Notable Mergers and Acquisitions 10/19: (QUNR) (LBTYA) (GNC) (ACHC) (IMPV)
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Pursuant to the terms of the Merger Agreement, at the effective time of the merger, each ordinary share of the Company issued and outstanding immediately prior to the effective time of the merger (each a “Share”) will be cancelled and cease to exist in exchange for the right to receive $10.13 in cash without interest, and each American depositary share (each an “ADS”) of the Company, representing three Shares, will be cancelled in exchange for the right to receive $30.39 in cash without interest, except for (a) (i) Shares (including Shares represented by ADSs) beneficially owned by each of Ctrip.com International, Ltd. (“Ctrip”), M Strat Holdings, L.P., Momentum Strategic Holdings, L.P. and certain other minority existing shareholders (the “Rollover Shareholders”), (ii) Shares (including Shares represented by ADSs) held by Parent, the Company or any of their subsidiaries, and (iii) Shares (including Shares represented by ADSs) held by the Depositary and reserved for the issuance and allocation pursuant to the Company’s 2007 and 2015 share incentive plans, each of which will be cancelled and cease to exist without any conversion thereof or consideration paid therefor, and (b) Shares held by shareholders who have validly exercised and not effectively withdrawn or lost their rights to dissent from the merger pursuant to Section 238 of the Companies Law of the Cayman Islands (the “Dissenting Shares”), which will be cancelled and cease to exist in exchange for the right to receive the payment of appraised fair value of the Dissenting Shares in accordance with Section 238 of the Companies Law of the Cayman Islands.
The merger consideration represents a premium of approximately 15% to the closing price of the Company’s ADSs on June 22, 2016, the last trading day prior to the Company’s announcement of its receipt of a “going-private” proposal.
Immediately following the consummation of the transactions contemplated by the Merger Agreement, Parent will be beneficially owned by Ocean Management Limited, Ctrip and the other Rollover Shareholders. The Company’s board of directors (the “Board”), acting upon the unanimous recommendation of a committee of independent and disinterested directors established by the Board (the “Special Committee”), approved the Merger Agreement and the merger and resolved to recommend that the Company’s shareholders vote to authorize and approve the Merger Agreement and the merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.
The merger, which is currently expected to close during the first half of 2017, is subject to customary closing conditions including the approval of the Merger Agreement and the merger by the affirmative vote of holders of Shares representing at least two-thirds of the voting power of the Shares present and voting in person or by proxy at a meeting of the Company’s shareholders convened to consider the approval of the Merger Agreement and the merger. The Rollover Shareholders have agreed to vote all of the Shares and ADSs they beneficially own, which represent approximately 94.3% of the voting power of the Shares outstanding as of the date of the Merger Agreement, in favor of the authorization and approval of the Merger Agreement and the merger. If completed, the merger will result in the Company becoming a privately-owned company and its ADSs will no longer be listed on the NASDAQ Stock Market.
Duff & Phelps, LLC and Duff & Phelps Securities, LLC are serving as financial advisors to the Special Committee, and Kirkland & Ellis is serving as U.S. legal counsel to the Special Committee.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as U.S. legal counsel to Parent.
*** Liberty Global (Nasdaq: LBTYA) announced that its subsidiary UPC Poland has entered into a definitive agreement to acquire the cable business of Multimedia Polska S.A. (“Multimedia”), the third-largest cable operator in Poland, in an all cash transaction. Multimedia is being valued at an enterprise value of PLN 3.0 billion (approximately $760 million1), with the final purchase price subject to potential downward adjustments for the operational and financial performance of Multimedia prior to closing. The PLN 3.0 billion purchase price equates to a multiple of 6.2x Multimedia’s 2015 full-year Adjusted EBITDA2 when adjusted for PLN 124 million (approximately $30 million1) of projected annual run-rate synergies3 derived from revenue and cost-related items.
Mike Fries, CEO of Liberty Global, commented, “This acquisition will significantly increase our scale in Poland, where we are already the largest cable operator. It will also enhance our ability to invest in cutting-edge products and services for Polish consumers and businesses that will help drive organic growth across our enlarged footprint of over four million premises. Upon closing of the transaction, we will begin upgrading the Multimedia network, after which Multimedia’s customers will be able to enjoy superfast broadband speeds and our next-generation video service Horizon TV.”
The acquisition of Multimedia will be financed through a combination of incremental debt borrowings and cash on hand. The transaction excludes Multimedia’s existing insurance, gas and energy operations (“Non-Telecom Businesses”), which will be retained by the shareholders of Multimedia. The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close within the next twelve months.
