Monday Nov. 16, 2015 www.bloombergbriefs.com EDITOR'S CORNER CHANGE OF FORMAT This is the last edition of the weekly The Big Keep Getting Bigger, and So Do the Deals Mergers brief. We will continue to publish special issues on major transactions and BY JOHN E. MORRIS, BLOOMBERG BRIEF EDITOR other merger topics. Inside is a guide to As we end the weekly Mergers brief, 2015 has already set M&A the ways readers can obtain M&A news records. Seven mergers worth more than $50 billion have been and data on the Bloomberg terminal. announced this year, according to data compiled by Bloomberg. You have to look back to 1998 and 1999 to find more than three QUOTED $50 billion deals in a year. Those mergers, like this year's, were driven by strategic buyers. "A restriction on who can buy the The biggest in the 2015 crop, Anheuser-Busch InBev SA's stock really just smacks of $120.5 billion deal for SAB Miller Plc, was formally sewn up last week. That could be eclipsed if Pfizer Inc. pulls off a takeover of retrenchment by the Allergan Plc, which would probably be valued north of $165 billion. management team and the When total M&A volume hit its all-time record in 2006-07, volume board." was driven by transactions in the $20 billion to $49 billion range, many of them — Stephen Griggs, CEO of activist fund leveraged buyouts by private equity firms. Nine of the 25 deals in that range in those two Smoothwater Capital, discussing Concordia years were LBOs. Healthcare's restrictions on the resale of its stock The other striking thing about this year's monster deals is how many involve to activists companies buying direct competitors. Brewers, oil companies, insurers, big pharmas, food makers, drug chains and chipmakers — the biggest deals this year also tend to be the ones with the biggest overlaps, and the most thorny antitrust issues. (See our analysis of the overlap of the Walgreens and Rite Aid drug chains.) Today's T-Mobile USA CEO John Legere and announcement that Marriott International Inc. is buying Starwood Hotels & Resorts Republican presidential hopeful Donald Worldwide Inc. falls in the same category, though at $13.5 billion, it is not on the same Trump took to Twitter to trade insults scale. after martial arts star Ronda Rousey lost A good year for bankers and lawyers and investors collecting control premiums, then. to Holly Holm during an Ultimate Fight Perhaps a less good year for customers and suppliers facing new goliaths. Championship in Australia Sunday and suffered a concussion from a kick to the A History of Very Large Deals head. Trump tweeted that she was "not a nice person;" while Legere came to her defense. Surprise: It quickly escalated. WEEK IN NUMBERS 646 and 577: Number of Walgreens and Rite Aid stores in California, respectively. IN THIS ISSUE WEEK IN REVIEW. The biggest deal last week — Molson Coors's $12 billion purchase of SABMiller's 58 percent stake in their joint venture MillerCoors — was spawned by the year's largest takeover. M&A TRENDS. Chinese companies are making more purchases abroad, seeking to move up the value chain. MERGER MONDAY A ROUND-UP OF TODAY'S LARGEST DEALS AND DEALMAKING NEWS Nov. 16, 2015 Bloomberg Brief Mergers 2 MERGER MONDAY A ROUND-UP OF TODAY'S LARGEST DEALS AND DEALMAKING NEWS Marriott Buying Starwood in Deal Valued at $13.5 Billion Constellation to Acquire Marriott International Inc. is buying Starwood Hotels & Resorts Worldwide Inc. for Craft Brewer for $1 Billion $13.5 billion to create the world’s largest hotel company, beating other suitors, which Constellation Brands Inc., the maker reportedly included Hyatt Hotels Corp. of Robert Mondavi wines and Svedka Marriott is paying $2 a share in cash and 0.92 of its own stock for Stamford, vodka, agreed to acquire Ballast Point Connecticut-based Starwood, the companies said in a statement today. The new group Brewing & Spirits for $1 billion to add to will operate or franchise more than 5,500 hotels with 1.1 million rooms worldwide. its beer portfolio. Starwood has been exploring options including a sale since the February departure of Constellation, which had long focused longtime head Frits van Paasschen amid criticism he failed to increase the number of on wine and spirits, has found success in properties carrying Starwood’s brands quickly enough. Starwood hired Lazard Ltd. to the beer business since acquiring the advise it in April. At least three Chinese companies were pursuing bids for Starwood, rights to sell Corona and Modelo beers in according to a person with knowledge of the matter in October. CNBC reported on Oct. the U.S. in a $5.3 billion deal with 28 that Hyatt was holding takeover talks with Starwood. Anheuser-Busch InBev NV in 2013. — Andrew Blackman and Hui-yong Yu, Bloomberg News San Diego-based Ballast Point was started in 1996. Sales are expected to Media General Rejects Nexstar Bid, Agrees to Talks double to almost 4 million cases this