Notable Mergers and Acquisitions 11/18: (DAN) (CYH) (FIBK)/(CACB) (BAM)/(TERP)
- Major stock indexes rise again to new records
- Unusual 11 Mid-Day Movers 12/8: (COOL) (TLRD) (DRAM) Higher; (SHIP) (OHRP) (MLSS) Lower
- Third-Party Said Interested in PrivateBancorp (PVTB) as CIBC (CM) Deal is Delayed
- Insys Therapeutics (INSY) Sinks as Former Employees Arrested in Racketeering Scheme
- Lower for longer, ECB scales back asset buys
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Under terms of the agreement, Dana plans to initially purchase an 80 percent share in the Brevini businesses, with an option to purchase the remaining 20 percent by 2020. Dana has valued 100 percent of the Brevini businesses at €325 million, including the assumption of approximately €100 million of net debt.
The acquisition will immediately expand Dana's product portfolio with adjacent technologies and establish Dana as the only off-highway solutions provider that can manage the power to both move the equipment and perform its critical work functions. It adds technologies for tracked vehicles, doubling Dana's addressable market for off-highway driveline systems. It also provides a platform of proven technologies that can be leveraged in Dana's light- and commercial-vehicle end markets, helping to accelerate the company's hybridization and electrification initiatives.
"Brevini is a strong, well-run business that shares Dana's commitment to serving customers with advanced technologies that deliver exceptional performance and durability," said James Kamsickas, president and chief executive officer of Dana. "We have long admired Brevini's exceptional products, customer focus, and company culture, which are some of the most pertinent reasons we specifically targeted this acquisition – at this opportune time in the off-highway business cycle."
The transaction will be funded with cash on hand, with existing Brevini debt to be refinanced in the future. Subject to customary regulatory approvals, the acquisition is expected to close in early 2017. Dana expects the purchase to be accretive to earnings in 2017.
The acquisition of Brevini aligns with Dana's enterprise strategy, which includes leveraging core expertise, strengthening customer centricity, expanding global markets, commercializing new technologies, and accelerating hybridization and electrification.
Founded in 1960, the privately held Brevini Group employs approximately 2,300 people. It has engineering and manufacturing operations in China, Germany, and Italy, with a network of 30 sales subsidiaries and nine service centers around the world. The businesses being acquired reported sales of €388 million in 2015.
"Brevini's customers and employees will find an ideal fit with Dana, a company that delivers true value to customers through a commitment to innovation," said Renato Brevini, president of Brevini Group S.p.A. "Dana's global footprint, operational excellence, deep industry knowledge, and position as a top-tier supplier to manufacturers will raise the profile and market penetration of our products."
Brevini technologies that will be purchased by Dana include a wide range of highly engineered mobile planetary hub drives; planetary gearboxes; hydraulic pumps, motors, and valves; and advanced electronic control systems. Brevini's expertise in cylindrical gearing and planetary hub gears will supplement Dana's long history and market leadership in spiral bevel and hypoid gear technologies.
"Brevini's product line is a perfect complement to Dana's current offerings, helping us to increase the amount of Dana content on construction, mining, material-handling, and other off-highway equipment," said Aziz Aghili, president of Dana Off-Highway Drivetrain Technologies. "Brevini's technology portfolio will increase the number of patents and patents pending for Dana's off-highway business by 33 percent, enabling us to provide our customers with a full range of power-conveyance systems."
*** Community Health Systems, Inc. (NYSE: CYH) announced that subsidiaries of the Company have signed a definitive agreement to sell Rockwood Health System and its associated assets to MultiCare Health System for $425 million, subject to certain adjustments. Facilities included in the transaction include 388-bed Deaconess Hospital in Spokane, 123-bed Valley Hospital in Spokane Valley and the multi-specialty Rockwood Clinic, all in Washington.
Commenting on the announcement, Wayne T. Smith, chairman and chief executive officer of Community Health Systems, Inc., said, “Rockwood Health System is a strong healthcare system, and we have carefully considered how to position it for future success. The hospitals and clinic will benefit from joining a growing regional health system that is expanding its network across the Pacific Northwest.”
The transaction is expected to close in the first quarter of 2017, subject to customary regulatory approvals and closing conditions. This transaction is one of the seven transactions discussed on the Company’s third quarter 2016 earnings call. The Company will apply proceeds of the transaction to pay down debt.
