Notable Mergers and Acquisitions of the Day 06/15: SLE, GOV/HPT, NWSA

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SC Johnson is pleased to announce that it has reached an agreement to acquire Sara Lee's (NYSE: SLE) global household insecticides business, marketer of products under the Ridsect, Bloom, Catch, Cucal, Pyrel, Vapona, and Fumitox brands. These brands are well recognized across 41 countries throughout Asia, Europe, Russia and Africa.

Sara Lee, the U.S.-based company, is best known for products including Sara Lee baked goods, Hillshire Farm and Jimmy Dean meats, and Douwe Egberts, Pickwick, and Senseo beverages. The pest control business is part of Sara Lee's Household and Body Care unit. SC Johnson is purchasing the pest control portion of that unit.

"We are pleased that this deal, and the addition of the Ridsect, Bloom, Catch, Cucal, Pyrel, Vapona, and Fumitox brands, helps SC Johnson further extend its reach to even more families around the globe for whom pest control products provide invaluable health protection," said SC Johnson Chairman and CEO Fisk Johnson.

SC Johnson expects the deal to be finalized by the end of the year after the customary regulatory clearances and is currently working on transition plans for the business.

As a private company, SC Johnson does not disclose details regarding financial or business transactions.
Government Properties Income Trust (NYSE: GOV) today announced that it has entered a series of agreements to purchase 15 properties primarily leased to government tenants for approximately $231 million.

The properties are being acquired by GOV from HRPT Properties Trust (NYSE: HRP). GOV was formerly a 100% owned subsidiary of HRP, and HRP continues to own 9,950,000 common shares of GOV, or approximately 31.8% of GOV’s total common shares outstanding. When GOV completed its initial public offering in June 2009, HRP granted GOV a right of first refusal to purchase properties which HRP owns that are majority leased to government tenants, including the 15 properties which are the subjects of the agreements announced today.

The current annualized net operating income which GOV expects from these 15 properties is approximately $20.5 million/year, including straight line rents recognized under generally accepted accounting principles, or GAAP, which creates a purchase price capitalization rate for the 15 properties combined of approximately 8.9% per annum. In addition, these purchases will diversify GOV’s revenue sources by tenants and geography: 11 additional U.S. Government agencies and one new state tenant will be added to GOV’s tenants; and properties in four states will be added to the 20 states (and District of Columbia) in which GOV currently owns properties. Charts showing GOV’s sources of rental income by tenant and by geography as of June 1, 2010, and pro forma as if all of the 15 properties to be purchased were owned at that time are presented at the end of this press release.

These acquisitions are not expected to materially impact GOV’s average lease maturity (weighted by rents) of almost five years.

The purchases of the 15 properties are expected to close in phases between today and March 31, 2011. All purchases made in the near future are expected to be funded by GOV using cash on hand and drawings under GOV’s revolving bank credit facility. Additional purchases and repayments of GOV’s revolving credit facility are expected to be by a mix of long term capital which will be determined based upon market conditions. GOV expects that it will realize funds from operations, or FFO, accretion as a result of these acquisitions, but there can be no assurance it will be able to do so. The FFO per share accretion which GOV may realize as a result of these purchases will depend, in large part, upon the capital costs which GOV incurs to fund these acquisitions.

Each of GOV and HRP are managed by Reit Management & Research LLC, or RMR. Accordingly, the purchase agreements announced today were negotiated by special committees of the Boards of GOV and HRP composed solely of Independent Trustees who are not also Trustees of the counterparty. Also, the agreed purchase prices are within the ranges of market values determined by an independent third party appraiser.
News Corp. (NYSE: NWSA) (NYSE: NWS) announced on Tuesday its £7.8 billion ($11.5 billion) offer to buy the remaining 61 percent that it does not own of the top pay provider of television service in the U.K., British Sky Broadcasting Group PLC has been rejected.

Rupert Murdoch's media conglomerate has been unsuccessful in its efforts to to acquire the remaining stake in BSkyB, even as the latest 700 pence per share offer is raised from the 675 pence per share bid made last week by News Corp.

BSkyB has said that the proposed price undervalues the company significantly. The satellite provider stated that it would endorse an offer of over 800 pence per share, after taking advice from Morgan Stanley (NYSE: MS) and UBS AG (NYSE: UBS).

The two companies have however come to terms on an agreement to work together to gain regulatory approval for any potential deal, and to work in the best interest of all shareholders involved. Once an agreement for a deal is reached, regulatory approval is expected to take between 12 and 18 months.

"We believe that this is the right time for BSkyB to become a wholly owned part of News Corp., with its greater scale and broader geographic reach," said Chase Carey, deputy chairman, president and chief operating officer at News Corp.

BSkyB has become one of the most dominant media companies in Europe, after struggling in its earl conception over two decades ago. News Corp. was a founding investor in the British company, and a deal to acquire the remaining portion of company would show an increased bet on one of the media giant’s most successful investments.

Shares of News Corp. are down 19 cents to $12.93 in premarket trade Tuesday.