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Notable Mergers and Acquisitions of the Day 7/28: IBM/SPSS, S/VM, ABT


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July 28, 2009 10:08 AM EDT
  • IBM (NYSE: IBM) and SPSS Inc. (Nasdaq: SPSS) announced that the two companies have entered into a definitive merger agreement for IBM to acquire SPSS, a publicly-held company headquartered in Chicago, in an all cash transaction at a price of $50/share, resulting in a total cash consideration in the merger of approximately $1.2 billion.

    The deal is expected to close later in the second half of 2009.

    This acquisition is expected to further expand IBM's Information on Demand (IOD) software portfolio and business analytics capabilities, including the range of offerings available through IBM's recently-announced Business Analytics and Optimization Consulting organization and network of Analytics Solution Centers. The acquisition is also expected to strengthen IBM's Information Agenda initiative, which helps companies turn information into a strategic asset.

  • Sprint Nextel Corporation (NYSE: S) and Virgin Mobile USA, Inc., (NYSE: VM) announced today that their boards of directors have approved a definitive agreement for Sprint to acquire Virgin Mobile USA for a total equity value of approximately $483 million, which includes the value of Sprint's current 13.1% fully diluted ownership interest in Virgin Mobile USA. In addition, at closing Sprint will retire all of Virgin Mobile USA's outstanding debt, which is $248 million net of cash and cash equivalents as of March 31, 2009, but is expected to be no more than $205 million net of cash and cash equivalents on Sept. 30, 2009.

    This acquisition will strengthen Sprint's position in the growing prepaid segment by bringing together under one umbrella the iconic Virgin Mobile brand with Sprint's successful Boost Mobile business. These complementary prepaid brands, each with a distinctive offer, style and appeal to different customer demographics, will continue to serve existing and prospective customers following the completion of the transaction.

    Following the closing of the transaction, Sprint's prepaid business will be led by Dan Schulman, current Virgin Mobile USA CEO, who will report directly to Dan Hesse, Sprint Nextel president and chief executive officer. Bringing exceptional telecom leadership credentials to Sprint, Schulman will be responsible for the business strategy and growth of the prepaid segment. Matt Carter will continue to lead Boost Mobile and will report to Schulman.

    Transaction Benefits
    • Strengthens Sprint's position in the fast growing prepaid segment.
    • Enhances cross selling of full suite of Sprint products and services across a larger target audience.
    • Free cash flow accretive for Sprint before synergies.
    • Synergies to be derived from general and administrative reductions, operational efficiencies, and streamlined distribution.
    • Sprint gains deeper managerial talent with additional expertise in the prepaid segment.
    Terms of the Transaction

    Under the terms of the agreement, Virgin Mobile USA stockholders will receive shares of common stock of Sprint based on the exchange ratios described in more detail below, and cash in lieu of fractional shares.

    Virgin Mobile USA Public Stockholders:

    Each public stockholder, holding in aggregate approximately 39.7 million shares on a fully diluted basis or 43.3% ownership, will receive Sprint shares having a 10-day average closing price equivalent to $5.50 per Virgin Mobile USA share, subject to the collar referenced below.
    • The exchange ratio for public stockholders will be based on Sprint's 10-day average closing share price ending two trading days prior to closing.
    • The exchange ratio will be subject to a collar such that in no event will the exchange ratio be lower than 1.0630 or higher than 1.3668.
    The Virgin Group:
    • The exchange ratio for the Virgin Group will in all circumstances be equal to 93.09% of the exchange ratio for the public stockholders equating generally to $5.12 per Virgin Mobile USA share for common stock owned by the Virgin Group (including shares into which preferred stock held by it is convertible.)
    • Preferred shares owned by Virgin Group will be converted into common stock based on the Virgin Group exchange ratio at a conversion price of $8.50.
    • Virgin Group owns approximately 26.0 million shares on a fully diluted basis or 28.3% ownership, of Virgin Mobile USA.
    SK Telecom:
    • The exchange ratio for the SK Telecom will in all circumstances be equal to 89.84% of the exchange ratio for the public stockholders, equating generally to $4.94 per Virgin Mobile USA share for common stock owned by SK Telecom (including shares into which preferred stock held by it is convertible.)
    • Preferred shares owned by SK Telecom will be converted into common stock based on the SK Telecom exchange ratio at a conversion price of $8.50.
    • SK Telecom owns approximately 14.0 million shares on a fully diluted basis or 15.3% ownership, of Virgin Mobile USA.
    Based on the terms of the agreement, Sprint currently expects to issue between 81.4 million and 104.7 million shares of its common stock in exchange for all Virgin Mobile USA common stock, excluding Sprint's 13.1% stake, and all Virgin Mobile USA preferred stock.

    Following the closing of the transaction, Virgin Mobile USA will continue to license the Virgin Mobile USA brand from the Virgin Group under the terms of an amended and restated Trademark License Agreement. Sprint will pay $12.7 million for the initial term, which will continue through the end of 2021. The agreement contains several renewal provisions that will allow Virgin Mobile USA to extend the term until 2047.

    Sprint will pay Virgin Group approximately $50 million at closing as payment in full for net operating losses available to be utilized by Virgin Mobile USA in the future under the Tax Receivable Agreement.

    All of Virgin Mobile USA's outstanding debt will be retired at the closing of the transaction including amounts due under the Senior Secured Credit Facility and the Related Party Subordinated Secured Revolving Credit Agreements.

  • Late last night, HealthTronics, Inc. (Nasdaq: HTRN) announced that it has successfully completed its previously-announced exchange offer for all of the outstanding shares of common stock of Endocare, Inc. and subsequently completed its acquisition of Endocare by a short-form merger of Endocare into a wholly-owned subsidiary of HealthTronics.

    "The acquisition of Endocare demonstrates HealthTronics' continued commitment to supporting technology that improves patient care and enhances the practice economics of our physician partners. We expect the combination will create both near term and long term financial and strategic benefits for us. After successful integration, we believe Endocare will contribute favorably to our financial results. Strategically, Endocare's existing physician and care facility relationships will support an enhanced organic growth initiative for not only cryoablation, but also for ClariPath Laboratories and our core partnership business. I look forward to expanding on the expected impact in our upcoming second quarter conference call," said James Whittenburg, HealthTronics' President and CEO.
To see all the Mergers & Acquisitions for today in real-time go to http://www.streetinsider.com/Mergers+and+Acquisitions

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