Notable Mergers and Acquisitions of the Day 06/08: (CHK)/(CHKM) (HGSI)/(GSK) (CTFO)
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- Chesapeake Energy Corporation (NYSE: CHK) today announced plans to sell its midstream assets in three separate transactions for total expected cash proceeds of more than $4.0 billion. The midstream divestitures will also enable Chesapeake to reduce previously budgeted capital expenditures by approximately $3.0 billion over the next three years.
Chesapeake has agreed to sell its limited partner units and its general partner interests in Chesapeake Midstream Partners, L.P. (NYSE: CHKM) to Global Infrastructure Partners (GIP) for cash proceeds of $2.0 billion. Chesapeake expects to receive the first half of the proceeds on June 15, 2012 with a final closing and payment of the second half of the proceeds scheduled to occur by June 29, 2012. Chesapeake’s net book value for these assets as of March 31, 2012 was approximately $1.0 billion, and the company anticipates reporting a pretax gain on the sale of approximately $1.0 billion.
Chesapeake has also entered into a letter agreement with CHKM relating to the potential sale of certain Mid-Continent gathering and processing assets to CHKM and a separate letter agreement with GIP for the sale of the company’s interests in its wholly owned subsidiary, Chesapeake Midstream Development, L.P. (CMD) to GIP. Chesapeake expects total cash proceeds of more than $2.0 billion from these two transactions. The company’s net book value for these assets as of March 31, 2012 was approximately $1.4 billion. The GIP letter agreement includes a 45-day exclusive negotiation period and a 45-day extension period if a purchase price has been agreed to and progress is being made toward closing.
- Human Genome Sciences, Inc. (Nasdaq: HGSI) today issued the following statement regarding the extension by GlaxoSmithKline plc (NYSE: GSK) of its unsolicited tender offer to acquire all the outstanding common shares of HGS at a price of $13.00 per share in cash and GSK’s statement that approximately 474,029 shares of HGS common stock have been tendered into their offer. HGS noted that less than one percent of its shares outstanding tendered into the GSK offer.
The HGS Board of Directors has rejected GSK’s unsolicited $13.00 per share tender offer after determining, in consultation with financial and legal advisors, that the GSK offer price is inadequate and does not reflect the value inherent in HGS. As previously announced, our Board has authorized the exploration of strategic alternatives in the best interests of stockholders, including a potential sale of the Company. This process continues to be active and fully underway. GSK declined to enter the process and, through its unsolicited tender offer, seeks to circumvent, disrupt and prematurely end the Company’s process to the disadvantage of HGS stockholders. We are committed to completing our exploration of strategic alternatives as expeditiously as possible, and the HGS Board of Directors recommends that HGS stockholders reject GSK’s tender offer and not tender any of their shares to GSK.
Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC are serving as financial advisors to HGS, and Skadden, Arps, Slate, Meagher & Flom LLP and DLA Piper LLP (US) are serving as legal counsel.
- China TransInfo Technology Corp. (Nasdaq: CTFO) has entered into an Agreement and Plan of Merger with TransCloud Company Limited, a Cayman Islands exempted company with limited liability and indirectly wholly owned by Mr. Shudong Xia ("Parent"), TransCloud Acquisition, Inc., a Nevada corporation and a wholly owned, direct subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent (the "Merger").
Pursuant to the terms and subject to the conditions of the Merger Agreement, each share of the common stock of the Company (a "Share") issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive US$5.80 in cash without interest (the "Merger Consideration"), except for (i) Shares held by the Company as treasury stock or owned, directly or indirectly, by Parent, Merger Sub or any wholly owned subsidiary of the Company; and (ii) Shares to be contributed to Parent by Mr. Shudong Xia and certain other stockholders of the Company (collectively, the "Rollover Stockholders") pursuant to the contribution agreements among Parent and the Rollover Stockholders immediately prior to the effective time of the Merger (the "Rollover Shares") , which will be cancelled without receiving any consideration. The Merger Consideration represents a 12.6% premium over the closing price on February 17, 2012, the last trading day prior to the Company's announcement on February 21, 2012 that it had received a "going private" proposal, and a 52.6% premium over the 90-trading day volume weighted average price as of the same date, on February 17, 2012, the last trading day prior to the Company's announcement on February 21, 2012 that it had received a "going private" proposal.
Each of the Company, Parent and Merger Sub has made customary representations and warranties in the Merger Agreement. The Merger contemplated by the Merger Agreement is subject to customary closing conditions, including, but not limited to, (i) adoption of the Merger Agreement by the affirmative vote of both (x) the holders of a majority of the Shares and (y) holders of a majority of the Shares (excluding the Rollover Shares), (ii) the absence of any order, injunction or decree preventing or making illegal the consummation of the Merger, (iii) truth and correctness of each party's representations and warranties at closing and (iv) the absence of any material adverse effect to the Company. The Merger Agreement may be terminated under certain circumstances, including, among others, termination by mutual agreement of the parties, and termination by either party if the Merger is not consummated on or before April 7, 2013, as set forth in the Merger Agreement.
Parent has secured debt facility from China Development Bank Corporation Hong Kong Branch to finance the transactions contemplated by the Merger Agreement.
The Company's Board of Directors, acting upon the unanimous recommendation of the Special Committee formed by the Board of Directors, approved the Merger Agreement and resolved to recommend that the Company's stockholders vote to adopt the Merger Agreement. The Special Committee, which is composed solely of independent directors unrelated to any of Parent, Merger Sub or any of the management members of the Company, negotiated the terms of the Merger Agreement.
The Company will call a meeting of its stockholders for the purpose of voting on the adoption of the Merger Agreement as soon as practicable. If completed, the Merger will, under laws of the State of Nevada, result in the Company becoming a privately held company and the Shares would no longer be listed on the NASDAQ Global Market.
Shearman & Sterling LLP is serving as U.S. legal advisor to the Special Committee. William Blair & Company, L.L.C. is serving as financial advisor to the Special Committee. Pillsbury Winthrop Shaw Pittman LLP is serving as U.S. legal advisor to the Company. Skadden, Arps, Slate, Meagher & Flom LLP is serving as U.S. legal advisor to Mr. Shudong Xia and the buyer consortium. Houlihan Lokey (China) Limited is serving as financial advisor to Mr. Shudong Xia. McDermott Will & Emery LLP is serving as U.S. legal advisor to William Blair & Company, L.L.C.
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