Notable Mergers and Acquisitions of the Day 09/06: (O)/(ARCT) (ESGR) (FACE) (FNF)/(JAX)

• Realty Income Corporation (Realty Income) (NYSE: O) and American Realty Capital Trust, Inc. (NASDAQ: ARCT), announced today that they have signed a definitive agreement under which Realty Income will acquire all of the outstanding shares of American Realty Capital Trust (ARCT) in a transaction valued at approximately $2.95 billion. The board of directors of both companies have unanimously approved the agreement. Following a shareholder vote by both companies, the transaction is expected to close during the fourth quarter of 2012 or early in the first quarter of 2013. Upon completion, it is anticipated that Realty Income will be the 18th largest REIT in the US, based on total pro forma equity market capitalization, and twice as large as the next largest net lease REIT.
  
  The acquisition will be financed by Realty Income directly issuing $1.9 billion of its common stock to American Realty Capital Trust shareholders, the assumption of approximately $526 million of debt, and the immediate repayment of approximately $574 million of outstanding debt and transaction expenses. Under the terms of the agreement, American Realty Capital Trust shareholders will receive a fixed exchange ratio of 0.2874 Realty Income shares for each share of American Realty Capital Trust common stock that they own. Based on Realty Income’s closing stock price of $42.48 on September 5, 2012, this consideration would be equivalent to $12.21 per share. Upon closing of the transaction, American Realty Capital Trust shareholders are expected to own approximately 25.6% of Realty Income’s shares.
  
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• Enstar Group Limited (Nasdaq: ESGR) today announced that it has entered into a definitive agreement under which Enstar will acquire all of the shares of Household Life Insurance Company of Delaware and HSBC Insurance Company of Delaware from Household Insurance Group Holding Company, an affiliate of HSBC Holdings plc. (NYSE: HBC).
  
  The companies to be acquired have written various U.S. and Canadian life insurance, including credit insurance, term life insurance, assumed reinsurance, corporate owned life insurance, and annuities.
  
  Enstar expects to finance the purchase price through a combination of cash on hand and a drawing under its revolving credit facility. The base purchase price of $181 million will roll forward under the terms of the stock purchase agreement based upon changes to the capital and surplus of the acquired entities arising from the operation of the business prior to closing. Completion of the transaction is conditioned on, among other things, governmental and regulatory approvals and satisfaction of various customary closing conditions. The transaction is expected to close by the end of the first quarter of 2013.
  
  
• Physicians Formula Holdings, Inc. (Nasdaq: FACE) received an unsolicited, nonbinding proposal to acquire all its outstanding shares of common stock at a price of $4.90 per share, subject to several conditions, including the completion of due diligence and securing of financing commitments by the third party who submitted the proposal and the negotiation of a mutually acceptable definitive agreement.
  
  In accordance with the terms of the Agreement and Plan of Merger that was entered into on August 14, 2012 between the Company and affiliates of Swander Pace Capital, the Company and its representatives have engaged in and are continuing to engage in discussions and negotiations with the third party who submitted the Acquisition Proposal.
  
  
• Fidelity National Financial, Inc. (NYSE: FNF) and J. Alexander’s Corporation (NASDAQ: JAX) announced today an amendment to the Amended and Restated Agreement and Plan of Merger, dated July 30, 2012, by and among J. Alexander’s, Fidelity National Financial, Inc. and certain affiliates of FNF. Pursuant to the amendment, FNF agreed to increase its offer price from $13.00 per share to $14.50 per share and will extend the offer for at least 10 business days until September 19, 2012. In connection with the increased offer, J. Alexander’s agreed to increase the termination fee payable by J. Alexander’s to FNF in certain circumstances under the merger agreement from $2,159,725 to $3,800,000.

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