Notable Mergers and Acquisitions of the Day 12/05: (FCX)/(MMP)/PXP) (HBC) (AOL) (PAA)
- Market Wrap: Couche-Tard to Acquire The Pantry; MetLife Deemed SIFI; New CEO at Kraft Foods; American Apparel Catches Bid
- Nike (NKE) Tops Q2 EPS by 4c; Adjusted Futures Orders Rose 11%
- MetLife (MET) Designated as Systemically Important Financial Institution; Issues Statement
- American Apparel (APP) Said to Get Takeover Offer at $1.30 - $1.40/Share - NYPost
- Red Hat (RHT) Tops Q3 EPS by 2c; Boosts FY15 EPS Outlook
- Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Plains Exploration & Production Company (NYSE: PXP) and McMoRan Exploration Co. (NYSE: MMR) announced today that they have signed definitive merger agreements under which FCX will acquire PXP for approximately $6.9 billion in cash and stock and FCX will acquire MMR for approximately $3.4 billion in cash, or $2.1 billion net of 36 percent of the MMR interests currently owned by FCX and PXP. Upon closing, MMR shareholders will also receive a distribution of units in a royalty trust which will hold a 5 percent overriding royalty interest on future production in MMR’s existing shallow water ultra-deep properties.
The combined company is expected to be a premier U.S.-based natural resource company with an industry leading global portfolio of mineral assets, significant oil and gas resources and a growing production profile. FCX’s mineral assets include the world class Grasberg minerals district in Indonesia, the large-scale Morenci minerals district in North America, the Cerro Verde and El Abra operations in South America, the high potential Tenke Fungurume minerals district in the Democratic Republic of Congo (DRC) and a leading global molybdenum business. The addition of a high quality, U.S.-focused oil and gas resource base is expected to provide exposure to energy markets with positive fundamentals, strong margins and cash flows, exploration leverage and financially attractive long-term investment opportunities. The combined company’s long-lived resource base with commodities critical to the world’s economies provides enhanced opportunities to benefit from long-term global economic growth. On a pro forma basis for 2013, approximately 74 percent of the combined company’s estimated EBITDA (equals operating income plus depreciation, depletion, and amortization) is expected to be generated from mining and 26 percent from oil and gas, with 48 percent of combined EBITDA from U.S. operations.
The oil and gas assets being acquired are located in attractive onshore and offshore U.S. geologic basins. PXP’s major assets include its established strong oil production facilities in California, a growing production profile in the onshore Eagle Ford trend in Texas, significant production facilities and growth potential in the Deepwater Gulf of Mexico and large onshore resources in the Haynesville natural gas trend in Louisiana. MMR is an industry leader in the emerging shallow water ultra-deep gas trend with sizeable potential, located offshore in the shallow waters of the Gulf of Mexico and onshore in South Louisiana. The MMR portfolio is expected to provide a large, long-term and low cost source of natural gas production.
James R. Moffett, Chairman of the Board of FCX, said: “FCX has been built through our exploration and development capabilities, and this transaction will enable us to add assets with exceptional exploration and development potential to a world-class mining company to create a premier minerals and oil and gas business focused on value creation for shareholders. The transaction offers significant values to the MMR and PXP shareholders and will enable FCX to build on these values through a much larger, well capitalized platform. We are pleased to add the PXP and MMR oil and gas teams to FCX’s global family. The combined mining and oil and gas teams have significant management depth in operations, technical innovation, project development and financial management, and share a strong commitment to safety, community development and environmental management.”
Richard C. Adkerson, FCX’s President and Chief Executive Officer, said: “The transaction will add a high quality portfolio of assets with strong current cash flows, significant growth options and complementary exposure to markets positioned for global growth in the developed and developing world and reflects our positive view of the factors that will drive demand for copper and other commodities. The oil and gas assets being acquired possess the asset quality characteristics that we seek in our mining business - large scale assets with long lives, low cost and geologic potential to support growth through exploration and development. We anticipate that attractive debt financing markets and our strong balance sheet will allow us to finance a significant portion of the transaction using low cost debt and enable FCX shareholders to retain the significant value we see in our existing asset base, while enhancing future value generation opportunities. We will not diminish our focus in our mining operations on safe and efficient production, executing our organic growth projects, prudent capital allocation and an entrepreneurial spirit of creating values for our shareholders.”
James C. Flores, Chairman and Chief Executive Officer of PXP, said: “I am proud of the accomplishments of our team who have built a strong company and created the opportunity for our shareholders to participate in this exciting transaction. I believe that the addition of PXP’s U.S. oil and gas assets to FCX’s global mining business will establish a very significant, long-term commodities business positioned to generate meaningful returns over an extended period. We look forward to becoming part of FCX’s global team and to the contributions of the PXP assets to the combined company, which we expect will provide strong margins and meaningful reserve additions in the years to come.”
TERMS OF THE TRANSACTIONS
The terms of the transactions were negotiated by and recommended to the board of directors of each of FCX and MMR by separate special committees of independent directors. The transactions are expected to close in the second quarter of 2013.
- HSBC Insurance Holdings Limited (NYSE: HBC) and The Hongkong and Shanghai Banking Corporation Limited, indirect wholly-owned subsidiaries of HSBC Holdings plc, have agreed to sell their entire shareholdings in Ping An Insurance (Group) Company of China, Ltd., representing 15.57% of the issued share capital of Ping An Insurance. The Shares will be sold to All Gain Trading Limited, Bloom Fortune Group Limited, Business Fortune Holdings Limited and Easy Boom Developments Limited, indirect wholly-owned subsidiaries of Charoen Pokphand Group Company Limited, for an aggregate purchase price of HK$72,736m (approximately US$9,385m), equivalent to HK$59.00 per share, payable in cash.
