Notable Mergers and Acquisitions of the Day 11/24: WIN/IWA, GMCR/DDRX, PLA
- Windstream Corporation (NYSE: WIN) announced today that it has entered into a definitive agreement to acquire Iowa Telecommunications Services, Inc. (NYSE: IWA), based in Newton, Iowa, in a transaction valued at approximately $1.1 billion.
Iowa Telecom shareholders will receive 0.804 shares of Windstream stock and $7.90 in cash per each Iowa Telecom share under terms of the agreement approved by the boards of directors of both companies. Windstream expects to issue approximately 26.5 million shares of stock valued at approximately $269 million, based on the company's closing stock price on Nov. 23, 2009, and pay approximately $261 million in cash as part of the transaction. Windstream also will repay estimated net debt of approximately $598 million. Windstream intends to finance the cash portion of the transaction and the repayment of Iowa Telecom's outstanding indebtedness with the proceeds from a debt financing or additional bank borrowings.
"These are well-run, profitable properties in very rural service areas that expand our presence in the Upper Midwest and grow our free cash flow per share," said Jeff Gardner, president and CEO of Windstream. "I also am pleased to have Alan join our company's board of directors. His financial acumen and executive management experience will be a tremendous asset."
"This is an excellent transaction for our shareholders, and for the customers that we serve," said Alan L. Wells, Iowa Telecom Chairman and CEO. "Windstream is a leader in our industry, and Jeff Gardner and his team have done an outstanding job of profitably growing their business in challenging times. Windstream shares our commitment to both customer service and shareholder value, and we're very pleased that our company will be joining the Windstream organization."
Windstream estimates the transaction will be accretive to free cash flow in the first year following the closing after expected annual synergies of approximately $35 million in operating expenses and capital expenditure savings and excluding integration charges. The transaction also includes tax assets with an estimated net present value of approximately $130 million.
The transaction is expected to close in mid-2010, subject to certain conditions, including necessary approvals from federal and state regulators and Iowa Telecom shareholders.
- Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) today confirmed that it has submitted a revised proposal to acquire Diedrich Coffee, Inc. (NASDAQ: DDRX) for $32.00 per share in cash pursuant to a cash tender offer, in a transaction with a total value of approximately $265 million. GMCR believes its revised offer constitutes a superior proposal, as defined in the existing merger agreement between Diedrich and Peet's Coffee & Tea, Inc. (NASDAQ: PEET), to Peet's November 22, 2009 cash and stock proposal.
This offer represents an approximately 57% premium to the closing market price of Diedrich common stock on November 2, 2009, the last trading day prior to the public announcement of a proposed merger agreement between Diedrich and Peet's. Additionally, this $32 all-cash offer represents a significant premium, based on the price of Peet's stock, and greater certainty than Peet's November 22, 2009 proposal, which is subject to fluctuations of market price. Under the terms of GMCR's revised proposal, GMCR will acquire all of the outstanding shares of Diedrich common stock for $32.00 per share in cash, with no financing and no due diligence contingencies. GMCR intends to fully finance this transaction through cash on hand and GMCR's existing bank lines of credit. GMCR anticipates that this transaction will be neutral to slightly accretive within the first twelve months following the close, excluding one-time transaction expenses, and accretive thereafter.
Lawrence J. Blanford, President and Chief Executive Officer of GMCR, said, "We remain firmly committed to this strategic combination with Diedrich. We believe our revised offer constitutes a superior proposal to Peet's November 22, 2009 offer, as it provides Diedrich shareholders with a substantial all-cash premium as well as greater value and greater certainty and speed of closing. This transaction will build upon the success of GMCR's family of brands across North America and further advance GMCR's objective of becoming a leader in the highly fragmented and competitive coffee and coffee maker businesses. We look forward to working with the Diedrich Board to complete a mutually beneficial business combination for all our stakeholders."
- Playboy Enterprises, Inc. (NYSE: PLA) today announced that it has reached an agreement with American Media, Inc. for the outsourcing of all Playboy magazine functions excluding the editorial product. AMI, which is the nation's fourth-largest consumer magazine publisher, will assume responsibility for the production, circulation, advertising sales, marketing and other support services of both Playboy magazine and the company's other domestic publications.
Scott Flanders, CEO of PEI, said: "Our goal is to focus our resources on what we do best, which is to create compelling content. At the same time, we were looking to partner with companies who can manage the operations of the magazine more effectively than we can as a stand-alone publisher. By joining forces with American Media, we will be able to significantly reduce our cost structure and leverage the economies of scale related to manufacturing, distribution and marketing that are available to this large, multi-title publisher. This agreement also is expected to improve our top-line results as we benefit from AMI's proven skill in growing newsstand and advertising sales. This partnership will enable us to generate profits from our magazine operations in 2011.
"Playboy magazine is a vital part of this company and our brand. We evaluated AMI's outsourcing capabilities on both a quantitative and qualitative basis, and we are confident that this partnership will enable us to continue publishing a magazine that reflects the quality and image of Playboy," Flanders said. "AMI has an unmatched entrepreneurial culture. Its position as the only large U.S. publisher to show year-over-year growth in advertising during the first nine months of this year demonstrates its capabilities."
AMI Chairman and CEO David Pecker said: "By adding Playboy to our stable of cutting edge men's titles, including Men's Fitness, UFC Magazine, Muscle & Fitness and Flex, we now deliver over 11 million men 18 - 34 years of age. That's 34% of all men that age in the country, and it is almost double our closest competitor. For the first time, an advertiser can effectively and efficiently talk to this hard-to-reach demo because our new Young Men's Network combines the things guys love most - fitness, sports and females - into one group of brands."
Pecker added: "Scott Flanders has done a masterful job in managing the Playboy empire since taking over. I couldn't think of a better partner. We are equally excited to work with publishing legend Hugh Hefner. Playboy has been part of American culture for over 50 years, and Hef continues to keep the editorial just as vital today as it was when he launched it."
Under terms of the contract, AMI will be paid negotiated fees to perform functions currently done by PEI and will be incented to increase both advertising and circulation revenues.
PEI said that Playboy magazine is expected to lose approximately $8 million in 2009, and, with this agreement, to reduce that loss to approximately $5 million in 2010 before reaching profitability in late 2011. The company also said that the agreement will result in a fourth-quarter restructuring charge of approximately $2.0 million due to the elimination of approximately 25 positions, some of which will be transferred to new job openings at AMI.
Both companies will begin working together immediately with a goal of completing the transition by March 2010.
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