With over four million passed homes and businesses, the combined operations of UPC Poland and Multimedia will be able to compete more effectively to the benefit of Polish consumers and businesses alike. As of June 30, 2016, UPC Poland passed 3.1 million homes, or around 20% of total households in Poland, serving 1.4 million unique customers who subscribed to 2.9 million cable subscription services. At the end of the second quarter of 2016, Multimedia passed 1.6 million homes4 mainly through its hybrid fiber-coaxial cable network, serving 832,000 unique customers who subscribed to 1.4 million subscription services consisting of 643,000 video, 491,000 broadband and 241,000 telephony RGUs. In addition, Multimedia had 54,000 mobile subscribers at June 30, 2016.
In connection with the transaction, Credit Suisse International acted as financial advisor to Liberty Global.
*** GNC Holdings (NYSE: GNC) is said to have met with a range of Chinese buyers in recent weeks to gauge interest in a potential buyout that could be worth $4 billion, including debt, the WSJ noted today.
*** Imperva's (NYSE: IMPV) sale process is on hold, as potential suitors wait to see if the company's growth can improve enough to justify a higher price, according to Bloomberg.
*** Acadia Healthcare Company, Inc. (Nasdaq: ACHC) announced the signing of a definitive agreement with BC Partners for the sale of 21 existing behavioral health facilities and one de novo behavioral health facility not yet opened, which are located in the United Kingdom. Acadia will receive £320 million (approximately $390 million) cash for the sale. The sale is subject to the approval of the Competition and Markets Authority (“CMA”) in the U.K. The facilities to be sold have approximately 1,000 total beds and produce aggregate approximate annual revenue of $162 million and adjusted EBITDA of $37 million, after overhead allocation and assuming an exchange rate of $1.22 per British Pound Sterling.
Joey Jacobs, Chairman and Chief Executive Officer of Acadia, remarked, “We are very pleased to announce the signing of a definitive agreement with BC Partners. Upon approval by the CMA, this sale will fulfill our previously announced undertakings to address the CMA’s concerns about the impact of our acquisition of Priory on competition for the provision of behavioral healthcare services in certain markets. We currently expect the CMA to approve the sale on or before November 18, 2016 and expect to complete the sale transaction shortly thereafter.
“Though we expect the CMA to approve the sale, the CMA is continuing its review process and could determine to reject the proposed sale and proceed with a Phase 2 investigation. We cannot integrate Priory’s business until the CMA completes its review process, including any potential Phase 2 investigation.”
Acadia also today announced its preliminary summary financial results for the third quarter ended September 30, 2016. These results are based on information available to management as of the date of this press release and are subject to revision upon finalization of the Company’s quarterly accounting and financial reporting procedures.
The Company expects revenue for the quarter to be approximately $735 million compared with $479.7 million for the third quarter of 2015. Loss from continuing operations attributable to Acadia stockholders is expected to be approximately $118 million, or $1.36 per diluted share, for the third quarter of 2016 compared with income of $29.5 million, or $0.42 per diluted share, for the third quarter last year. Our expected results include an anticipated loss on the U.K. divestiture of approximately $175 million, which includes an allocation of the goodwill related to our U.K. operations to the facilities held for sale of $107 million, estimated transaction-related expenses of $26 million, and a loss on the sale of properties of $42 million. Adjusted income from continuing operations attributable to Acadia stockholders is expected to be approximately $50 million, or $0.58 per diluted share, for the third quarter of 2016 compared with $43.9 million, or $0.62 per diluted share, for the third quarter of 2015. Consolidated adjusted EBITDA for the third quarter of 2016 is expected to be approximately $156 million compared to $108.5 million for the third quarter last year.
(NOTE: The Street sees Q3 EPS of $.66 on revenue of $743 million)
Mr. Jacobs said, “Our adjusted EPS for the third quarter was lower than expected due to certain challenges in both the U.K. and the U.S. In the U.K., we believe that there was significant disruption to our operations as a result of the July 14, 2016 announcement by the CMA that the Priory acquisition would be referred for a Phase 2 investigation, unless we offered undertakings to address the CMA’s competitive concerns. The process of developing and implementing our proposed undertakings placed substantial and immediate demands on the U.K. management team, including many of the individual facility management teams, in addition to being a significant distraction for our U.K. operations in general because of the nature of the proposed undertakings. As one indication of the pervasive impact we believe the event had on our operations in the U.K., those operations produced same facility revenue growth for the third quarter of 5.1%, compared with 6.3% for the first half of 2016.
“Our U.S. operations were also affected by below-trend growth in same facility revenue, which increased 6.5% for the third quarter compared with 9.1% for the first half of 2016. While the growth rate for the third quarter improved from 5.9% for the third quarter last year, it is lower than we anticipated. In addition, our U.S. results for the third quarter reflected the impact of a slower than expected ramping of revenues from several de novo acute inpatient facilities that we have opened in 2015 and 2016.”
Acadia expects to issue its third quarter earnings release after the market closes on Tuesday, November 1, 2016 and to hold its conference call the following morning. Based on its preliminary financial results, the Company expects to adjust its financial guidance for 2016 and provide additional detail on its results of operations for the quarter in that news release and conference call.
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