Archive for the 'M&A' Category

Ensco plc (ESV) to Acquire Pride International, Inc. (PDE)

Posted on February 7, 2011, 8:30 am. Closed

Ensco plc to Acquire Pride International, Inc.

Ensco plc (NYSE: ESV) and Pride International, Inc. (NYSE: PDE) jointly announced today that they have entered into a definitive merger agreement under which Ensco will combine with Pride in a cash and stock transaction valued at $41.60 per share based on Ensco’s closing share price on 4 February 2011. The implied offer price represents a premium of 21% to Pride’s closing share price as of the same date and a premium of 25% to the one month volume weighted average closing price of Pride. The definitive merger agreement was unanimously approved by each company’s board of directors.
Under the terms of the merger agreement, Pride stockholders will receive 0.4778 newly-issued shares of Ensco plus $15.60 in cash for each share of Pride common stock. Upon closing, and reflecting the issuance of new Ensco shares, Pride stockholders collectively will own approximately 38% of Ensco’s outstanding shares.
Ensco expects the combined company to realize annual pre-tax expense synergies of at least $50 million for full year 2012 and beyond. The combination is projected by Ensco management to be immediately accretive to Ensco’s earnings and cash flow per share before synergies.
The transaction will create the second largest offshore driller in the world with 74 rigs spanning all of the strategic, high-growth markets around the globe. The combined company will have 21 ultra-deepwater and deepwater rigs, forming the second largest/youngest fleet able to drill in water depths of 4,500’ or greater. In addition, the combined company will have more active jackup rigs than any other driller. Mid-water rigs will represent 8% of the combined fleet.
Based on the closing price of each company’s shares on 4 February 2011, the estimated enterprise value of the combined company is $16 billion. The total estimated revenue backlog for the combined company is approximately $10 billion.

RockTenn (RKT) and Smurfit-Stone (SSCC) Agree to Merge

Posted on January 23, 2011, 11:07 pm. Closed

Via DealBook, “2 Top Package Companies to Merge”:

The merger will combine two of the biggest names in packaging, creating a company with 9.4 million tons of production capacity. It will also expand RockTenn’s business in the Midwest and West Coast. The combined company will keep RockTenn’s headquarters in Norcross, Ga.

The deal appears in some ways to be a bet that consumers will increase their buying and need for shipping products.

It also comes about two years after Smurfit-Stone filed for bankruptcy during a wave of big Chapter 11 filings. Through the bankruptcy process, the company shed billions of dollars in debt.

Under the terms of the deal, RockTenn will pay 0.30605 of its own shares and $17.50 in cash, or $35 a share at Friday’s closing price, for each Smurfit-Stone share. The price represents a 27 percent premium to Smurfit-Stone’s Friday closing price of $27.52. RockTenn will also assume $1.8 billion of Smurfit-Stone’s debt and pension liabilities.

This just goes to show that post-reorg companies can be a great opportunity. No matter how crappy they were before or that they’re still in a crappy industry, bankruptcy is inevitably a cleansing process. Upon emergence, the company has been scrubbed and scrutinized, which paves the way for outperformance in the public markets or makes the company more attractive to potential acquirers.

Coleman Cable (CCIX) Offers to Acquire Technology Research Corp (TRCI) for $5.50 per Share in Cash

Posted on January 19, 2011, 11:33 am. Closed

This acquisition could get a little ugly given that TRCI’s Board adopted a Poison Pill. This is part of the press release from Coleman’s tender offer filing:

WAUKEGAN, Ill. January 18, 2011 — Coleman Cable, Inc. (Nasdaq: CCIX) (“Coleman”), a leading manufacturer and innovator of electrical and electronic wire and cable products, announced today that it has delivered to the Board of Directors of Technology Research Corporation (NASDAQ: TRCI) (“TRC”) a proposal to acquire all of the outstanding shares of TRC for $5.50 per share in cash. The proposed offer price represents a premium of 41% to TRC’s closing share price on January 14, 2011, the last trading day prior to the public disclosure of Coleman’s offer by TRC. The proposed offer also represents a premium of approximately 46% to TRC’s average closing share price for the 20 trading days ending January 14, 2011. Through its legal advisors, TRC has today informed Coleman that its Board of Directors is considering Coleman’s offer and will try to respond by January 21, 2011.

“We have attempted to engage TRC’s Board of Directors on a number of occasions and we are disappointed that rather than engaging in constructive dialogue with Coleman, TRC’s Board instead adopted a Poison Pill to block a transaction that is clearly friendly to its shareholders,” said Gary Yetman, President and Chief Executive Officer of Coleman. “Given the historically low trading volume of TRC’s stock, we firmly believe that TRC shareholders will find the certainty of a cash offer – at a premium of 46% to the average closing share price for the 20 trading days before our offer was made public – very attractive.”

Coleman has made numerous efforts to engage TRC’s Board and management in negotiations to agree to a friendly transaction beginning with a letter sent to TRC Chairman of the Board and Chief Executive Officer, Mr. Owen Farren, on December 2, 2010, which proposed an offer price of $5.00 to $5.50 per share. On January 3, 2011, TRC sent a letter to Coleman indicating that TRC was not interested in discussing Coleman’s proposal. On January 5, 2011, Coleman sent a letter to TRC reiterating its interest in discussing a possible transaction and requesting a response by January 12, 2011. After TRC did not respond to this letter, on January 14, 2011, Coleman communicated to TRC a revised offer price of $5.50 per share, the top end of the range set forth in Coleman’s December 2 letter. To date, TRC has refused to enter into any dialogue with Coleman to explore the merits and potential terms of a transaction.

M&A Arbitrage Opportunities Abound

Posted on October 9, 2008, 10:15 pm. Closed

In this disjointed and frightened market, arbitrage opportunities in merger and acquisition simply abound. There are significant discounts even with the shareholders of the target company having voted “Yes” to acquisition. An investor using due diligence will be able to find good opportunities.

Take a look at this list of pending mergers for ideas.

Blockbuster Gets Smart For Once

Posted on July 1, 2008, 10:48 pm. Closed

Jesus, sometimes I think I could run some companies better than some current management teams. When Blockbuster announced in April that it wanted to acquire Circuit City, I thought to myself they must be stupid idiots. If that deal actually was consummated, it would be like Dumb and Dumber. Two companies destined to go down in flames separately would now go down in flames together.

However, Blockbuster just announced it has dropped its bid for Circuit City. BB’s CEO said it wouldn’t be in the best interest of the shareholders. Ya think? I bet his wife knocked some sense in to him…