Notable Mergers and Acquisitions of the Day 07/10: (DRH) (MBND) (VOG)
- JPMorgan's Dimon buys more than $25 million of company stock
- AIG (AIG) Misses Q4 EPS by 19c; Raises Buyback to $5B, Announces Dividend Increase
- Oil prices jump but weekly losses and physical excess loom
- CBS Corp. (CBS) Reports In-Line Q4 EPS
- Visa's (V) Stake in Square (SQ) Shows Attractiveness of Square as Potential Takeover Target - BTIG
- After the market closed Monday, DiamondRock Hospitality Company (NYSE: DRH) entered into a purchase and sale agreement to acquire a portfolio of four hotels from affiliates of Blackstone Real Estate Partners VI for a contractual purchase price of approximately $495 million. The hotels under contract to be acquired are the Hilton Boston, the Westin Washington D.C., the Westin San Diego and the Hilton Burlington (collectively, the "Acquisition Portfolio"). The contractual purchase price represents an approximately 14.4 times multiple of 2012 forecasted EBITDA and approximately $339,000 per key.
The Company intends to fund the acquisition with a combination of borrowings under the Company's senior unsecured credit facility, cash on hand, net proceeds from a public equity offering and the issuance of shares of the Company's common stock to Blackstone in a private placement, based on its closing stock price as of July 9, 2012, subject to a floor of $10.00 and a cap of $10.50.
The Company expects to complete the acquisition of the Acquisition Portfolio in July 2012. The completion of the acquisition is subject to customary closing conditions and is not subject to a financing or due diligence condition or the receipt of third-party consents. The Company made a $50 million initial deposit upon execution of the purchase agreement that is non-refundable except in the case of a material default by the sellers or the sellers' failure to satisfy a closing condition.
Goldman, Sachs & Co. acted as financial advisor to the Company in connection with the acquisition.
- Multiband Corporation (Nasdaq: MBND), and MDU Communications International, Inc., signed a definitive agreement pursuant to which MDU Communications will merge into Multiband and will be combined with Multiband's MDU business segment. MDU Communications currently owns, operates and services over 75,000 subscribers in 790 MDU properties encompassing 170,000 residences. The transaction will add both scale and leverage to Multiband's existing MDU business segment, which includes approximately 116,000 owned and managed subscribers, and an additional 81,000 subscribers supported by its support center.
Under the terms of the definitive agreement, which has been approved by the Boards of Directors of both companies, holders of MDU Communications common stock will receive a currently calculated 0.759 shares of Multiband common stock for each share of MDU Communications common stock in a tax-free exchange. Multiband will issue 4.3 million shares of its common stock for all issued and outstanding shares of MDU Communications common stock. Based upon a price of $3.00 per share of Multiband common stock, the transaction, including the assumption by Multiband of MDU Communications' outstanding credit facility of $29.7 million, is valued at approximately $42.6 million. The definitive agreement provides for adjustment of the number of Multiband shares if the trading price of Multiband common stock is greater or less than 20% (based on the $3.00) at the time of the merger closing date. In the alternative, Multiband has the option to pay an equivalent $12.9 million in cash for the issued and outstanding shares of MDU Communications common stock. The definitive agreement also provides for contingent consideration to MDU Communications stockholders of record if MDU Communications enters into a definitive agreement with a third party prior to the merger closing date, or within three months after, for the sale of a certain number of subscribers, which would reduce the balance outstanding under their credit facility.
MDU Communications will effectively continue to operate as a subsidiary of Multiband, with the combined business of MDU Communications and Multiband's MDU segment generating approximately $55 million annual pro-forma revenue with pro-forma EBITDA of approximately $8 million post integration, inclusive of direct savings of $4 million per year in redundancy reduction by combining the entities. Additionally, the companies expect reductions in direct costs and the creation of additional incremental recurring revenue streams as the business units are fully combined and transitioned. Multiband, as a whole, operates with 3,700 employees in 33 states with 33 field offices and MDU Communications operates with 102 employees in 17 states with 6 regional offices.
The transaction is expected to close during the fourth quarter of 2012 and is subject to the finalization of a valuation report on MDU Communications, approval by lenders to both companies, and a vote of the stockholders of MDU Communications, as well as certain other customary closing conditions.
- Voyager Oil & Gas, Inc. (AMEX: VOG) and Emerald Oil Inc., a wholly owned subsidiary of Emerald Oil & Gas NL announced that they have entered into a securities purchase agreement whereby Voyager will acquire Emerald Oil to create a U.S.-based oil and gas company that will focus on select oil and gas basins in the Rocky Mountain region. The transaction will combine the companies’ oil-producing assets in the Williston Basin, specifically in the Bakken and Three Forks plays located in North Dakota and Montana, with Emerald Oil’s acreage position focusing on the Niobrara shale in the Sandwash Basin located in Colorado and Wyoming.
The transaction will significantly expand the acreage position of both companies in the Williston Basin. The combination is intended to create an oil and gas company with operating capabilities that has the ability to effectively manage a multi-rig drilling program in the Rocky Mountains and extract maximum value from both of its operated and non-operated drilling programs. The transaction will also realign individual management responsibilities of the combined company’s executives in order to allow each executive to focus on his core area of professional expertise. The combined company will begin the transition from a non-operating business model to an operating business model with its first operated well in Dunn County, North Dakota, which is planned to spud in early 2013 and will be followed by a continuous single-rig drilling program in 2013. The combined company intends to leverage its extensive technical Williston Basin well database to optimize the designs of future wells.
The combined company will operate as Emerald Oil and will be headquartered in Denver, Colorado and maintain its lease acquisition program from Billings, Montana focused on the Williston Basin.
Under the terms of the securities purchase agreement, at closing and subject to certain adjustments, Voyager will acquire 100% of Emerald Oil’s outstanding equity interests in exchange for up to 19.9% of Voyager common stock (approximately 11.6 million shares) and assume approximately USD 19.0 million of Emerald Oil’s outstanding debt. Upon closing, Voyager’s existing shareholders will own approximately 80% of the combined company with Emerald owning the remaining 20%. The common stock to be issued by Voyager to Emerald Australia is not being registered under federal or state securities laws.
The Boards of Directors of both Voyager and Emerald Australia have unanimously approved the transaction. The consummation of the transaction contemplated by the securities purchase agreement, including those set forth in this press release, is subject to customary closing conditions, including all applicable regulatory approvals and the completion of due diligence. The transaction is expected to close by the end of July 2012.
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