year, with net sales hitting $115 million, Media General Inc.’s board unanimously rejected an offer from Nexstar Constellation said. Broadcasting Inc., saying it undervalues the company, though will enter talks with the The deal is expected to be completed suitor on a takeover. this year and will be financed with cash Media General agreed to acquire Meredith Corp. for $2.4 billion on Sept. 8. Later in and debt, Victor, New York-based the month, Irving, Texas-based Nexstar made an unsolicited $1.85 billion takeover bid Constellation said Monday in a statement. for Media General. Media General’s board continues recommend the existing agreement The takeover will be neutral to to buy Meredith, the Richmond, Virginia-based company said in a statement Monday. Constellation’s profit in its current fiscal On Oct. 14, Media General got permission from Meredith to exchange information with year and add about 6 cents to per-share Nexstar. Starboard Value LP, which holds 4.5 percent of the company’s outstanding earnings the following year, it said. shares, wrote Media General last Tuesday urging it to begin negotiations with Nexstar. — Jennifer Kaplan, Bloomberg News — Paul Barbagallo, Bloomberg News Energy Transfer Plans $2.2B ChemChina Said to Approach CIC on Syngenta Bid Dropdown to Sunoco China National Chemical Corp. approached sovereign wealth funds including China Energy Transfer Partners LP, a unit of Investment Corp. to help pay for a potential acquisition of Syngenta AG, which would the pipeline group led by billionaire Kelcy be the biggest Chinese acquisition ever if it goes ahead, people with knowledge of the Warren, agreed to sell wholesale fuel and matter said. ChemChina, as the state-owned company is known, contacted retail marketing assets for about $2.23 government-run investment funds in Asia to gauge their interest in contributing money billion to its affiliate Sunoco LP. for an offer, people familiar with the matter said. The funds haven’t yet agreed to The transaction, which completes $5.7 participate, the people said. billion of retail-business dropdowns from ChemChina is in talks to buy the Swiss pesticide maker, people familiar with the matter Energy Transfer to Sunoco in just over a said last week. The Chinese company offered 449 francs a share in cash, valuing the year, will be effective Jan. 1 and is Swiss pesticide maker at 41.7 billion francs ($41.4 billion), one of the people said. expected to close in February, the Syngenta said the figure was too low, but it served as a basis for discussions. companies said Monday in a statement. ChemChina and CIC representatives didn’t immediately respond to requests for The transaction is the latest move by comment. Energy Transfer Equity LP to simplify its — Jonathan Browning and Dinesh Nair, Bloomberg News financial structure. Energy Transfer Biggest Deals Since Friday Partners, primarily an operator of natural gas pipelines and processing units, TARGET INDUSTRY COUNTRY ACQUIRER VALUE ($M) bought Sunoco Inc. for about $6.8 billion Starwood Hotels & Resorts in 2012. Lodging US Marriott International Inc/MD 13,453 Worldwide Inc “With the completion of the dropdown program, SUN will be able to focus on a Legacy Sunoco retail business Oil & Gas US Sunoco LP 2,398 broad range of opportunities to grow via Ballast Point Brewing & Spirits Inc Beverages US Constellation Brands Inc 1,000 third-party acquisitions and capital Trayport Ltd Software GB Intercontinental Exchange Inc 638 projects,” according to the statement. — Jim Polson, Bloomberg News Kbro Co Media TW Dafu Media Co 555 Source: Bloomberg MA<GO> Real estate assets, joint ventures and stock buybacks excluded DEAL FOCUS Nov. 16, 2015 Bloomberg Brief Mergers 3 DEAL FOCUS Walgreens, Rite Aid Overlaps Will Be Scrutinized by Regulators Rite Aid Corp.'s Oct. 27 agreement to approval, though the company said it demands that divestitures ensure genuine be acquired by Walgreens Boots expects the figure to be less than 500. competition for the combined Alliance Inc. will create the largest U.S. Walgreens agreed to pay Rite Aid a a Walgreens-Rite Aid. drugstore chain. The rapid consolidation $325 million termination fee if the deal The state-wide figures do not of health care, from drug manufacturers isn't approved by regulators. necessarily reflect the extent of the to managed care companies, is driving a A state-level comparison shows competitive issues. In retail mergers, race to achieve scale in the supply chain. significant overlap. This includes six of regulators typically examine much smaller Rite Aid's footprint in the Northeast and the 10 most populous states — California, geographic markets, such as zip codes, West Coast is highly complementary to New York, Ohio, Georgia, North Carolina to see if specific stores of one merger Walgreens' presence in the Midwest and and Michigan — though those may be the partner compete against outlets of the South.