Notable Mergers and Acquisitions of the Day 06/19: (WAG) (NEI) (SONS)/(NWK) (BPO)
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- Walgreen Co. (NYSE: WAG) and Alliance Boots GmbH entered into a strategic transaction "designed to bring together the strengths and expertise of both companies to create the first global pharmacy-led, health and wellbeing enterprise."
Walgreens will invest approximately $6.7 billion in cash and stock (comprised of $4.0 billion in cash and 83.4 million shares) in exchange for a 45% equity ownership stake in Alliance Boots. Walgreens will have the option to proceed to a full combination by acquiring the remaining 55% of Alliance Boots in approximately three years’ time. At the current Walgreens share price and at a $1.55=£1 exchange rate, the second step of the transaction would be valued at approximately $9.5 billion in cash and stock, plus the assumption of Alliance Boots then-outstanding debt. Completion of the initial investment, which is subject to various regulatory approvals, is expected to take place by September 1, 2012.
The Boards of Directors of Walgreens and Alliance Boots have unanimously approved the transaction. Upon the completion of Walgreens initial investment in Alliance Boots, Gregory Wasson, President and Chief Executive Officer of Walgreens, Wade Miquelon, Executive Vice President and Chief Financial Officer, Thomas Sabatino, Executive Vice President and General Counsel, and Robert Zimmerman, Senior Vice President and Chief Strategy Officer, will join the Alliance Boots Board of Directors. In addition, Stefano Pessina, Executive Chairman of Alliance Boots, and Dominic Murphy, Director and Member of KKR & Co. L.P., will join the Walgreens Board of Directors. Alliance Santé Participations S.A., of which Stefano Pessina is a director and whose ultimate ownership is a family trust, will hold a significant stake in Walgreens, which it intends to hold for the long term. KKR, through its funds, will also be an important shareholder of Walgreens.
The transaction is expected to be accretive to Walgreens net earnings per diluted share in the first year following completion of the initial step of the transaction, by approximately $0.23 to $0.27, excluding one-time transaction costs. Walgreens expects combined synergies across both companies to be between $100 million and $150 million in the first year and $1 billion by the end of 2016.
The transaction has been structured to allow synergies to be realized by the respective management teams working closely together on key projects, while progressing to full integration in approximately three years’ time. Walgreens and Alliance Boots believe that this transaction structure maximizes the potential for value creation, while minimizing the initial business disruption and allowing time for thoughtful integration planning.
For more color on the deal, click here.
- NEI (Nasdaq: NEI) signed a definitive merger agreement with UNICOM Systems, Inc. and a new UNICOM subsidiary under which UNICOM, will acquire NEI for $1.45 per common share in cash. The transaction is valued at approximately $63.2 million.
This price represents a premium of approximately 85.5% to NEI's closing price of $0.78 on June 18, 2012.
Under the terms of the definitive merger agreement, NEI is permitted to solicit alternative acquisition proposals from third parties through July 18, 2012 and intends to consider any such proposals. There can be no assurances that the solicitation of such proposals will result in an alternative acquisition transaction. It is not anticipated that any developments will be disclosed with regard to this process unless the Company's Board of Directors makes an affirmative decision to proceed with an alternative acquisition proposal. In addition, NEI may, at any time, subject to the terms of the definitive merger agreement, respond to unsolicited alternative acquisition proposals. The definitive merger agreement also contains certain break-up fees payable to each party in connection with the termination of the definitive merger agreement under certain circumstances.
- Brookfield Office Properties Inc. (NYSE: BPO) agreed to acquire a portfolio of premier office buildings and a development site in the London financial district from Hammerson plc for $829 million (£518 million). The portfolio consists of four operating assets totaling 884,000 square feet (720,000 square feet at ownership) which is being acquired at an initial yield of 6%. In addition, the acquisition includes a development site with in-place planning consent for an office and residential tower comprising 857,000 square feet.
Brookfield is funding the acquisition through the assumption of $106 million (£66 million) of debt, additional property-level debt expected to be put in place prior to close, and from available cash resources.
- Sonus Networks, Inc. (Nasdaq: SONS), and Network Equipment Technologies, Inc. (Nasdaq: NWK), entered into a definitive agreement for Sonus to acquire NET in a cash merger. The purchase price of $1.35 per share is valued at approximately $42 million, excluding acquisition-related costs, and is expected to close in the third quarter of 2012, subject to NET stockholder approval, the satisfaction of customary closing conditions and any applicable regulatory reviews. The intended acquisition has been approved by the Board of Directors of both companies.
As a result of the acquisition, Sonus expects incremental revenue of approximately $15 million to $20 million in the second half of fiscal 2012, with the amount recognized dependent upon the timing of the completion of the acquisition. Achievement of $15 million in revenue is expected to have a dilutive impact on GAAP EPS of approximately $0.03 per share in the second half of 2012 and a dilutive impact on non-GAAP EPS of approximately $0.01 per share in the same period. Achievement of $20 million in revenue is expected to have a dilutive impact on GAAP EPS of approximately $0.02 per share in the second half of 2012 and a break-even to slightly accretive impact on non-GAAP EPS in the same period. Non-GAAP EPS excludes certain expenses, including but not limited to, acquisition-related costs, stock-based compensation and amortization of intangible assets.
- Julius Baer Group Ltd., affirmed it is in discussions with Bank of America Corp (NYSE: BAC) about Merrill Lynch’s international wealth management business (outside the United States).
Given the early stage of these discussions, the outcome is entirely open.
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