Notable Mergers and Acquisitions of the Day 10/31: (PVH)/(WRC) (CLH) (RVBD)/(OPNT) (SHF) (SE) (CG)

Note: Due to Hurricane Sandy closing U.S. markets on Monday and Tuesday, today's report will cover the last two days of notable M&A:

• PVH Corp. (NYSE: PVH) and The Warnaco Group, Inc. (NYSE: WRC) today announced that they have entered into a definitive merger agreement pursuant to which PVH will acquire Warnaco and holders of Warnaco common stock will receive $51.75 in cash and .1822 of a share of PVH common stock for each share of Warnaco common stock. The transaction values Warnaco at approximately $2.9 billion. With over $8 billion in pro forma revenue, PVH will be one of the largest and most profitable global branded lifestyle apparel companies in the world, with a diversified portfolio of iconic brands led by Calvin Klein and Tommy Hilfiger, as well as heritage brands – Van Heusen, IZOD, ARROW, Bass, Speedo, Olga and Warner’s.
  
  Based on PVH’s last closing stock price, the per share value of the consideration to be received by Warnaco stockholders is $68.43, a 34% premium over the last closing price of Warnaco common stock. The merger, which has been unanimously approved by the Boards of Directors of both companies, is expected to close in early 2013, at which time the former Warnaco stockholders will own approximately 10% of the outstanding common stock of PVH. In addition, Helen McCluskey, Warnaco’s President and Chief Executive Officer, is expected to join PVH’s Board of Directors. The Warnaco Board of Directors has unanimously recommended that Warnaco stockholders approve the transaction.
  
  PVH anticipates approximately $100 million of annual run rate synergies from the transaction, which will be fully realized over three years. In order to achieve these synergies, PVH expects to incur one-time costs of approximately $175 million over three years. PVH expects the transaction to be $0.35 per share accretive to earnings in the first full year (fiscal 2013, if the deal closes when currently anticipated), excluding one-time integration costs and transaction expenses but including the effect of the potential loss of a license. When the $100 million of expense synergies are fully realized in year 3, PVH would expect the transaction to be accretive to earnings by $1.00 per share, excluding one-time integration costs and including the effect of the potential loss of a license.
  
  The closing of the transaction is subject to customary conditions, including approval by the holders of a majority of the outstanding shares of Warnaco common stock and approval under applicable antitrust and competition laws. Commitments for $4.325 billion of financing (consisting of a bridge credit facility and a senior secured credit facility) have been received from Barclays, BofA Merrill Lynch and Citigroup Global Markets Inc. subject to customary conditions. The facility will be used to refinance debt, fund the cash portion of the consideration, pay other transaction related expenses, and provide liquidity for PVH going forward.
  
  Peter J. Solomon Company is serving as lead financial advisor to PVH in connection with the acquisition and financing of the transaction and sole advisor to the PVH Board of Directors, and provided a fairness opinion to PVH. Wachtell, Lipton, Rosen & Katz is serving as legal advisor to PVH.
  
  Barclays, BofA Merrill Lynch and Citigroup Global Markets Inc. will arrange and lead the financing for the transaction. Barclays, BofA Merrill Lynch and Citigroup also acted as financial advisors to PVH.
  
  J.P. Morgan is serving as exclusive financial advisor to Warnaco, and provided a fairness opinion to Warnaco. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Warnaco.
  
  
• On Monday, Clean Harbors, Inc. (NYSE: CLH) signed a definitive agreement to acquire Safety-Kleen, Inc., the largest re-refiner and recycler of used oil in North America and a leading provider of parts cleaning and environmental services, in an all-cash transaction valued at $1.25 billion.
  
  In 2011, Safety-Kleen managed hazardous and non-hazardous waste volumes equivalent to approximately 680,000 55-gallon drums. Safety-Kleen generated revenues of $1.3 billion and adjusted EBITDA of $161 million in 2011.
  
  The transaction is expected to be completed by year-end.
  
  
• On Tuesday, Schiff Nutrition International, Inc. (NYSE: SHF) agreed to be acquired by Bayer HealthCare LLC for approx. US$1.2 billion, or $34 per share in cash.
  
  Closing is subject to customary closing conditions and is expected by year end 2012.
  
