It is an aggressive review is only going to drive that further. for national security purposes of ‘‘‘‘ proposed mergers and acquisitions you see people taking in the U.S. out an insurance policy (This interview was condensed and edited.) Heifetz: The committee is chaired by filing with CFIUS. by the Treasury Department, but there are agencies that fall on both Bloomberg Brief Mergers security issues, like Department of Bloomberg LP 731 Lexington Avenue, New York, NY 10022 Homeland Security and the Depart- 212-318-2000 ment of Homeland Defense, as well Q: What do companies get wrong Newsletter Ted Merz as more trade-focused agencies, most often in this process? Executive Editor [email protected] like the Department of Commerce 212-617-2309 Baker: First, companies tend to not and the U.S. Trade Representative, fully understand what the govern- Bloomberg News Katherine Snyder and they review these acquisitions ment considers to touch on national Managing Editor [email protected] 212-617-5212 together. security. For example, telecommu- nications deals and computer deals Mergers Editors Rob Williams Q: Stewart, how often do they kill [email protected] very often will be viewed as touching 212-617-8844 deals? Is this something compa- on national security; it's not just a Contributing nies realistically need to be wor- question of stealth technology or de- ried about? Data Editors Carol Chuang fense contracts. Second, at the tail [email protected] Baker: I would say they've averaged end of the Bush administration Con- 212-617-3642
one dead deal every 18 months for gress passed a new law on CFIUS Pratik M. Patel the last several years. Those are the and they brought the intelligence [email protected] deals we know about. Sometimes community deep into the analysis 212-617-8705 people will get a quiet word before of these deals and they now look at they’ve announced the transaction, not only the sector involved, but also To subscribe via the Bloomberg professional terminal type BRIEF