Notable Mergers and Acquisitions of the Day 04/18: (SXCI)/(CHSI) (KNOL) (RHHBY)/(ILMN) (STO)

• SXC Health Solutions Corp. (Nasdaq: SXCI) and Catalyst Health Solutions, Inc. (Nasdaq: CHSI) Boards of Directors unanimously approved a definitive merger agreement under which SXC and Catalyst will combine in a cash and stock transaction valued at approximately $4.4 billion.
  
  Under the terms of the agreement, Catalyst shareholders will receive $28.00 in cash and 0.6606 shares of SXC stock for each Catalyst share, which implies a purchase price of $81.02 per Catalyst share and a premium of approximately 28% based on the closing stock prices of SXC and Catalyst on April 17, 2012.
  
  The transaction is expected to be highly accretive to SXC's non-GAAP earnings in 2013, which excludes transaction-related amortization expected to be approximately $200 million in the first twelve months after closing. The combined company expects to achieve approximately $125 million of annual cost synergies over the first 18 to 24 months after closing through improved scale and operating leverage. The combined company expects to incur approximately $40-45 million of transition expenses to achieve these annual synergies.
  
  SXC expects annual interest expense to be approximately $70 million due to financing the transaction with $1.7 billion in debt. Upon closing, the combined company will have a strong balance sheet and attractive cash flow, giving it substantial financial flexibility to pursue continued growth initiatives while paying down debt.
  
  SXC has secured fully committed financing from J.P. Morgan Chase Bank, N.A. for the cash portion of the transaction.
  
  The transaction, which is subject to approval by SXC and Catalyst shareholders, U.S. antitrust approval and other customary closing conditions, is expected to close in the second half of 2012.
  
  SXC and Catalyst will each release first quarter 2012 unaudited financial results on May 3, 2012. Both companies today reaffirmed their full-year 2012 guidance excluding the costs related to this proposed transaction, which for SXC is expected to be approximately $25 million.
  
  J.P. Morgan acted as lead financial advisor and Barclays acted as financial advisor to SXC, and Sidley Austin LLP acted as its legal counsel. Goldman, Sachs & Co. acted as lead financial advisor and Citi acted as financial advisor to Catalyst, and Milbank, Tweed, Hadley & McCloy acted as its legal counsel.
  
  
• WOW! Internet, Cable & Phone and Knology, Inc (Nasdaq: KNOL) jointly announced a definitive merger agreement under which a subsidiary of WOW! will acquire Knology in an all-cash transaction.
  
  Under the terms of the agreement, WOW! will acquire all of the outstanding shares of Knology for $19.75 per share in cash, representing a premium of approximately 34% over Knology’s average closing share price during the 3-month period prior to media reports on Knology’s sales process. The total transaction value is approximately $1.5 billion. The Board of Directors of Knology, acting on the unanimous recommendation of a Transaction Committee of the Board, unanimously approved the transaction, which is expected to close after receipt of approval by Knology’s stockholders and satisfaction of customary closing conditions and regulatory approvals. The transaction is not subject to any financing conditions.
  
  
• Earlier, Roche (OTCBB: RHHBY) said it will not extend its $51 per share tender offer forIllumina (Nasdaq: ILMN) past the April 20th deadline.
  
  Roche initiated a bid for the company on January 24th at $44.50 per share.
  
  Roche CEO Severin Schwan said, "We continue to hold Illumina and its management in very high regard but, with access only to public information about Illumina’s business and prospects, we do not believe that a price above Roche’s offer for Illumina of $51.00 per share would be in the interest of Roche’s shareholders...Roche will continue to consider options and opportunities to develop further its portfolio of businesses in order to expand its diagnostics leadership position."
  
  
• Statoil ASA's Board of Directors (NYSE: STO) has decided to pre-accept, subject to certain conditions, a cash offer from Alimentation Couche-Tard for the shares in the listed energy and retail company Statoil Fuel & Retail ASA at a consideration of NOK 53 per share (adjusted for any dividends and other distributions after 31 December 2011). The proceeds for Statoil's 54 % stake in the company are estimated to NOK 8.6 billion (USD 1.5 billion), assuming successful closing of the transaction.
  
  As a result of the transaction, Statoil Fuel & Retail will no longer be consolidated in Statoil ASA's accounts.

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