Notable Mergers and Acquisitions of the Day 12/7: AON, CELG, CF/TRA, IXYS/ZILG, FNFG/HNBC, MLNK

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AON Hot Sheet

Overall Analyst Rating:
NEUTRAL (= Flat)

Dividend Yield: 1.2%
Revenue Growth %: +102,798.6%

Aon Risk Services, the risk management and insurance brokerage business of Aon Corporation (NYSE: AON), today announced that it has signed a definitive agreement to acquire Allied North America, one of the largest independent surety and construction insurance brokerage firms in the United States. Financial terms of the acquisition were not disclosed. Closing is expected by year's end.

"This acquisition reinforces our leadership position in the construction sector and enables us to bring additional talent and skills to the benefit of our clients," said Steve McGill, chairman and chief executive officer of Aon Risk Services. "We very much welcome our colleagues from Allied to the firm."

"Through the increased broking capability provided by Allied North America, we are enhancing our global construction powerhouse as well as our abilities to better serve our clients and grow our business around the world," added Gregory C. Case, president and chief executive officer of Aon Corporation.
Celgene Corporation (NASDAQ: CELG) and Gloucester Pharmaceuticals Inc., a privately held pharmaceutical company, announced a definitive merger agreement under which Celgene Corporation will acquire Gloucester Pharmaceuticals. Celgene says the acquisition will continue to advance its leadership position in the development of disease-altering therapies through innovative approaches for patients with rare and debilitating blood cancers. Gloucester Pharmaceuticals develops new therapies that address the unmet medical needs in the treatment of cancer, including cutaneous T-cell lymphoma (CTCL), peripheral T-cell lymphoma (PTCL) and other hematological malignancies.

ISTODAX (romidepsin) was approved in November 2009, by the U.S. Food and Drug Administration (FDA) for the treatment of CTCL in patients who have received at least one prior systemic therapy. Additionally, ISTODAX has received both orphan drug designation for the treatment of non-Hodgkin's T-cell lymphomas, which includes CTCL and PTCL, and Fast Track status in PTCL from the Food and Drug Administration (FDA). The European Agency for the Evaluation of Medicinal Products (EMEA) has granted orphan status designation for ISTODAX for the treatment of both CTCL and PTCL. Accrual of the ISTODAX registration SPA Trial for peripheral T-cell lymphoma (PTCL) is expected to be completed early next year.

CTCL is a type of non-Hodgkin's lymphoma (NHL) caused by a mutation of T-cells; most types of NHL are of T-cell origin. The malignant T-cells involve the skin, causing plaques, patches, erythroderma and/or tumors and can involve other organs, including the blood, lymph nodes and viscera. According to the Cutaneous Lymphoma Foundation, this rare orphan disease has a greater frequency among men than women; the disease is more common after the age of 50.
CF Industries Holdings, Inc. (NYSE: CF) announced today that it has increased its offer for Terra Industries Inc. (NYSE: TRA) by $4.75 in cash per share. CF Industries is now offering to acquire Terra for $36.75 in cash and 0.1034 of a share of CF Industries common stock for each Terra share. The offer has a value of $45.91, based on the CF Industries closing price as of Friday, December 4, 2009. The $36.75 cash portion of the offer includes the $7.50 per share dividend declared by Terra.

"We have made a compelling offer, which represents more than a 50% premium to what we believe would be the unaffected trading price for Terra," said Stephen R. Wilson, chairman, president and chief executive officer of CF Industries. "It is time to sign a merger agreement and put these two great companies together."

The following letter was sent to the Terra Board of Directors last Friday afternoon:

Dear Members of the Board:

It is clear that Terra Industries stockholders want and expect a transaction now. To that end, we are increasing our offer by $4.75 per share in cash. Our new offer is $36.75 per share in cash ($29.25 net of the $7.50 dividend), plus 0.1034 of a share of CF Industries common stock.

Our offer has a value of $38.41 per Terra share (net of the $7.50 dividend) based on our closing price today, and represents a premium of over 50% to what we believe is Terra's unaffected share price after payment of the dividend. That premium is substantially above historical and recent transaction premiums. Our offer also represents a multiple of 10X estimated EBITDA for 2009.

