Notable Mergers and Acquisitions of the Day 08/20: (CVH)/(AET) (KMP) (FTI) (MKC)
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- Aetna (NYSE: AET) and Coventry Health Care, Inc. (NYSE: CVH) entered into a definitive agreement pursuant to which Aetna will acquire Coventry in a transaction valued at $7.3 billion, including the assumption of Coventry debt.(1) Coventry is a diversified managed health care company that offers a full portfolio of risk and fee-based products, including Medicare Advantage and Medicare Part D programs, Medicaid managed care plans, group and individual health insurance, coverage for specialty services such as workers’ compensation, and network rental services. The acquisition is projected to add nearly 4 million medical members and 1.5 million Medicare Part D members to Aetna’s membership. On a pro forma basis, the transaction increases Aetna’s share of revenues from Government business to over 30 percent from 23 percent currently.
Under the terms of the agreement, which has been approved by the board of directors of each company, Coventry stockholders will receive $27.30 in cash and 0.3885 Aetna common shares for each Coventry share, or $42.08 per share, based on the closing price of Aetna common shares on Friday, August 17, 2012. Aetna expects to finance the cash portion of the transaction with a combination of cash on hand and by issuing approximately $2.5 billion of new debt and commercial paper. Excluding transaction and integration costs, the transaction is projected to be modestly accretive to Aetna’s operating earnings per share (2) in 2013, $0.45 accretive in 2014 and $0.90 accretive in 2015.
The transaction is subject to Coventry stockholder approval, as well as other customary closing conditions, including expiration of the federal Hart-Scott-Rodino antitrust waiting period and approvals of state departments of insurance and other regulators. The acquisition is expected to close in mid-2013.
- Tallgrass Energy Partners, LP today announced that it has entered into a purchase and sale agreement with Kinder Morgan Energy Partners, L.P. (NYSE: KMP) to buy Kinder Morgan Interstate Gas Transmission (KMIGT), Trailblazer Pipeline Company, the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, and KMP’s 50 percent interest in the Rockies Express Pipeline (REX).
Tallgrass will acquire these assets for a total cash consideration of approximately $1.8 billion. Including the proportionate amount of REX debt, this amount is equivalent to a value of $3.3 billion. The transaction, which is subject to Federal Trade Commission (FTC) approval, is expected to close in the fourth quarter.
- FMC Technologies, Inc. (NYSE: FTI) and Pure Energy Services Ltd. announced execution of a definitive acquisition agreement under which FMC will acquire Pure for C$11.00 per share in cash, or approximately C$282 million (US$285 million).
Based in Calgary, Pure is a leading provider of frac flowback services and an established wireline services provider operating in multiple field locations in both Canada and the United States. Pure employs approximately 1,300 employees. For the twelve months ended June 30, 2012, Pure generated C$282 million of revenue and C$59 million of EBITDAS, with the majority related to frac flowback services.
Under the terms of the acquisition agreement, the acquisition will be accomplished by way of a plan of arrangement (the "Arrangement") pursuant to the Business Corporations Act (Alberta). The proposed Arrangement is subject to certain conditions including, the approval by i) the holders of Pure shares and options representing at least two-thirds of votes cast in person or by proxy at the meeting of Pure shareholders to be held to approve the Arrangement; ii) the Court of Queen's Bench of Alberta; and iii) relevant regulatory authorities. Under the arrangement agreement, Pure has agreed that it will not solicit, initiate or participate in any discussions concerning any other acquisition proposals, subject to the ability of Pure to respond to superior proposals in certain circumstances.
The Pure securityholders' meeting to approve the Arrangement is currently expected to be held by mid-October 2012, and the closing of the Arrangement is currently anticipated to be completed in October 2012. An information circular in respect of the meeting is currently expected to be mailed to Pure shareholders and optionholders in September 2012. In the event the Arrangement is not completed before the close of business on October 31, 2012, being the record date for the dividend of $0.09 per share declared by Pure on August 9, 2012, the price per Pure Share under the Arrangement will be reduced by $0.09 per share. Pure is also immediately suspending the operation of its dividend reinvestment plan.
After receiving financial and legal advice, the Board of Directors of Pure unanimously approved the Arrangement and determined that the Arrangement is in the best interests of Pure shareholders. The Board unanimously supports the Arrangement and recommends that the Pure shareholders and optionholders vote in favor of the Arrangement. AltaCorp Capital Inc. has provided an opinion to the Board of Directors of Pure that, subject to certain assumptions, limitations and qualifications, the consideration to be received by holders of Pure Shares pursuant to the Arrangement is fair, from a financial point of view, to shareholders.
Each of the directors and officers of Pure, collectively holding approximately 18% of the issued and outstanding shares and options of Pure, have entered into agreements with FMC pursuant to which they have agreed to vote their Pure shares in favor of the Arrangement at the meeting of shareholders and optionholders.
AltaCorp Capital Inc. acted as financial advisor to Pure and Blake, Cassels & Graydon LLP served as Pure's legal counsel. Simmons & Company International acted as financial advisor to FMC, Stikeman Elliott LLP served as FMC's Canadian legal counsel, and Vinson & Elkins LLP served as FMC's U.S. legal counsel.
- McCormick & Company, Incorporated (NYSE: MKC), has signed an agreement to purchase 100% of the assets of Wuhan Asia-Pacific Condiments Co., Ltd. (WAPC), a privately held company based in China.Â The completion of the agreement is expected to occur in mid-2013 subject to regulatory approval.
WAPC manufactures and markets the well-known DaQiao and ChuShiLe brand bouillon products, which have a leading position in the central region of China.Â These products complement McCormick's current portfolio of flavor products in China that include spices, seasoning blends and sauces. Annual sales of WAPC's business are approximately Rmb 730 million (approximately $115 million in U.S. dollars). McCormick has agreed to acquire the company for approximately Rmb 900 million (approximately $141 million in U.S. dollars).
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