It has been agreed that 256,694,218 shares, representing approximately 20.8% of the Shares (the "Tranche 1 Shares"), will be transferred by HSBC Insurance to the Purchasers on 7 December 2012 ("First Completion") for a purchase price of HK$59.00 per share. 976,121,395 shares, representing approximately 79.2% of the Shares (the "Tranche 2 Shares"), will be transferred to the Purchasers conditional only on receipt of regulatory approval from the China Insurance Regulatory Commission ("CIRC") on the later of nine business days following CIRC approval and 7 January 2013 ("Second Completion"). The purchase price for the Tranche 2 Shares will also be HK$59.00 per share and will be financed in part in cash and in part under a facility with China Development Bank Corporation Hong Kong Branch ("CDB").
In HSBC's audited consolidated financial statements, prepared in accordance with International Financial Reporting Standards ("IFRS"), the carrying value of the investment in Ping An Insurance at 31 December 2011 was US$6,373m and the share of profits attributed to HSBC's investment in Ping An Insurance for the years ended 31 December 2011 and 31 December 2010 was US$946m and US$848m, respectively.
Commenting on the Transaction, HSBC Group Chief Executive, Stuart Gulliver, said: "This transaction represents further progress in the execution of the Group's strategy. China remains a key market for the Group and we will strengthen our focus on growing our own operations and building on our long-term strategic banking partnership with the Bank of Communications."
REASONS FOR AND BENEFITS OF THE TRANSACTION
As part of HSBC's objective to deliver sustainable long-term value to shareholders, it regularly reviews its businesses and investments against the strategic framework it has developed. The disposal of the stake in Ping An Insurance represents further progress in the execution of its strategy.
- AOL's (NYSE: AOL) Advertising.com Group today announced that it has strengthened its premium advertising product offering by acquiring Buysight, Inc., a leading provider of retargeting and intent-based targeted advertising.
This transaction further solidifies the Advertising.com Group as a global leader in advertising technologies across display, mobile and video. The Advertising.com Group is the global partner of choice for leading publishers, advertisers and agencies seeking to maximize the value of their online brands, and includes Advertising.com, ADTECH, The AOL On Network, goviral and Pictela. The Group brings together end-to-end platforms and solutions for publishers and advertisers spanning ad serving, monetization, optimization, and premium advertising formats across all mediums including desktop, mobile, tablets and connected TVs.
“Our acquisition of Buysight is the perfect complement to our powerful suite of offerings for advertisers, agencies and publishers seeking to maximize their brands online,” said Ned Brody, CEO, Advertising.com Group. “We strongly believe that both brand and performance display, as well as mobile and video campaigns benefit from dynamic, targeted creatives and messaging. The acquisition of Buysight brings proven Dynamic Creative Optimization and machine learning capabilities which will further enhance AdLearn, our market-leading optimization engine, and its ability to provide brands and performance marketers a comprehensive and integrated optimization solution across channels.”
Based in Sunnyvale, California and founded in 2008, Buysight is a performance advertising company focused on retargeting using intent-based Dynamic Creative Optimization and advanced machine learning technology. More specifically, Buysight transforms online data into actionable knowledge, and uses it to dynamically render more tailored advertising experiences for marketers and consumers alike, all in real-time.
"Buysight is thrilled to become part of AOL and the Advertising.com Group," said Armin Ebrahimi, CEO of Buysight. "The Advertising.com Group’s platforms bring even greater intelligence and scale to Buysight’s data-driven performance advertising business. Our retargeting and mid-funnel advertising products for online retailers, with the added power and reach of Advertising.com, represent best-in-class solutions and a comprehensive approach to driving real revenue gains for our clients. Our entire team is looking forward to being part of the Advertising.com Group and bringing our expertise to the world's leading publishers, advertisers, and agencies."
Terms of the deal were not disclosed.
- Plains All American Pipeline, L.P. (NYSE: PAA), announced today that it has agreed to acquire four operating crude oil rail terminals, one terminal under development and various contractual arrangements from U.S. Development Group (USD) for approximately $500 million. The transaction received early termination of the required waiting period under the Hart-Scott-Rodino Act and is expected to close before the end of this year.
The assets to be acquired include three crude oil rail loading terminals located in the Eagle Ford, Bakken and Niobrara producing regions with an aggregate daily loading capacity of approximately 85,000 barrels per day, a rail unloading terminal at St. James, Louisiana with capacity of approximately 140,000 barrels per day and a project to construct a crude oil unloading terminal near Bakersfield, California.
The Partnership stated that following the acquisition and taking into account projects currently under development, PAA’s North American crude oil rail business platform will include five loading terminals and three unloading terminals. Crude oil loading capacity is expected to total approximately 250,000 barrels per day, with five facilities located in or near key producing areas extending from the US Rockies to South Texas. Unloading capacity is expected to total 335,000 barrels per day with terminals located on the East Coast, Gulf Coast and West Coast. The West Coast project will connect with PAA’s West Coast pipeline and terminal network and will have access to refinery markets in both Northern and Southern California.
PAA also owns an extensive network of rail facilities for natural gas liquids (NGLs) that extends throughout the U.S. and Canada and includes 18 active loading and/or unloading terminals.
To support its current and planned activities for crude oil and NGL movements by rail, the Partnership expects to have approximately 6,700 railcars under lease by the end of 2013.
Shortly after the announcement of closing the pending transaction, the Partnership intends to post to its website a presentation that contains additional information regarding PAA’s network of crude oil and NGL rail assets.
PAA owns a network of approximately 18,000 miles of liquids pipelines, 120 million barrels of liquids storage capacity and handles more than 3 million barrels of physical product on a daily basis.
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