Our offer is not subject to financing and CF Industries has satisfied all antitrust regulatory conditions required to close the transaction. We have provided a form of merger agreement that we are prepared to enter into. The merger agreement has a "go-shop" period and we would agree to a break-up fee of $1 per Terra share, plus expense reimbursement.

Our offer is subject only to confirmatory due diligence and entering into the merger agreement. Our advisors are providing a due diligence list to your advisors and we believe due diligence could be completed over this coming weekend.

We are prepared to meet immediately and to sign a merger agreement before the market opens on Monday, December 7th.

Sincerely,

Stephen R. Wilson

Chairman, President and Chief Executive Officer
IXYS Corporation (NASDAQ: IXYS) today announced that it has entered into a definitive agreement to acquire Zilog, Inc. (NASDAQ: ZILG), a trusted supplier of application specific, embedded microcontroller units that are system-on-chip solutions for industrial and consumer markets.

Under the terms of the agreement, IXYS will acquire all of Zilog’s outstanding common shares for $3.5858 per share in cash, or approximately $62.4 million. The acquisition is subject to the approval of Zilog shareholders and other customary closing conditions. The transaction is expected to be completed
during the quarter ended March 31, 2010.

The combination of the two companies with complementing technologies will allow IXYS and Zilog to leverage analog power management with digital control. Zilog has a focused MCU business with technologies that will complement IXYS’ product portfolio. IXYS has a broad based and diversified range of products geared toward industrial, telecommunications, medical, automotive, alternative energy and consumer applications. By introducing MCUs that enable digital power management and embedded control, IXYS will be able to create more cost-effective system integration solutions for its diversified customer base.
First Niagara Financial Group, Inc. (NASDAQ: FNFG) which agreed to acquire Harleysville National Corporation (NASDAQ: HNBC) in July 2009 in an all-stock transaction valued at approximately $237 million, will lend up to $50 million as part of a recapitalization plan to ensure that Harleysville and its bank subsidiary meet the general regulatory capital ratios to be designated "well capitalized" under federal banking laws.

Thirty-five million of the $50 million facility was borrowed from First Niagara and contributed to Harleysville National Bank as Tier One Capital, allowing it to meet the ratios of a "well capitalized" bank for the first time since September 2008. Coupled with operational improvements initiated by Harleysville National Bank, as well as an enhanced and strong liquidity position, the capital injection enables the company to better serve the needs of its customers by increasing its lending capacity.

Harleysville's regulatory capital ratios as of December 7, 2009 included total risk-based capital of 10.44%, Tier 1 risk-based capital of 9.17% and a Tier 1 leverage capital of 6.49%. The general regulatory minimums for well capitalized designation are 10% for total risk-based capital, 6% for Tier 1 risk-based capital and 5% for a Tier 1 leverage capital.

In connection with the capital infusion, The Office of the Comptroller of the Currency informed Harleysville that it is extending the deadline for compliance with previously announced "individual minimum capital ratios" from June 30, 2009 to March 31, 2010, subject to continued compliance with "well capitalized" ratios achieved upon receipt of the First Niagara loan proceeds. First Niagara's acquisition of Harleysville is expected to close prior to the IMCR-compliance deadline, subject to regulatory and shareholder approval, in the first quarter of 2010.

First Niagara is also prepared to buy up to $80 million in commercial and commercial real estate loan participations from Harleysville and allow Harleysville to originate loans on behalf of First Niagara via a correspondent relationship, both of which will further enhance Harleysville's regulatory capital ratios and boost lending activities.
ModusLink Global Solutions, Inc. (NASDAQ: MLNK) announced that it has acquired Tech for Less LLC (TFL), a leading processor and marketer of customer-returned consumer electronics and business technology products. The all-cash transaction is valued at $30 million, plus additional performance-based consideration of up to $10 million if certain financial performance measures are met in calendar year 2010. The transaction is expected to be accretive to ModusLink's cash flow and neutral to earnings in fiscal 2010 and accretive to cash flow and earnings in fiscal 2011.

For the twelve months ending December 31, 2009, TFL is expected to generate revenue of approximately $40 million. The company's unaudited, compounded annual growth rate for revenue since 2006 has been approximately 14%.