Notable Mergers and Acquisitions of the Day 06/26: (NWSA) (SBAC) (DLR) (LLL)
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- News Corporation (Nasdaq: NWSA) confirmed today that it is considering a restructuring to separate its business into two distinct publicly traded companies.
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- SBA Communications Corporation (Nasdaq: SBAC) has entered into a definitive merger agreement with certain affiliates of TowerCo that own 3,252 tower sites in 47 states across the U.S. and Puerto Rico.
The consideration to be paid by SBA will be $1.2 billion in cash and 4.6 million shares of SBA Class A common stock, implying a total transaction value of $1.45 billion based on SBA's average three-day closing price of $54.48 as of June 22, 2012. The shares in the transaction will be subject to certain restrictions on transfer. The cash consideration shall be paid from a combination of cash on hand, existing credit facilities and up to $900 million in financing commitments from J.P. Morgan. The transaction, subject to customary closing conditions, is expected to close in the fourth quarter of 2012. Pro forma for the closing of the transaction, SBA expects that its net debt to annualized adjusted EBITDA ratio will be approximately 7.8x to 8.0x. SBA estimates the TowerCo assets will produce approximately $93 to $95 million in tower cash flow for the full calendar year 2013.
J.P. Morgan acted as financial advisor and Greenberg Traurig, LLP acted as legal advisor to SBA. Wells Fargo Securities, LLC acted as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to TowerCo.
- Digital Realty Trust, Inc. (NYSE: DLR), has entered into a definitive share sale and purchase agreement to acquire a three-property data center portfolio located in the greater London area, referred to as the Sentrum Portfolio. The Sentrum Portfolio comprises approximately 761,000 square feet across three data centers located in Woking, Watford and Croydon.
The purchase price of the Sentrum Portfolio will be approximately 715.9 million pounds Sterling (equivalent to $1.1 billion based on the June 25, 2012 exchange rate of 1.00 pound to $1.56) (subject to adjustment in limited circumstances and to additional earn-out payments based on a multiple of the net operating income from the lease-up of currently vacant space in the portfolio in the next three years). The Company expects to fund the purchase price and related earn-out payments with available cash, borrowings under the Company's global revolving credit facility, a bridge loan facility and/or the sale of debt or equity securities. Subject to various closing conditions, the acquisition is expected to close on or about July 31, 2012 and may be shortened or deferred in limited circumstances.
Digital Realty expects this transaction to be accretive to our 2012 Core FFO on a diluted per share and unit basis upon closing, excluding one time acquisition and financing costs.
- L-3 Communications Holdings, Inc. (NYSE: LLL) today announced that its board of directors has approved the distribution to its shareholders of all the outstanding shares of its subsidiary, Engility Holdings, Inc., and set the distribution ratio, record date and distribution date for the spin-off. Each L-3 shareholder of record as of July 16, 2012, the record date for the distribution, will receive on July 17, 2012, the distribution date, one share of Engility for every six shares of L-3 common stock held as of the record date.
In connection with the spin-off, Engility will retain approximately $10 million of cash on its balance sheet and incur approximately $345 million of debt financing. The proceeds of the debt financing will be used to pay a $335 million dividend to L-3 and to fund a portion of the transaction expenses. L-3 expects to receive net proceeds of approximately $325 million, after expenses and cash retained by Engility. L-3 intends to use the net proceeds it receives from Engility to redeem $250 million aggregate principal amount of its 6⅜% Senior Subordinated Notes due in 2015 (the “Notes”) and repurchase approximately $75 million of its outstanding shares. The Notes will be redeemed on July 26, 2012 (the “Redemption Date”) at a redemption price of 102.125% of the principal amount thereof, plus accrued and unpaid interest, to but not including the Redemption Date.
L-3 shares will continue to trade on the NYSE under the symbol “LLL” through and after the distribution date. Any shareholder of L-3 common stock who sells L-3 shares on or before July 17, 2012 will also be selling their right to receive shares of Engility common stock. Investors are encouraged to consult with their financial advisers regarding the specific implications of buying or selling L-3 common stock on or before the distribution date.
Engility common stock is expected to begin “when-issued” trading on the NYSE under the symbol “EGL.WI” beginning on July 9, 2012. On July 18, 2012, the day following the distribution date, “when-issued” EGL.WI trading will end and “regular-way” trading under the symbol EGL will begin. The CUSIP number for Engility common stock will be 29285W 104.
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