Notable Mergers and Acquisitions of the Day 12/03: (ADM) (DF) (EFX)/(CSC) (IOSP)/(TPCG)
- AT&T (T) to Acquire Time Warner (TWX) for $107.50/Share
- Rockwell Collins (COL) to Acquire B/E Aerospace (BEAV) for $6.4B
- TD Ameritrade (AMTD) to Acquire Scottrade in $4B Cash & Stock Deal
- Oil prices under pressure as Iraq resists joining output cut
- China Oceanwide to Acquire Genworth Financial (GNW) for $2.7B
- Archer Daniels Midland Company (NYSE: ADM) has delivered to GrainCorp Limited a revised non-binding proposal, with the aim of arriving at an agreement with GrainCorp’s Board of Directors under which they would recommend to GrainCorp shareholders an acquisition by ADM of all of GrainCorp for A$12.20 a share in cash, with shareholders keeping the dividend of A$0.35 announced on Nov. 15.
ADM’s revised non-binding proposal is subject to GrainCorp granting ADM access to conduct confirmatory due diligence, completion of that due diligence satisfactory to the ADM Board, and a recommendation from the GrainCorp Board. ADM is ready to commence due diligence immediately and expeditiously. Any agreement to acquire GrainCorp shares would also be subject to limited conditions which are available at on the company website www.adm.com.
As of Monday evening Sydney time, ADM held an economic interest in a total of 19.9 percent of GrainCorp shares. Since Oct. 18, ADM had held an economic interest in 14.9 percent of GrainCorp, and on Monday evening ADM acquired an additional 5 percent of GrainCorp’s outstanding shares for cash at a price of A$12.20 per share. ADM has received approval from the Australian Foreign Investment Review Board to acquire up to 19.9 percent of the shares in GrainCorp.
- Saputo Inc. announces today that it has signed a definitive agreement to acquire Morningstar Foods, LLC ("Morningstar"), a subsidiary of Dean Foods Company. Morningstar produces a variety of dairy and non-dairy extended shelf-life ("ESL") products, including creams and creamers, ice cream mixes, whipping cream, aerosol whipped toppings, iced coffee, half and half, value-added milks, as well as cultured products such as sour cream and cottage cheese. These products are manufactured under a wide array of private labels and owned brands, and are sold nationwide through an internal sales force and independent brokers. Morningstar serves the needs of retailers, national quick-serve restaurant chains, grocery stores, mass merchandisers and distributors across the United States. Morningstar has approximately 2,000 employees and operates 10 manufacturing facilities located in nine states.
The purchase price for the transaction is US$1.45 billion on a debt-free basis and will be financed through a newly committed bank loan. The transaction is subject to customary conditions (including regulatory approval) and is expected to close by the end of December 2012.
For the twelve months ended September 30, 2012, Morningstar had revenues of about CDN$1.6 billion, and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately CDN$153 million.
The transaction will be treated as an asset transaction for tax purposes pursuant to a 338(h)(10) election. After giving effect to the benefit related to that election, the net purchase price represents for Saputo Inc. a multiple of 7.9x Morningstar's EBITDA.
Saputo Inc. expects the transaction to be immediately accretive to earnings. After giving effect to the acquisition, the combined business of Saputo and Morningstar for the twelve months ended September 30, 2012, on a pro forma basis and taking into account interest on the new bank loan, would have had approximately CDN$8.6 billion of revenues, CDN$1.0 billion of EBITDA, and CDN$563 million of net earnings1, representing CDN$2.82 of basic earnings per share1 ("EPS"), equivalent to an increase of 11.5% over the Saputo stand-alone basic EPS(1) of CDN$2.53 for the twelve months ended September 30, 2012.
The combined business will have approximately 12,000 employees and 57 manufacturing facilities in five countries.
The acquisition of Morningstar will complement the activities of the Saputo Dairy Products Division (USA). Through this acquisition, Saputo will benefit from Morningstar's national manufacturing and distribution footprint and will optimize coast-to-coast service. This transaction will expand product offering to customers in the United States and broaden the range of Saputo's future acquisition opportunities.
- As part of its transformation initiative to rebalance its portfolio of services and focus on next-generation technology solutions and services, CSC (NYSE: CSC) has reached a definitive agreement with Equifax (NYSE: EFX) for the sale of its credit services unit for $1 billion in cash. The after-tax proceeds from the sale of the business will be approximately $750 - $800 million based on preliminary plans. CSC intends to use $300 - $400 million to repurchase shares, contribute $300 - $400 million to its pension plans and apply the remainder to general corporate purposes.
CSC’s credit services unit, which owns credit files in 15 Midwestern and Central U.S. states representing 20 percent of the U.S. population, is the largest independent U.S. consumer credit reporting agency and has been an Equifax affiliate for more than 20 years. Equifax’s history in the consumer credit reporting industry and longstanding relationship with CSC’s credit services business will ease the transition for CSC’s clients and employees.
The companies anticipate closing of the transaction by the end of the calendar year after concluding regulatory reviews. This deal marks CSC’s second divestiture in six weeks.
For this current fiscal year CSC’s Credit Services business is tracking to approximately $230 million in revenue, $100 million in operating income and $0.40 of earnings per share. The credit services business results have been previously reported in CSC’s Business Solutions and Services segment.
CSC expects that its cash deployment strategy will help to offset the absence of EPS contribution from the credit services unit in 2014 and subsequent years.
- Innospec Inc. (Nasdaq: IOSP) said its Board of Directors has informed the Board of Directors of TPC Group (Nasdaq: TPCG) that Innospec has withdrawn its proposal to acquire the company.
Patrick Williams, President and CEO said, "We have spent a great deal of time and effort studying the TPC business, and, while we still feel that it is a good fit with Innospec, we are unable to conclude a deal structure in a manner where we are totally satisfied with the value creation for our shareholders. As a result, we have reluctantly decided that it would be in our investors' best interests to withdraw our proposal. Our acquisition strategy has always been focused on delivering shareholder value, and we continue to pursue other opportunities which we hope will come to fruition in the coming months."
At the same time, the Board has also declared a special dividend of $2 per share on each outstanding share of common stock of Innospec Inc. The special dividend will be paid on December 21, 2012, to shareholders of record at the close of business on December 14, 2012.
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