Notable Mergers and Acquisitions 11/22: (DPS) (GOOG) (CWH) (TLLP)/(TSO)

November 22, 2016 9:41 AM EST

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*** Dr Pepper Snapple Group, Inc. (NYSE: DPS) announced that it has reached an agreement to acquire Bai Brands, LLC, and its complete portfolio of high-growth premium antioxidant infused beverages. The cash purchase price of $1.7 billion includes a tax benefit of approximately $400 million on a net present value basis and will be financed through new unsecured notes and short term commercial paper. We expect to maintain our strong investment grade credit profile and have no plans to change our existing shareholder dividends and share repurchase distributions.

Bai provides a strong platform to incubate and grow better-for-you beverages throughout the non-carbonated and carbonated beverage sectors. It is expected to generate approximately $425 million in net sales in 2017 and add an incremental $132 million to our current net sales expectation for 2017. The transaction is expected to be approximately $0.03 dilutive to reported diluted EPS in 2017 driven by planned increases in marketing investments behind the brand and increased interest expense associated with the financing of the purchase price. The transaction is expected to be accretive to reported diluted EPS in 2018.

"We're excited to welcome Bai into our family of great brands," said Larry Young, DPS President and CEO. "In a relatively short time, Bai has carved out a leadership position in the enhanced water category and has now extended that success into other fast-growing and profitable categories. We're equally impressed with their innovation pipeline, which will continue to meet the needs of consumers seeking great tasting, low-calorie beverages with natural flavors and no artificial sweeteners."

Young continued, "Bai has contributed greatly to our allied brand lineup since we began distributing it broadly in 2013. Adding it to the broad range of choices and options in our company-owned portfolio is a natural next step. Moving forward, we will empower Bai's management team to continue the breakthrough and disruptive branding and innovation that have revolutionized their categories and work with them to put the brand in front of more consumers in more places."

Bai is one of the fastest growing beverage brands, offering a family of premium better-for-you beverages. The Company's product portfolio spans across several high-growth beverage categories including enhanced water, carbonated flavored water, coconut water and premium ready-to-drink teas. With its Bai, Bai Bubbles, Cocofusion and other innovative brands, Bai is positioned for expanding growth in key beverage segments. These highly profitable categories are projected to continue to grow worldwide for the foreseeable future. The acquisition of Bai will further enable us to meet growing consumer demand for better-for-you beverages.

Bai will operate within the Packaged Beverages segment and continue to be led by founder Ben Weiss.

"Over the past seven years, Bai has proven to be an agent of change in a marketplace that is rapidly evolving," said Weiss. "We've worked tirelessly to challenge the notion that better-for-you beverages can't taste good. On our journey, we found a strong ally in DPS, an ally who embraced our mission to change the way the world drinks. Now, it only makes sense to continue our quest together. We are thrilled to join the DPS family and create a new path forward with infinite possibilities."

The transaction, which is subject to customary closing conditions, is expected to close in the first quarter of 2017. The boards of both companies have approved the transaction.

Credit Suisse Securities (USA) LLC is serving as exclusive financial advisor to Dr Pepper Snapple Group and Morgan, Lewis & Bockius LLP is acting as legal counsel. J.P. Morgan Securities LLC is serving as exclusive financial advisor to Bai and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel.

*** Alphabet's (Nasdaq: GOOG) (Nasdaq: GOOGL) Google announced the following on Monday night:

Today, we’re excited to announce the acquisition of Qwiklabs. Founded in 2012, Qwiklabs provides hands-on lab learning environments for leading cloud platforms and infrastructure software vendors.

There’s no faster way to get hands-on experience with a cloud environment and to learn all the ins and outs of today’s modern cloud solutions than in a Qwiklabs lab. Qwiklabs offers step-by-step instructions to learn a popular cloud service, test different use cases and train your teams to become cloud experts.

With Qwiklabs, we’re closing the IP skills gap in the cloud. More than half a million users have collectively spent over 5 million hours learning how to successfully deploy and manage multiple cloud technologies through the Qwiklabs platform. We’re focused on offering the most comprehensive, efficient, and fun way to train and onboard people across all our products on Google Cloud, including Google Cloud Platform and G Suite.