  Schiff generated net sales of US$259 million (approx. €200 million) for its fiscal year ended May 31, 2012. On September 18, 2012, Schiff publicly announced that net sales for fiscal year 2013 were projected to grow between 43 and 46 percent. Expected sales growth includes contributions from new products and brand building as well as Airborne®, which was acquired by Schiff on March 30, 2012.
  
  
• Spectra Energy Corp (NYSE: SE) today announced it has reached an agreement in principle to acquire a one-third interest in the Sand Hills and Southern Hills pipelines, both of which currently are under construction by DCP Midstream, LLC (DCP Midstream), a 50/50 joint venture between Spectra Energy and Phillips 66 (NYSE: PSX). The transaction is expected to close by the end of November. Upon closing, Spectra Energy, Phillips 66, and DCP Midstream each will own a one-third interest in the two pipelines – and will equally fund the remaining capital expenditures through completion of the pipelines. The aggregate investment by Spectra Energy in the two pipeline projects is expected to be between $700-800 million.
  
  The Sand Hills pipeline is designed to provide NGL transportation from the Permian Basin and Eagle Ford region to the premium NGL markets on the Gulf Coast. Sand Hills, which will have an initial capacity of 200,000 barrels per day and will be expandable to 350,000, is being phased into service with the first phase of the project recently coming online and providing service from the Eagle Ford. Direct connection to Mont Belvieu is expected by year end. The timing of Sand Hills' second phase, which is the Permian portion of the pipeline, has advanced and is now due to be in service in the second quarter of 2013.
  
  Southern Hills will provide 150,000 barrels per day, expandable to 175,000, of NGL transportation from the Mid-Continent to Mont Belvieu, and has a targeted in-service date of mid-2013.
  
  
• On Tuesday, The Carlyle Group (Nasdaq: CG) and Sealed Air Corporation (NYSE: SEE) entered into a definitive agreement on October 30, 2012 (U.S. time) whereby the Carlyle Group will sponsor the management buyout (MBO) of Diversey G.K., which will continue to run the operation under the Diversey name. The equity for this investment will come from Carlyle Japan Partners II.
  
  Diversey Japan is one of the major providers of cleaning, sanitation and hygiene products and solutions to institutional customers in the Japanese market. It distinguishes itself in the industry as the preeminent total solution provider in Japan, combining cleaning and sanitation products with consulting services to improve operational efficiency for its customers. Going forward, Diversey Japan will continue to strengthen its products and services to better meet its customers’ various needs. Mr. Toshiro Misumi, Executor of Diversey G.K., will assume the position of President and Chief Executive Officer upon closing and take the helm at the newly independent Diversey Japan.
  
  Value on the deal is about ¥30 billion (USD equivalent of approximately 377 million).
  
  The transaction is expected to be completed in the fourth quarter of 2012, subject to the satisfaction of customary closing conditions. The price will be subject to certain purchase price adjustments. The Company noted that Diversey Japan will now be accounted for as a discontinued operation as of September 30, 2012, which is expected to impact third quarter 2012 net earnings per share by $0.03. Full third quarter results and further detail regarding the transaction will be presented on Sealed Air’s upcoming earnings call on November 2, 2012.
  
  
• Riverbed Technology (Nasdaq: RVBD) entered an agreement to acquire OPNET Technologies, Inc. (Nasdaq: OPNT) for $43 per share in cash and stock, representing an equity value of $1 billion and an enterprise value of $921 million.
  
  OPNET will be combined with Riverbed's Cascade business unit. The transaction is expected to be accretive to Riverbed's 2013 earnings per share on a non-GAAP basis. Leveraging the Riverbed brand, channels and infrastructure, Riverbed expects meaningful revenue and operating synergies in 2014.
  
  Under the terms of the agreement between Riverbed and OPNET, Riverbed will acquire all of the outstanding shares of OPNET common stock pursuant to an exchange offer, followed by a second step merger. In the exchange offer and the merger, OPNET stockholders will receive for each OPNET share they own: (i) $36.55 in cash; and (ii) 0.2774 of a share of Riverbed common stock.
  
  The exchange offer is subject to customary closing conditions, including the tender into the exchange offer by OPNET stockholders of shares representing at least a majority of the outstanding shares of OPNET common stock on a fully diluted basis, receipt of financing and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as amended, and is expected to close before December 31, 2012.

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