Notable Mergers and Acquisitions of the Day 07/03: (SLGN) (EKDKQ) (EXBD)
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- Silgan Holdings Inc. (Nasdaq: SLGN) entered into a definitive purchase agreement to purchase Rexam PLC's plastic thermoformed food business. This business, with anticipated sales of approximately $100 million in 2012, provides thermoformed packaging solutions such as retortable bowls and barrier trays to many of the world’s leading packaged food and ready-meal companies.
The purchase price for this transaction is $250 million and is expected to be neutral to Silgan’s 2012 earnings primarily due to the initial write-up of inventory required for accounting purposes, and modestly accretive to earnings in 2013 based on current growth expectations. The transaction is expected to close in the third quarter of 2012, subject to certain customary conditions and regulatory approvals, and Silgan expects to fund the purchase price from cash on hand.
- Eastman Kodak Company (OTCBB: EKDKQ) obtained approval from the Bankruptcy Court to conduct an auction to sell its Digital Capture and Kodak Imaging Systems and Services (KISS) patent portfolios.
Kodak’s motion was contested by Apple, Inc. (Nasdaq: AAPL) and FlashPoint Technologies, Inc. which have asserted “ownership” interests in a small number of the 1,100 patents in the portfolios. The Bankruptcy Court, over Apple and Flashpoint’s objections, found that all of the patents in the Digital Capture and KISS patent portfolios are property of Kodak’s estate. Accordingly, the Court granted Kodak the right to sell these patents free and clear of Apple and FlashPoint’s claims at the auction, subject to the applicable provisions of the U.S. Bankruptcy Code.
Kodak is selling the patents under section 363 of the U.S. Bankruptcy Code which permits a sale free and clear of any adverse claim or interest. The patents will be sold in a fair, competitive process overseen by the Bankruptcy Court. At closing, the winning bidder can obtain an order of the Bankruptcy Court that protects it against any third-party ownership claims.
The Bankruptcy Court’s ruling provides a path to separate the auction process from continuing litigation about the Apple and Flashpoint claims. Kodak believes these claims are without merit, and is also seeking a determination on summary judgment, expected to be heard in July, that the claims are time-barred.
Even if the dispute with Apple and FlashPoint has not been fully resolved by the time of closing of the patent sale, Kodak may still sell the patents free and clear of Apple and FlashPoint’s claims by establishing “adequate protection” under the Bankruptcy Code for Apple and Flashpoint at the time of sale. Kodak’s adequate protection could take many forms depending on the value of any remaining alleged interests, the amount of the sale proceeds, and other factors. Alternatively, the Bankruptcy Court also authorized Kodak to sell the patents subject to Apple and FlashPoint’s claims, if mutually agreed between Kodak and the winning bidder.
- After the market closed Monday, Veronis Suhler Stevenson (VSS), signed a definitive agreement to sell its portfolio company SHL to The Corporate Executive Board Company (“CEB”) (NYSE: EXBD) for $660 million in cash, subject to customary pre- and post-closing adjustments.
The transaction is expected to close in the third calendar quarter of 2012, subject to clearance under the Hart-Scott Rodino Antirust Improvements Act of 1976. SHL and VSS were represented by financial advisors Morgan Stanley and Deloitte, and legal advisors Weil Gotsheil and Proskauer Rose.
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