We want to help businesses get the most out of their cloud investment and, with Qwiklabs, we’ll give users a place to learn and expand their cloud skills to deliver more innovation, more features and more efficiency for their customers.

*** Camping World Holdings Inc. (NYSE: CWH) announced an agreement to acquire Thompson Family RV L.C. in Davenport, Iowa. Camping World anticipates closing the acquisition within the next sixty days. Current arrangements are to commence operations upon finalizing the transaction, with renovation plans to feature a Camping World retail store and preparing the location to join over 120 other Camping World retail locations across the U.S.

Thompson Family RV was started by Charles W. Thompson in 1959, along with his children Mag, Gene and Jim. Continuing under the leadership of the Thompson family's third generation, Thompson Family RV has grown to one of the Midwest's largest recreational vehicle dealers. RV Business magazine has named Thompson Family RV a Top 50 RV Dealer in North America multiple times and Thompson Family RV has received numerous other awards and recognitions over the years, including designation as one of Iowa's Top 100 Workplaces by the Des Moines Register and being awarded the Integrity Award by the Greater Iowa, Quad Cities and Siouxland Region Better Business Bureau, by exemplifying the highest standards of business ethics and conduct. Mark Thompson, CEO of Thompson Family RV, said "We look forward to joining the nation's leading RV network and adding ever increasing value to our customers. We sincerely thank our family, employees and loyal customers for making Thompson Family RV what it is today." Chad Tappendorf acted as advisor to Thompson Family RV on the transaction.

"Under the Thompson family's leadership and dedication, Thompson Family RV has established itself as one of the most successful, well-known and respected RV dealerships in the Midwest," said Marcus Lemonis, Chairman and CEO of Camping World and Good Sam. Lemonis added, "The acquisition of Thompson Family RV will strengthen our footprint in the Iowa market and allow us to leverage the experience of the Thompson family management team, market knowledge and product lines to expand to surrounding markets, including additional Iowa and southern Illinois opportunities, further increasing our market share and penetration of our Good Sam products, services and plans. In anticipation of this acquisition and its platform, we are acquiring property in Bloomington, IL for further expansion and actively searching for opportunities in Des Moines, IA, Dubuque, IA, Peoria, IL, Springfield, IL and Joliet, IL."

As part of the Camping World network, the location will offer a wide array of services, such as RV sales, service and parts and accessories for the outdoor and RV enthusiast, and will provide the full suite of Good Sam products, services and protection plans, including roadside assistance, extended warranties and insurance.

The new Camping World Supercenter will feature RVs from top manufacturers and brands, including Keystone, Jayco, CrossRoads and Venture, and new and innovative products, accessories, interactive displays and customer experiences from top vendors such as Dometic, Honda, Thetford, Goodyear, Winegard, Camco, Roadmaster, Reese, Cequent, Lippert, Exide, Ultra-Fab, Coleman, Valterra, Champion, Rand McNally, Max-Air, BAL, Select Comfort, ASA Electronics, Cummins-Onan, WFCO, Weber, HWH, Presto-Fit, Stromberg-Carlson, RDK Products, Magellan, King Controls, Charbroil, Amerigas, ExxonMobil products, Norcold and many more.

Lemonis continued, "I always look for three things: People, Process and Product in relation to enhancing our Camping World and Good Sam presence, all of which are exemplified by Thompson Family RV. Our goal is to add more quality manufacturers and brands, increase our presence in the surrounding markets by adding additional locations, and growing the workforce."

*** Tesoro Logistics LP (NYSE: TLLP) announced that the Company has agreed to acquire crude oil, natural gas and produced water gathering systems and two natural gas processing facilities for total consideration of $700 million. Additionally, the Company has acquired terminalling and storage assets located in Martinez, California from a subsidiary of Tesoro Corporation (NYSE: TSO) for total consideration of $400 million. These acquisitions strengthen TLLP's position as a leading integrated midstream service provider and are expected to support distribution growth.

