Notable Mergers and Acquisitions of the Day 12/04: (BAX) (YDNT) (NOK) (AZO) (OSK) (QCOM)
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- Baxter International Inc. (NYSE: BAX) has entered into a definitive agreement to acquire Gambro AB, a privately held dialysis product company based in Lund, Sweden, for total consideration of 26.5 billion SEK (approximately $4.0 billion USD at current exchange rates). Gambro is a global medical technology company focused on developing, manufacturing and supplying dialysis products and therapies for patients with acute or chronic kidney disease. The acquisition gives Baxter a comprehensive dialysis product portfolio, complements Baxter’s global home dialysis offerings, and positions the company to better meet the evolving needs of the large and growing dialysis market.
- Young Innovations, Inc. (Nasdaq: YDNT) announced that it has entered into a definitive agreement to be acquired by an affiliate of Linden Capital Partners, a Chicago-based private equity firm that focuses on middle market leveraged buyout investments in the healthcare and life science industries.
Under the terms of the agreement, holders of outstanding shares of common stock of Young will receive $39.50 per share, representing a 12.5% premium to the 30-day average closing stock price. The agreement was unanimously approved by Young's Board of Directors.
A special meeting of Young's shareholders will be held after the preparation and filing of a proxy statement with the Securities and Exchange Commission and subsequent mailing to shareholders. If the merger is approved by shareholders, the transaction is expected to close in the first quarter of calendar year 2013. The transaction is subject to various closing conditions, including the receipt of regulatory approvals, but is not subject to a financing condition. Upon completion of the acquisition, Young will become a private company, wholly owned by an affiliate of Linden.
Under the terms of the definitive merger agreement, Young is permitted to solicit alternative acquisition proposals from third parties through January 12, 2013 and intends to consider any such proposals. There can be no assurances that the solicitation of such proposals will result in an alternative acquisition transaction. It is not anticipated that any developments will be disclosed with regard to this process unless the Company's Board of Directors makes an affirmative decision to proceed with an alternative acquisition proposal. In addition, Young may, at any time, subject to the terms of the definitive merger agreement, respond to unsolicited alternative acquisition proposals. The definitive merger agreement also contains certain break-up fees payable to each party in connection with the termination of the definitive merger agreement under certain circumstances.
Robert W. Baird & Co. Incorporated is acting as exclusive financial advisor to Young and has provided a fairness opinion to the Young Board of Directors. McDermott Will & Emery LLP is serving as Young's outside counsel. Kirkland & Ellis LLP is serving as legal counsel to Linden.
- Nokia Corp. (NYSE: NOK) has agreed to sell and lease back its head office building in Espoo, Finland on a long-term lease to Finland-based Exilion. We expect to complete the sale by the end of 2012. The selling price is €170 million.
"We had a comprehensive sales process with both Finnish and foreign investors and we are very pleased with this outcome. As we have said before, owning real estate is not part of Nokia's core business and when good opportunities arise we are willing to exit these types of non-core assets. We are naturally continuing to operate in our head office building on a long-term basis," said Timo Ihamuotila, CFO, Nokia.
- Sharp Corporation (OTCBB: SHCAY) announced that the Company has reached an agreement with Pixtronix Inc., a subsidiary of Qualcomm Incorporated (Nasdaq: QCOM), concerning the development of Pixtronix's MEMS displays. In addition, Sharp signed the capital alliance agreement and will issue new shares by a third party allotment with Qualcomm Incorporated as the allottee.
MEMS display to be developed jointly by the two companies is a display using ultrafine process technology and existing display manufacturing infrastructure with features including high color reproducibility and low-power consumption. The development for commercialization of MEMS display will be achieved by integrating Sharp’s core display technology, IGZO and MEMS display technology of Pixtronix.
In addition, Sharp is planning to accept up to 9.9 billion yen (roughly $120 million) from Qualcomm in equity investment to pursue this joint development. This capital will be used for the development of MEMS display and necessary capital investments related thereto targeting for the achievement of the technology for commercialization.
With this agreement, the two companies will consider the possibility of further collaboration of chipsets by Qualcomm Technologies, Inc., a wholly-owned subsidiary of Qualcomm Incorporated and IGZO-based display technology for lower power consumption and higher performance of mobile terminals.
With this agreement, Sharp will accelerate its strategy for growth in small- to medium- sized LCD business with IGZO-based display technology as its core, and expand its revenue and corporate value.
- AutoZone (NYSE: AZO) entered into a definitive agreement to purchase the assets and select liabilities of AutoAnything, an online retailer of specialized automotive products.
- Carl Icahn says he won't extend his tender offer for Oshkosh (NYSE: OSK). The deal expired with 22 percent of outstanding Oshkosh tendered.
The transaction will provide a number of long-term growth opportunities for Baxter around the world. With a broad and complementary dialysis product portfolio, Baxter can accelerate product sales in established markets such as Europe, where Gambro has an extensive footprint. Baxter can also expand Gambro’s reach in high-growth regions of Latin America and Asia-Pacific, where Baxter has steadily grown its peritoneal dialysis (PD) business. In addition, Baxter will also build upon its pipeline of investigational home HD and automated PD systems by adding Gambro’s highly innovative and next-generation monitors, dialyzers, devices and dialysis solutions.
Excluding special items, the company expects this transaction to be dilutive to adjusted earnings per diluted share by $0.10 to $0.15 in 2013 and neutral to modestly accretive to adjusted earnings per diluted share in 2014. Excluding the impact of special items and estimated amortization of intangible assets, the company expects this transaction to be neutral to adjusted earnings per diluted share in 2013, and accretive in 2014 by $0.20 to $0.25 per diluted share. The company expects this transaction to be increasingly accretive to adjusted earnings per diluted share beyond 2014 and, in addition to an array of commercial synergies, projects opportunities for annual cost synergies totaling approximately $300 million by 2017. Baxter now expects over its five-year long-range financial plan to increase sales (excluding the impact of foreign currency) by 7 to 8 percent and to grow adjusted earnings per diluted share in the 8 to 10 percent range, both on a compounded annual basis.
The transaction will be financed through a combination of cash generated from overseas operations and debt. Baxter expects to maintain its current dividend payout ratio of approximately 40 percent. The closing of the transaction is subject to regulatory approvals and other customary closing conditions and is expected to occur in the first half of 2013.
J.P. Morgan acted as financial advisor and Kirkland & Ellis LLP acted as legal advisor to Baxter.
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