M&A Weekly Recap: NRG and GenOn Go on Power Trip, Universal Music Negotiates for EMI Buy
NRG Energy, Inc. (NYSE:NRG) is conducting a merger with GenOn Energy, Inc. (NYSE:GEN), which will create the largest competitive power generation company in the United States. Shareholders of the latter will receive 0.1216 of a share of NRG common stock for each GenOn share of common stock, which represents a 20.6% windfall to GenOn shareholders. NRG shareholders will thus own 71 percent of the combined firm, and GenOn shareholders will own 29 percent.
DigitalGlobe, Inc. (NYSE:DGI) and GeoEye, Inc. (NASDAQ:GEOY) are set to merge in a stock-and-cash transaction worth approximately $900 million, which will establish “a global leader in earth imagery and geospatial analysis with a more diversified revenue base, a superior financial foundation and significant growth potential.” The deal represents a 34 percent premium to GeoEye’s Friday closing price.
Peet’s Coffee & Tea, Inc. (NASDAQ:PEET) is being bought by the German holding company Joh A. Benckiser, for $73.50 per share in cash, or $1 billion. The price yields a 28.6 percent bonus to Peet’s Friday closing price. Peet shares were halted for a period, but are popping in mid-afternoon.
United Technologies Corporation (NYSE:UTX) divests its Rocketdyne division to GenCorp, Inc. (NYSE:GY) for $550 million, as the former concentrates upon selling off its non-core units and focuses on closing its $16.5 billion Goodrich purchase. The firm will use the proceeds from the sale to repay a portion of the debt it took on to acquire Goodrich.
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Synergy Pharmaceuticals, Inc. (SGYP) acquires Callisto Pharmaceuticals, which is a development stage bio-pharmaceutical firm that primarily concentrates upon the development of medications to treat gastrointestinal disorders and diseases.
The Federal Trade Commission okays Dell, Inc. (NASDAQ:DELL) to purchase the systems management software supplier Quest Software, Inc. (NASDAQ:QSFT). Observers are not surprised by the move, since Dell’s share of the systems management market is quite small compared to that of competitors IBM and Hewlett-Packard. The acquisition of Quest should aid Dell’s ambitions for turning its software operations into a $5 billion per year business, along with offering integrated hardware and software solutions for virtualization deployments.
Stanley Black & Decker, Inc. (NYSE:SWK) purchases Infastech, which is a producer of engineered mechanical fasteners based in Hong Kong, for $850 million, all in cash. The current owners are private equity. Infastech brings annual revenues of approximately $500 million, and generates 40 percent of its sales from Asia-Pac. The transaction should close in the fourth quarter, and is expected to be accretive by 15 cents per share in its first year.
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The Carlyle Group (NYSE:CG) and BC Partners are said to be in joint discussions to acquire United Technologies Corporation’s (NYSE:UTX) industrial divisions, say sources. Talks are already in an advanced stage; such a deal could be worth more than $3.5 billion, but it’s still possible that United Tech could turn to other suitors, such as TPG Capital.
Rosneft Oil Co. (RNFTF.PK) intends to initiate discussions with BP (NYSE:BP) regarding the purchase of the latter’s 50 percent investment in its TNK-BP Russian joint venture. The remaining 50 percent is owned by AAR, which last week indicated that it’s interested in obtaining one half of BP’s interest, offering $10 billion.
Cnooc Limited’s (NYSE:CEO) purchase offer for Nexen, Inc. (NYSE:NXY) is likely to reward traders by getting Canadian approval, according to Bloomberg. The 66 percent windfall to NXY’s 20-day share average is more than twice the industry average, and only around 30 percent of Nexen’s production comes from Canada, so regulators should not reject the deal because it would not provide a “net benefit” to the country.
The French group Veolia Environnement (NYSE:VE) is a part-owner in Veolia Transdev’s eastern European bus services, which will be put up for auction with preliminary offers due Thursday, according to Reuters. The former hopes that the sale of its 50 percent interest will help it divest €5 billion worth of assets by next year, as it seeks to reduce debt.
ArcelorMittal (NYSE:MT) will divest its 48.1 percent investment in Paul Wurth Group to SMS GmbH, a move which represents the firm’s strategy to sell off its non-core assets. Financials of the transaction were not divulged.
London Metal Exchange (LME) shareholders approve Hong Kong Exchanges $2.2 billion acquisition bid, which effectively ends a struggle for the former that lasted almost a year. Shares in Hong Kong Exchanges didn’t really change on the news, but have fallen some 30 percent since the February offer was reported.
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The European Commission and United States authorities have conditionally okayed United Technologies Corporation’s (NYSE:UTX) $16.5 purchase of Goodrich, with the buyer required to divest some power generation and aircraft engine controls operations. United must give Rolls Royce an option to acquire its lean-burn fuel-nozzle research and development project, as well. The transaction, which is closing at once, will add approximately $8 billion to the purchaser’s annual revenues and reinforce its presence on Boeing and Airbus jets.
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Shares of OCZ Technology Group, Inc. (NASDAQ:OCZ) pop, on new chatter that Seagate Technology (NASDAQ:STX) wants to acquire the firm in order to reinforce its solid-state drive position. It’s said that Seagate is offering approximately $1 billion, split between $475 million to $550 million in cash and $450 million to $525 million in stock, which represents more than twice what OCZ is worth, counting the latest offer. Some observers are very dubious that Seagate would ever shell out that much.
Canadian gas producer Petronas has raised its acquisition bid for Progress Energy Res (PRQNF.PK) to C$22 per share, or approximately C$5.8 billion, from an earlier offer of C$20.45 a share following the receipt of an unsolicited offer from an unidentified third party. Cnooc Limited’s (NYSE:CEO) recent purchase of Nexen has ignited speculation that more Chinese firms might be looking for energy assets in North America.
Universal Music (VIVHY.PK) will have to make a tradeoff if it wants the European Commission’s okay for its $1.9 billion purchase of EMI’s (NYSE:C) recorded music unit. The former will be required to divest EMI’s iconic Parlophone label, for which a potential buyer might be BMG Rights Management, which is co-owned by KKR & Co., LP (NYSE:KKR).
Fingerprint sensor chips maker AuthenTec, Inc. (NASDAQ:AUTH) agrees to be acquired by Apple (NASDAQ:AAPL) at $8 per share, which represents a 58 percent windfall over Thursday’s close. In mid-afternoon, shares are trading above Apple’s buyout price, as speculators may be betting on a higher bid from some other entity that wants to keep AuthenTec’s fingerprint sensor and mobile VPN solutions away from Apple. Larry Dignan opines Apple’s acquisition is about staying ahead of Samsung and Android in the enterprise, while information technology’s “bring your own device” trend goes on unabated.
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