  • Acquiring North Dakota integrated crude oil and natural gas gathering and processing assets for $700 million
  • Acquired terminalling and storage assets in Northern California from Tesoro Corporation for $400 million
  • Both transactions expected to be immediately accretive to unitholders
  • Tesoro to waive $100 million of incentive distribution rights (IDRs) over the next two years
  • Distribution growth for 2017 expected to be 12% to 15%

"These two acquisitions strengthen TLLP's portfolio of logistics assets that provide full-service capabilities to both upstream and downstream customers," said Greg Goff, Chairman and Chief Executive Officer of TLLP's general partner. "TLLP is on target to achieve its 2017 goal of $635 million of net earnings and $1 billion of annual EBITDA. Further, these assets provide optimization and organic investment opportunities that support future growth."

Acquisition of North Dakota Gathering and Processing Assets
TLLP has agreed to acquire crude oil, natural gas and produced water gathering systems and two natural gas processing facilities from Whiting Oil and Gas Corporation, GBK Investments, LLC and WBI Energy Midstream, LLC for total consideration of approximately $700 million. The North Dakota Gathering and Processing Assets include over 650 miles of crude oil, natural gas, and produced water gathering pipelines, 170 MMcf per day of natural gas processing capacity and 18,700 barrels per day of fractionation capacity in the Sanish and Pronghorn fields of the Williston Basin in North Dakota.

The revenue from the assets is approximately 90% fee-based and backed by acreage dedications from ten producers. The assets are well utilized based on current production levels and provide organic expansion opportunities that support continued drilling in existing well locations with attractive production economics.

The acquisition, which is subject to customary closing conditions including regulatory approval, is anticipated to close early in the first quarter of 2017. The North Dakota Gathering and Processing Assets are expected to contribute $79 to $89 million of annual net earnings and $100 to $110 million of annual EBITDA. TLLP expects the acquisition to be immediately accretive to unitholders.

Acquisition of Northern California Terminalling and Storage Assets
TLLP has acquired terminalling and storage assets located in Martinez, California from a subsidiary of Tesoro for total consideration of $400 million. The Northern California Terminalling and Storage Assets include 5.8 million barrels of crude oil, feedstock, and refined product storage capacity at Tesoro's Martinez Refinery along with a marine terminal capable of handling up to 35,000 bpd of feedstock and refined product throughput. The Northern California Terminalling and Storage Assets are expected to provide annual net earnings of $28 to $33 million and annual EBITDA of $45 to $50 million. TLLP expects to generate higher revenues over the next several years by improving asset utilization by 10% to 15% as well as pursuing related organic growth opportunities. The transaction is expected to be immediately accretive to unitholders.

In connection with the acquisition, Tesoro and TLLP entered into long-term, fee-based storage and throughput and use agreements which are expected to provide stable cash flows to TLLP.

Northern California Terminalling and Storage Assets Acquisition Financing
In consideration for the Northern California Terminalling and Storage Assets, TLLP paid $400 million, including $360 million of cash financed with borrowings on TLLP's revolving credit facility and $40 million in common and general partner units to Tesoro. The equity consideration was based on the average daily closing price of TLLP's common units for the 10 trading days prior to closing, or $45.53 per unit, with 860,933 units in the form of common units and 17,570 units in the form of general partner units.

Incentive Distribution Rights Waiver and 2017 Distribution Growth Guidance
Tesoro has agreed to waive $100 million of general partner incentive distributions with respect to 2017 and 2018, or $12.5 million per quarter, to support the balanced growth of the general and limited partners' interests and maintain strong financial metrics. With these transactions, the Company now expects annual distribution growth of 12% to 15% for 2017.

Additional Materials Available on TLLP's Website
TLLP has also made available presentation slides and prepared remarks from Greg Goff, in the form of an audio recording and PDF, in addition to today's press release. Interested parties may access the accompanying presentation slides and prepared remarks by visiting

RBC Capital Markets is serving in a financial advisory capacity to Tesoro Logistics and Norton Rose Fulbright US LLP is serving as its legal advisor for the transaction.

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