*** First Interstate BancSystem, Inc. (Nasdaq: FIBK) and Cascade Bancorp (Nasdaq: CACB) announced that they have entered into a definitive agreement under which First Interstate, parent company of First Interstate Bank, will acquire Cascade, parent company of Bank of the Cascades, in a cash and stock transaction for total consideration valued at approximately $589 million in aggregate, or $7.60 per share based on the First Interstate closing price of $38.30 per share on November 16, 2016. The transaction creates a unique regional banking franchise that extends from the Mountain West to the Pacific Northwest and provides First Interstate with a presence in several high-growth markets, including Bend, Oregon and Boise, Idaho.
Cascade is a relationship-oriented community bank based in Bend, Oregon with total assets of $3.2 billion, deposits of $2.7 billion, loans of $2.1 billion and 50 banking offices across Oregon, Idaho and Washington. After completion of the acquisition, First Interstate will have approximately $12.1 billion in total assets, $10.1 billion in total deposits, $7.6 billion in total loans and 131 banking offices.
“We are very excited to announce this transformational acquisition that leverages our significant investment in people, processes and technology. This opportunity is a good fit for us geographically, strategically, financially and culturally. Cascade’s operating philosophy, commitment to community banking and corporate responsibility are similar to ours, allowing for a seamless integration of our two companies,” said First Interstate President and Chief Executive Officer, Kevin Riley. “We are pleased to welcome Cascade’s employees, customers and shareholders and look forward to continuing the good work that Cascade has been doing. Both of our banks have very strong, relationship-centered cultures and this is an ideal extension of First Interstate into markets we have been evaluating for several years,” continued Mr. Riley.
“We believe First Interstate is an exceptional banking partner for Cascade,” commented Terry Zink, President and Chief Executive Officer of Cascade Bancorp. “Strategically they intend to grow Cascade’s branch network, as well as our metropolitan commercial banking centers across the northwest. It follows that they highly value the many Cascade bankers who are on the front line with our customer relationships and are committed to ensuring our loyal customers will benefit from this combination.”
Zink continued, “For nearly 50 years, First Interstate has demonstrated strong and stable banking leadership. Today, they are a recognized leader in community banking and consistently deliver quality and competitive financial services to their customers while making a clear and positive difference in the communities they serve. In light of our shared culture and commitment to community, I am excited for the prospects of our combined companies. Together, we will continue to deliver a highly personalized experience to our customers with the expanded set of products and services that First Interstate will provide our customers. Employees and shareholders will be well-served as part of the First Interstate family.”
Pursuant to the terms of the definitive merger agreement, Cascade shareholders will receive 0.14864 shares of First Interstate Class A common stock and $1.91 in cash in exchange for each share of Cascade common stock they hold. The exchange ratio is fixed and the portion of shares received by Cascade shareholders is expected to qualify as a tax-free exchange. Cascade shareholders will own approximately 20% of the outstanding capital stock of First Interstate once the transaction is complete.
First Interstate expects the transaction will result in long-term annual earnings per share “EPS” accretion of 10% and 2018 EPS accretion of over 8% after accelerating the debit interchange limitations from the Durbin amendment brought on by crossing $10 billion in consolidated total assets. First Interstate is expected to recover the tangible book value dilution experienced in this transaction in five years.
The boards of directors of each company have unanimously approved the transaction, and the directors and certain large shareholders of Cascade have entered into agreements with First Interstate pursuant to which they have agreed to vote their shares of Cascade common stock in favor of the transaction. Additionally, the directors of First Interstate have entered into agreements with Cascade pursuant to which they have agreed to vote their shares of First Interstate common stock in favor of the transaction.
First Interstate and Cascade expect to close the transaction in mid-2017 after satisfaction of customary closing conditions, including regulatory approvals and the approvals of the First Interstate and Cascade shareholders. Immediately following the completion of the acquisition, it is anticipated that Bank of the Cascades will be merged with and into First Interstate Bank. Two members of Cascade’s Board of Directors will be added to the First Interstate Board of Directors in order to maintain the community commitment that Cascade has established in important markets in the Pacific Northwest.
Barclays Capital Inc. served as exclusive financial advisor and Luse Gorman, PC served as legal counsel to First Interstate. Piper Jaffray & Co. served as exclusive financial advisor and Hunton & Williams LLP served as legal counsel to Cascade.
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