Notable Mergers and Acquisitions of the Day 03/09: (QSFT) (MCP) (HEK)

• Quest Software, Inc. (Nasdaq: QSFT) entered into definitive agreements with affiliates of Insight Venture Partners, under which stockholders not affiliated with the buyout group would receive $23.00 per share in cash, valuing the Company at approximately $2 billion. The shares of Chairman and CEO Vinny Smith, who will continue to lead the Company after the closing of the proposed transaction, will be “rolled over” into the surviving privately owned entity. The purchase price represents a 19-percent premium to the closing price on March 8, 2012.
  
  The proposed merger with an affiliate of Insight was negotiated and unanimously recommended to the Board by a Special Committee of the Company’s Board of Directors, which comprised three independent and disinterested directors. The Special Committee was advised by independent financial and legal advisors. The entire Board, with the exception of Vinny Smith who recused himself from the vote, voted in favor of the proposed transaction.
  
  
  Upon closing, Quest expects to become a privately held company and will continue to be led by Vinny Smith and the existing senior management team. The Company plans to maintain its headquarters in California.
  
  The agreement also calls for the Company to pay a break-up fee to Insight of $4.2 million for termination of the merger agreement during the go-shop period in connection with a superior proposal. After the end of the go-shop period, the break-up fee for superior proposals is $6.3 million.
  
  Closing of the transaction is subject to the affirmative vote in favor of the transaction of holders of a majority of the Company’s outstanding shares, which will be sought at a special meeting of the stockholders of the Company. In addition, the transaction is subject to a non-waivable condition, pursuant to which more than 50 percent of the outstanding shares held by the Company’s stockholders who are not rolling over shares in the transaction must approve the transaction, and other customary closing conditions and regulatory approvals. Subject to the closing conditions and the receipt of no superior proposal, the transaction is expected to close in the third quarter of 2012.
  
  In connection with the agreement, Vinny Smith has agreed to roll over all of his existing shares and restricted stock units in the Company (representing approximately 34 percent of current shares outstanding) into the newly created private Company. Smith has agreed to vote his shares in favor of the transaction. However, if the merger agreement is terminated, he will be released from this obligation.
  
  
• Late Thursday, Molycorp, Inc. (NYSE: MCP) and Neo Material Technologies Inc., signed a definitive agreement under which Molycorp will acquire Neo Materials for approximately CDN $1.3 billion. This will create one of the most technologically advanced, vertically integrated rare earth companies in the world.
  
  Under the agreement, which was unanimously approved by the two companies’ boards of directors, Neo Materials shareholders will receive consideration equal to CDN$11.30 per share, comprising of CDN$8.05 per share in cash and 0.122 Molycorp shares based on Molycorp’s 20–day volume weighted average price of US$26.66. Neo Materials shareholders will have the right to elect their preferred consideration mix of cash and newly issued Molycorp common stock, with the total consideration being approximately 71.2 percent cash and approximately 28.8 percent Molycorp common stock. The CDN$11.30 per share represents a premium of approximately 42 percent to Neo Materials’ closing share price of CDN$7.97 on March 8, 2012.
  
  The transaction is expected to close in the second or third quarter of 2012.
  
  Molycorp intends to finance the majority of the cash portion of the consideration, and has obtained a committed financing facility from Morgan Stanley and Credit Suisse. Permanent financing is expected to include long-term debt, existing cash on hand of the combined company, and the proceeds from any equity issuances. Funds allocated to Project Phoenix Phase 1 and Phase 2 will not be used for this transaction.
  
  
• After the market closed Thursday, Heckmann Corporation (NYSE: HEK) signed a definitive agreement with CIVC Partners, a Chicago-based private equity firm, to acquire Thermo Fluids Inc. (TFI) for $245 million to be paid in cash and shares of the Company's common stock.
  
  TFI is the largest seller of commercial fuel oil from recovered UMO in the Western United States. This strategic acquisition expands Heckmann’s total environmental solutions offering and diversifies the Company’s operations by revenue, geography and customer base.
  
  The acquisition is expected to be immediately accretive to Heckmann’s earnings in 2012 and close early in the second quarter, subject to customary closing conditions.

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