Notable Mergers and Acquisitions of the Day 07/30: (SHAW)/(CBI) (ORCL) (JASO) (RIO)/(IVN)

July 30, 2012 10:24 AM EDT
  • CB&I (NYSE: CBI) entered into a definitive agreement to acquire Shaw Group (NYSE: SHAW), a Fortune 500 company primarily focused on serving clients in the power generation and government services sector. The acquisition is expected to close in early 2013.

    CB&I will acquire Shaw for $46.00 per share in cash and stock. Shareholders will receive $41.00 in cash and $5.00 in CB&I equity (0.12883 shares based on an agreed upon recent average stock price of $38.81 per share) for each share of Shaw stock at closing. CB&I will use cash on the balance sheets of both companies, along with approximately $1.9 billion in debt to finance the acquisition. Based on the estimated cash position of Shaw at the end of its August 31, 2012 fiscal year, this equates to an enterprise value of approximately $2.0 billion. Using consensus estimates, the implied transaction multiple is 7.0x Shaw’s fiscal 2012 adjusted EBITDA. First year earnings per share are anticipated to be double-digit accretive before transaction related costs.

    The acquisition of Shaw Group by CB&I has been unanimously approved by the Directors of the respective company’s boards. The transaction is subject to approval by each company’s shareholders, along with the receipt of certain regulatory approvals and the satisfaction of other customary closing conditions. Philip K. Asherman will continue as President and CEO of the combined company.

    CB&I plans to operate Shaw as a business sector under the brand name CB&I Shaw. This will enable the company to retain Shaw’s brand equity, particularly in the power industry, and it will allow the combined organization to capitalize on the resources, capabilities, and best practices from each group for the benefit of all stakeholders.

    Bank of America Merrill Lynch is acting as the financial advisor to CB&I, and Wachtell, Lipton, Rosen & Katz is acting as the Company’s legal counsel.

  • Oracle (Nasdaq: ORCL) announced that it has entered into an agreement to acquire Xsigo Systems, a leading provider of network virtualization technology.
    • Xsigo's software-defined networking technology simplifies cloud infrastructure and operations by allowing customers to dynamically and flexibly connect any server to any network and storage, resulting in increased asset utilization and application performance while reducing cost.

    • The company's products have been deployed at hundreds of enterprise customers including British Telecom, eBay, Softbank and Verizon.

    • The combination of Xsigo for network virtualization and Oracle VM for server virtualization is expected to deliver a complete set of virtualization capabilities for cloud environments.
  • JA Solar Holdings Co., Ltd. (Nasdaq: JASO) entered into a share transfer agreement on July 23, 2012 with M.SETEK Co., Ltd. ("M.SETEK"), a polysilicon and solar wafer manufacturer in Japan controlled by AU Optronics Corp. (NYSE: AUO).

    Pursuant to the Agreement, M.SETEK will transfer its 65% equity interest in Hebei Ningjin Songgong Semiconductor Co., Ltd. to JA Solar Hong Kong Limited, a wholly-owned subsidiary of the Company, for RMB247.0 million (US$38.9 million).

    The parties expect to complete the share transfer by the end of this year, subject to possible government approval. The parties have been liaising with the Anti-monopoly Bureau of the Ministry of Commerce of the People's Republic of China to evaluate the necessity of an antitrust filing of the transaction under PRC law.

    The share transfer is part of an arrangement with M.SETEK to settle outstanding prepayments made by the Company to M.SETEK for polysilicon supply, following an assignment by the Company of such claim over the outstanding prepayment to JA Hong Kong. Due to a magnitude-9 earthquake in Japan and a consequent tsunami, M.SETEK failed to make the majority of the scheduled delivery of polysilicon to the Company. M.SETEK subsequently entered into a framework agreement with the Company in March 2012 to settle outstanding prepayments of US$69.1 million (RMB438.7 million).

    Under the framework agreement, M.SETEK agreed to (i) use the dividends distributed by Ningjin Songgong to repay part of the prepayments, (ii) transfer its 65% equity interest in Ningjin Songgong to the Company at an appraisal price, which will be used to offset part of the remaining unused prepayments, and (iii) continue to deliver polysilicon to fully utilize the remaining unused prepayments, if any.

    In order to offset the outstanding prepayments, M.SETEK repaid RMB70.0 million (US$11.0 million) to the Company in June 2012 with dividends distributed by Ningjin Songgong. M.SETEK agreed to transfer its 65% equity interest in Ningjin Songgong pursuant to the Agreement by the end of this year. For the remaining unused prepayments, M.SETEK will continue to deliver polysilicon to the Company pursuant to a supply agreement, the details of which are currently under discussion.

    Based in Hebei province, China, Ningjin Songgong is a producer of solar-grade mono-crystalline silicon ingots with an annual production capacity of 2,000 MT. Its production of mono-crystalline silicon ingots is expected to complement the Company's existing mono-crystalline silicon wafer slicing capabilities.

    Upon the consummation of the share transfer, Ningjin Songgong will be 65% owned by JA Hong Kong, 32.7% beneficially owned by Mr. Baofang Jin, executive chairman of the board of directors of JA Solar and general manager of Ningjin Songgong, and 2.3% beneficially owned by several third-party individuals.

  • Rio Tinto (NYSE: RIO) acquired 133,571,192 common shares under Ivanhoe's (NYSE: IVN) rights offering at a total cost of $934,998,344 or $7.00 per share. The purchase represents approximately 51 per cent of the common shares offered under the rights offering. The rights offering, which closed today, was fully subscribed.

    Prior to the completion of the rights offering, Rio Tinto owned 377,397,658 common shares of Ivanhoe representing approximately 51 per cent of the outstanding common shares. Upon the completion of the rights offering, Rio Tinto owned 510,968,850 common shares representing approximately 51 per cent of the outstanding common shares.
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