Notable Mergers and Acquisitions of the Day 9/8: KFT/CBY, AIG, CHRT, FFH/ORH, ATHR/ITLN
Down)- Kraft Foods (NYSE: KFT) made a proposal to the Board of Cadbury plc (NYSE: CBY) to combine the two companies, which the board of Cadbury has rejected.
Kraft Foods is proposing an offer for Cadbury of 300 pence in cash and 0.2589 new Kraft Foods shares per Cadbury share. This values each Cadbury share at 745 pence (based on the closing price of $28.10 for a Kraft Foods share on 4 September 2009 and an exchange rate of 1.6346 $/pounds Sterling) and values the entire issued share capital of Cadbury at pounds Sterling 10.2 billion.
Despite the rejection, Kraft Foods is committed to working toward a recommended transaction and to maintaining a constructive dialogue and is announcing this proposal as a means to encourage and further that process.
- This weekend, American International Group, Inc. (NYSE: AIG) announced an agreement to sell a portion of its investment advisory and asset management business to Bridge Partners, L.P., a company owned by Pacific Century Group (PCG), the Hong Kong-based private investment firm.
AIG is retaining its in-house investment operation that oversees approximately $480 billion of assets under management.
The purchase price of approximately $500 million consists of a cash payment of approximately $300 million at closing, plus additional future consideration that includes a performance note and a continuing share of carried interest.
- Advanced Technology Investment Company LLC of Abu Dhabi and Chartered Semiconductor Manufacturing (Nasdaq: CHRT) of Singapore today announced a definitive agreement whereby ATIC would acquire Chartered for $1.8 billion.
Under this scheme of arrangement, each Chartered ordinary share will be acquired by ATIC for a cash consideration of S$2.68 per share. The transaction represents an equity value of approximately S$2.5 billion (US$1.8 billion) and a total value of approximately S$5.6 billion (US$3.9 billion), including debt and convertible redeemable preference shares of approximately S$3.1 billion (US$2.2 billion) as of June 30, 2009. The price represents a premium of 14.2 percent to its 30 trading-day volume weighted average price, 26.8 percent to its 90 trading-day volume weighted average price and 44.2 percent to its 6-month volume weighted average price on the SGX. The estimated amount of consideration for each American Depositary Share is US$18.641.
- Fairfax Financial Holdings Limited (NYSE: FFH) proposed to acquire all of the outstanding shares of common stock of Odyssey Re Holdings Corp. (NYSE: ORH) that it does not currently own for $60 per share in cash, representing a 19.8% premium over today's closing price and a 23.2% premium over the 30-day average closing price.
Fairfax intends to issue new equity under its existing shelf prospectus, the proceeds of which would be used to fully fund the proposed acquisition of Odyssey Re shares. Following completion of the proposed acquisition of Odyssey Re and the proposed Fairfax new equity issuance, Fairfax expects to continue to have in excess of $1 billion in cash and marketable securities at the holding company level.
Fairfax has been advised that the board of directors of Odyssey Re has formed a special committee of independent directors to evaluate Fairfax's proposal and that the special committee has engaged independent financial and legal advisors.
- Atheros Communications, Inc. (NASDAQ: ATHR) and Intellon Corporation (NASDAQ: ITLN) today announced that the companies have entered into a definitive agreement for Atheros to acquire Intellon in a stock and cash transaction valued at approximately $244 million, or $181 million net of Intellon's cash, cash equivalents and short-term investments as of June 30, 2009.
Pursuant to the terms of the definitive agreement, the overall acquisition consideration consists of an amount of Atheros common stock and equivalents (including the assumption of outstanding Intellon restricted stock units and stock options) representing between 45 and 55 percent of the total consideration with the remainder paid in cash, providing an overall value of $7.30 per share based on the five-day average closing price of Atheros as of September 4, 2009. Intellon shareholders may elect to receive either: 1) approximately 0.135 shares of Atheros common stock and approximately $3.60 in cash, 2) $7.30 in cash, or 3) approximately 0.267 shares of Atheros common stock, for each share of Intellon common stock; however, each of these elections will be subject to adjustment and proration provisions (as further detailed in the definitive agreement). In the aggregate, Atheros expects to issue approximately 4.2 - 5.1 million shares of Atheros common stock and equivalents and pay approximately $115 - $141 million in cash, depending on the overall elections that are made and pursuant to the terms in the definitive agreement.
Atheros expects to close the transaction in the fourth quarter of 2009, subject to Intellon shareholder approval as well as customary closing conditions and regulatory approvals. Intellon shareholders representing approximately 22% percent of Intellon's outstanding common stock have signed an agreement to vote their shares in favor of this transaction. It is anticipated that the transaction will be accretive to Atheros' non-GAAP earnings per share in the first half of 2010.
Raises its Q3 outlook: sales move from $129-$134.6 million to $145-$150 million, versus the consensus of $137.86 million. Non-GAAP EPS for the quarter move from $0.29-$0.31 to $0.35-$0.39, versus the Street estimate of $0.32.
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