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Notable Mergers and Acquisitions of the Day 01/30: (KMP)/(CPNO) (BIOC) (PXD) (AVY)

January 30, 2013 10:23 AM EST Send to a Friend
* Overnight, Kinder Morgan Energy Partners, L.P. (NYSE: KMP) announced a definitive agreement to acquire Copano Energy, L.L.C. (Nasdaq: CPNO) for approximately $5 billion, including the assumption of debt.

The transaction, which has been approved by the boards of directors of both companies, will be a 100 percent unit for unit transaction with an exchange ratio of .4563 KMP units per Copano unit. The consideration to be received by Copano unitholders is valued at $40.91 per Copano common unit based on KMP’s closing price as of Jan. 29, 2013, representing a 23.5 percent premium to Copano’s close on Jan. 29, 2013.

The transaction, which is expected to close in the third quarter of 2013, is subject to customary closing conditions, including regulatory approval and a vote of the Copano unitholders.

Copano, a midstream natural gas company with operations primarily in Texas, Oklahoma and Wyoming, provides comprehensive services to natural gas producers, including natural gas gathering, processing, treating and natural gas liquids fractionation. Copano owns an interest in or operates about 6,900 miles of pipelines with 2.7 billion cubic feet per day (Bcf/d) of natural gas throughput capacity and 9 processing plants with more than 1 Bcf/d of processing capacity and 315 million cubic feet per day of treating capacity.

The acquisition of Copano is expected to be accretive to cash available for distribution to KMP unitholders upon closing. The general partner of KMP, Kinder Morgan, Inc. (NYSE: KMI), has agreed to forego a portion of its incremental incentive distributions in 2013 in an amount dependent on the time of closing. Additionally, KMI intends to forgo $120 million in 2014, $120 million in 2015, $110 million in 2016 and annual amounts thereafter decreasing by $5 million per year from this level. The transaction is expected to be modestly accretive to KMP in 2013, given the partial year, and about $0.10 per unit accretive for at least the next five years beginning in 2014.

The acquisition will be immediately accretive to KMI’s cash available to pay dividends, even after KMI foregoes a portion of the incremental incentive distributions this transaction is expected to produce. The increase in KMI’s cash available to pay dividends (net of the amounts voluntarily foregone) is expected to be approximately $25 million in 2014 growing to approximately $70 million in 2016.

* BioClinica Inc. (Nasdaq: BIOC) has entered into a definitive agreement to be acquired by a holding company controlled by JLL Partners, Inc., a leading private equity firm.

Simultaneously, JLL Partners announced that it has reached a definitive agreement to acquire CoreLab Partners, Inc., a provider of medical imaging solutions and cardiac safety services based in Princeton, N.J.

Following the proposed acquisitions, BioClinica and CoreLab Partners will be merged to create a leading provider of medical imaging services and best-in-class eClinical solutions for clinical trials. Ampersand Capital Partners, which is the majority owner of CoreLab Partners, will also be a significant investor in the combined company.

Mark L. Weinstein, currently President and CEO of BioClinica, will lead the combined company.

Dan Agroskin, Managing Director of JLL Partners said, “We are excited about the tremendous promise of this business combination given the strong fundamentals of each company and the overall industry. We will conservatively capitalize the combined business and look forward to supporting its continued growth.”

Terms of the agreement

Under terms of the BioClinica agreement, the holding company will commence a cash tender offer to purchase all of BioClinica’s common stock at an offer price of $7.25 a share, which results in an equity value of approximately $123 million. Any BioClinica shares not tendered in the offer will be acquired in a second-step merger at the same cash price as paid in the tender offer. The purchase price represents a premium of 23.2% over its average closing price for the 90 days ended January 29, 2013, and 28.7% over the average price for the 52-week period ended January 29, 2013. BioClinica’s Board of Directors has unanimously approved the definitive merger agreement and the transaction contemplated hereby.

The transaction will be financed by an equity commitment from JLL Partners and Ampersand Capital. It is subject to a valid tender of a majority of BioClinica’s common stock, regulatory approvals, and other customary conditions. It is not subject to any financing conditions, nor is it subject to the closing of the CoreLab Partners transaction. The parties expect the tender offer to close before the end of this year’s first quarter.

* Pioneer Natural Resources Company (NYSE: PXD) has signed an agreement with Sinochem Petroleum USA LLC, a U.S. subsidiary of the Sinochem Group (“Sinochem”), to sell 40% of Pioneer’s interest in approximately 207,000 net acres leased by the Company in the highly prospective horizontal Wolfcamp Shale play in the southern portion of the Spraberry Trend Area Field for a total price of $1.7 billion. At closing, Sinochem will pay $500 million in cash to Pioneer, before normal closing adjustments, and will pay the remaining $1.2 billion by carrying a portion of Pioneer’s share of future drilling and facilities costs.

