Notable Mergers and Acquisitions 11/1: (CCI)/(NEE) (OXY) (GCI)/(TRNC) (HRS)

November 1, 2016 10:22 AM EDT

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*** Crown Castle International Corp. (NYSE: CCI) announced that it has entered into a definitive agreement to acquire FPL FiberNet Holdings, LLC and certain other subsidiaries of NextEra Energy, Inc. (NYSE: NEE) (collectively, “FiberNet”) for approximately $1.5 billion in cash (subject to certain limited adjustments). FiberNet is a fiber services provider that owns or has rights to approximately 11,500 route miles of fiber installed and under construction in Florida and Texas, inclusive of approximately 6,000 route miles of fiber in top metro markets. Pro forma for the proposed acquisition, Crown Castle will own or have rights to approximately 28,500 route miles of fiber.

“The addition of FiberNet’s complementary footprint in top metro markets in South Florida and Texas bolsters our fiber available for small cells in markets where we see significant demand from our wireless carrier customers,” said Jay Brown, Crown Castle’s Chief Executive Officer. “As demand for wireless connectivity continues to grow, small cells are playing an increasingly important role in adding the network capacity and density needed to provide ubiquitous high-speed, high-capacity wireless services. With a long runway of expected growth ahead for small cells, we believe our investment in FiberNet further strengthens our leading position in small cells and will enhance our long-term dividend growth.”

Crown Castle expects the acquisition to close in the first half of 2017 and to be immediately accretive to Adjusted Funds from Operations (“AFFO”) per share upon closing. In the first year of Crown Castle’s ownership, the transaction is expected to contribute approximately $105 to $110 million to gross margin and approximately $15 to $20 million of general and administrative expenses. Additionally, the transaction includes approximately $5 million in annual cash flows associated with a customer lease that will be accounted for as a financing lease and therefore not contribute to the expected gross margin. Supplemental materials related to the transaction have been posted on the Crown Castle website at http://investor.crowncastle.com.

*** Occidental Petroleum Corporation (NYSE: OXY) announced it has acquired producing and non-producing leasehold acreage in the Permian Basin from private sellers. Separately, the company acquired interests in several Permian Basin enhanced oil recovery (EOR) and CO2 properties, and related infrastructure.

“These transactions further complement and solidify Occidental’s dominant position in the Permian Basin,” said President and Chief Executive Officer Vicki Hollub. “They leverage our existing infrastructure, utilize our strong balance sheet and create additional operational synergies.”

The total purchase price for these transactions is approximately $2 billion, which has been funded from existing cash on hand.

Acquisition Highlights

Permian Resources

  • The leasehold acquisition includes approximately 35,000 net acres in Reeves and Pecos counties, Texas, in the Southern Delaware Basin, in areas where Occidental currently operates or has working interests.
  • Approximately 7,000 barrels of oil equivalent (BOE) per day of net production (72 percent oil) from 68 horizontal wells.
  • A minimum of 700 gross estimated horizontal drilling locations targeting the Wolfcamp A, Wolfcamp B and Bone Spring, with meaningful upside potential through infill drilling and additional intervals.
  • Proximity to other key Occidental development areas, such as Barilla Draw, allows for cost and infrastructure efficiencies and contiguous position enables longer lateral well development.
  • Enables efficient development by gaining operatorship and provides capital flexibility as a high percentage of the acreage is held by production.
  • Including this transaction, Occidental’s overall position in the leasehold area encompasses nearly 59,000 acres with an aggregate acquisition cost, inclusive of value given to current production and infrastructure, of approximately $2 billion.

Permian EOR

  • Acquired working interests in producing oil and gas CO2 floods and related EOR infrastructure, increasing Occidental’s ownership in several properties where it is currently the operator or an existing working interest partner.
  • These properties have current production of approximately 4,000 BOE per day (80 percent oil), with estimated net proved developed producing reserves of approximately 25 million BOE and total proved reserves of approximately 41 million BOE.

*** Gannett Co., Inc. (NYSE: GCI) confirmed that the Company has been engaged in discussions with tronc, Inc. (Nasdaq: TRNC) regarding a potential transaction and has determined not to pursue an acquisition of tronc.

*** Harris Corporation (NYSE: HRS) and SpeedCast International Limited (ASX: SDA) today announced a definitive agreement under which SpeedCast will acquire Harris’ CapRock Communications commercial business for $425 million in cash. Proceeds from the transaction will be used to pay down debt and return cash to shareholders. The transaction is subject to regulatory review and other customary closing conditions and is expected to close in the first calendar quarter of 2017.

“One of Harris’ key priorities over the past several years has been to reshape our portfolio and focus on businesses where technology is a differentiator,” said William M. Brown, chairman, president and chief executive officer. “The sale of CapRock, which has been underway since early this calendar year, demonstrates our execution against this objective and will create value for shareholders. We will continue to optimize our portfolio to become a more focused company positioned for long-term growth.”

To keep up on all the Mergers & Acquisitions data in real-time, go to our M&A Insider page.



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