The transaction is expected to close during the second quarter of 2013, subject to customary governmental approvals. Under the agreement, Sinochem will acquire approximately 82,800 net acres of leasehold held by Pioneer for all Wolfcamp depths and deeper horizons. Pioneer retains 60% of its interest in the Wolfcamp depths and deeper horizons, with Sinochem receiving 40% of Pioneer’s interest. Pioneer will continue as operator and will conduct all leasing, drilling, completion, operations and marketing activities in the joint interest area. The joint interest area covers defined portions of Upton, Reagan, Irion, Crockett and Tom Green Counties in Texas. Pioneer retains its current working interests in all horizons shallower than the Wolfcamp horizon.

In addition to funding its own drilling obligations for the horizontal Wolfcamp Shale, Sinochem has agreed to fund 75% of Pioneer’s portion of drilling and facilities costs after closing until the $1.2 billion of drilling carry is fully utilized. Pioneer has six years to utilize the drilling carry, subject to extension under certain circumstances. At closing, Sinochem will pay its 40% share of net expenditures in the joint interest area from the December 1, 2012 effective date of the transaction to the closing date. Pioneer and Sinochem have agreed to a development plan which forecasts the drilling of 86 horizontal Wolfcamp Shale wells during 2013, increasing to 120 wells in 2014 and 165 wells in 2015.

To the extent Sinochem elects to participate in any vertical wells that are drilled in the joint interest area after the effective date, Sinochem will receive its share of production and costs from the Wolfcamp and deeper horizons based on the anticipated reserve contribution from the Wolfcamp and deeper intervals relative to anticipated reserves from all completed intervals. Pioneer’s and Sinochem’s participation in vertical wells will be based on each party’s interest without any drilling carry being applied. Pioneer will retain 100% of its existing vertical production in the joint interest area.

Pioneer has successfully drilled and completed 39 horizontal wells in the Wolfcamp Shale joint interest area through December 31, 2012. Of these 39 wells, 22 wells were on production and 4 additional wells were flowing back. Of the 22 wells on production, 20 wells were completed in the B interval and 2 wells were completed in the A interval. Pioneer’s net horizontal Wolfcamp Shale production in the joint interest area averaged approximately 2,000 barrels oil equivalent per day (BOEPD) in 2012, with a year-end exit rate of approximately 5,000 BOEPD.

Consistent with the announced transaction with Sinochem, the responsibilities for certain Executive Vice Presidents (EVPs) who are members of Pioneer’s Management Committee will be rebalanced. These changes are effective immediately.

William F. Hannes, formerly EVP South Texas Operations, will become EVP of the newly formed Southern Wolfcamp Asset Team. This asset team will focus on executing the drilling program in the horizontal Wolfcamp Shale joint interest area.

Danny L. Kellum, EVP Permian Operations, will focus his attention on Pioneer’s remaining Permian activities, with executive responsibility for the Permian Asset Team and Permian integrated services. This asset team will focus on executing the horizontal and vertical drilling programs over the remainder of Pioneer’s Permian acreage.

Jay P. Still, EVP Domestic Operations, will add executive responsibility for Pioneer’s South Texas operations to his current responsibilities for the Company’s Mid-Continent, Rockies, Alaska and Barnett Shale assets.

BofA Merrill Lynch served as financial advisor and Vinson & Elkins LLP served as legal advisor to Pioneer on the transaction.

* Avery Dennison Corp. (NYSE: AVY) announced that it has signed a definitive agreement to sell its Office and Consumer Products (OCP) and Designed and Engineered Solutions (DES) businesses to CCL Industries Inc. for $500 million in cash. The transaction is subject to customary closing conditions, adjustments and regulatory approvals, and is expected to be completed in mid-2013.

Avery Dennison intends to use the expected net sale proceeds of approximately $400 million to repurchase shares and make an additional pension contribution.

Avery Dennison’s Office and Consumer Products business is one of the world’s leading suppliers of printable media and other products, with 2012 sales of approximately $730 million and adjusted operating income of approximately $86 million. OCP results are reported as discontinued operations.

Avery Dennison Designed and Engineered Solutions manufactures custom pressure-sensitive labels and coated films for durable goods, electronics and specialty packaging. The business unit’s 2012 sales were approximately $180 million, with adjusted operating income of approximately $19 million. DES results are currently reported in Other specialty converting businesses, but will be reclassified as discontinued operations as of the first quarter.

Combined 2012 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for OCP and DES was approximately $110 million.

J.P. Morgan Securities LLC advised Avery Dennison on the transaction. Latham & Watkins served as Avery Dennison’s legal counsel.

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