Notable Mergers and Acquisitions of the Day 11/13: (GNOM) (HWD) (AKAM)

• Takeover target Complete Genomics, Inc. (NASDAQ: GNOM) is higher in pre-open trading Tuesday following the disclosure it receive an unsolicited bid on November 5 from "Party H" although it told "Party H" that its plan didn't constitute a superior proposal.
  
  In September, Complete Genomics agreed to be acquired by BGI-Shenzhen for $3.15 per share in cash.
  
  From the filing:
  * On November 5, 2012, Party H submitted an unsolicited non-binding proposal to acquire the Company, which included the following terms:
  
  * A per share cash purchase price of $3.30, which represented approximately a 5% premium over the consideration offered by Purchaser;
  
  * Financed with cash-on-hand;
  
  * Without any condition for further due diligence; and
  
  * Subject to negotiation of definitive transaction agreements on terms consistent with those agreed between and among the Company, Parent and Purchaser.
  
  On November 5, 2012, the Company provided a copy of Party H’s non-binding proposal to Parent and Purchaser in accordance with the terms of the Merger Agreement. On November 7, 2012, counsel to Parent and Purchaser submitted a letter to the Company that Parent and Purchaser did not believe that the Company Board could reasonably determine in good faith, after consultation with an independent financial advisor and outside legal counsel, that Party H’s non-binding proposal constituted or could reasonably be expected to result in a Superior Proposal, as defined in the Merger Agreement, because, among other reasons, there is a substantial likelihood that Party H’s proposed transaction would not receive antitrust clearance.
  
  On the afternoon of November 7, the Company Board held a special meeting. The Company Board received a report on the November 5, 2012 proposal from Party H. After carefully and thoroughly reviewing Party H’s proposal with the benefit of advice from the Company’s financial and legal advisors, the Company Board unanimously concluded that Party H’s proposal was inadequate, not in the best interests of the Company’s stockholders, and did not constitute a Superior Proposal, as defined in the Merger Agreement because, as discussed above, there is a substantial likelihood that a proposed transaction between the Company and Party H would fail to receive antitrust clearance.
  
  At the direction of the Company Board, on November 8, 2012, Dr. Reid submitted to the CEO of Party H a letter communicating the Company Board’s conclusion that Party H’s proposal did not constitute a Superior Proposal, as defined in the Merger Agreement.
  
  
• Harry Winston Diamond Corporation (NYSE: HWD) has entered into share purchase agreements with BHP Billiton Canada Inc., and various affiliates to purchase all of BHP Billiton's diamond assets, including its controlling interest in the Ekati Diamond Mine as well as the associated diamond sorting and sales facilities in Yellowknife, Northwest Territories and Antwerp, Belgium. The Ekati Diamond Mine consists of the Core Zone, which includes the current operating mine and other permitted kimberlite pipes, as well as the Buffer Zone, an adjacent area hosting kimberlite pipes having both development and exploration potential. The agreed purchase price, payable in cash, is US$400 million for the Core Zone interest and US$100 million for the Buffer Zone interest, subject to adjustments in accordance with the terms of the share purchase agreements.
  
  The Ekati Diamond Mine, which is located approximately 310 kilometers northeast of Yellowknife in the Northwest Territories of Canada, includes both open pit and underground operations and is Canada's first, and largest, diamond producer, having begun production in 1998. It is located near the Diavik Diamond Mine in which the Company holds a 40% interest. The Ekati Diamond Mine has produced an average of approximately three quarters of a billion US dollars of rough diamonds per year over the last five years. Over that period sales from the Core Zone represented approximately 6% of world rough diamond supply by value. The current phase of production at the Ekati Diamond Mine includes ore sourced primarily from the lower grade, but high carat value, Fox open pit supplemented by underground production from the lower portion of the Koala kimberlite pipe and from the Koala North pipe. Although production in the next two years is forecast to be lower than the average achieved over the last five years, it is expected to return to higher levels as the mine transitions to higher grade, but lower carat value, ore from the Misery and Pigeon open pits. The current Ekati mine plan calls for a further seven years of production, but there are additional resources which could become economic with increased diamond prices.
  
  Each of the Core Zone and the Buffer Zone is subject to a separate joint venture agreement. BHP Billiton holds an 80% interest in the Core Zone and a 58.8% interest in the Buffer Zone, with the remainder held by the Ekati minority joint venture parties. Harry Winston has agreed to purchase BHP Billiton's interests in each of the Core and Buffer Zones. Pursuant to the joint venture agreements, BHP Billiton will first separately offer to the joint venture parties its interest in each of the Core and Buffer Zones on the same terms as those agreed to by Harry Winston. The joint venture parties will then have 60 days to elect to acquire either or both of those interests. Any interests that the joint venture parties do not elect to acquire within that time period can then be transferred to the Company in the following 60 days.
  
  The share purchase agreements include typical closing conditions, including receipt of required regulatory and Competition Act approvals. If the Core Zone transaction is not completed because the minority joint venture parties exercise their pre-emptive rights, the Company will be entitled to be paid a termination fee of US$30 million by BHP Billiton (NYSE: BHP). Closing of the transactions is currently expected to occur before the end of March, 2013.
  
  The purchase price for the acquisitions will be satisfied from cash resources on hand and from new debt financing that has been arranged with The Royal Bank of Canada and Standard Chartered Bank. The new facilities will comprise a US$400 million term loan, a US$100 million revolving credit facility (of which US$50 million will be available for purposes of funding the Ekati acquisition) and a US$140 million letter of credit facility in support of the Core Zone environmental reclamation bond.
  
  The new facilities will be secured and will replace the Company mining segment's current US$125 million facility with Standard Chartered Bank, which will be repaid and terminated on closing. The new facilities will include customary covenants, including certain reporting and financial covenants, and will bear interest at market rates. The term loan will be an amortizing facility, with principal repayments beginning 30 months following closing and a final bullet payment of 50% of the principal amount being due on the date that is five (5) years after closing. The US$100 million portion of the revolving facility will be due five (5) years after closing. The letter of credit facility will expire 364 days after closing. The facilities will be subject to customary closing conditions, including closing of the Core Zone acquisition. If the Core Zone acquisition is not completed but the Buffer Zone acquisition is completed, then the Company expects to finance the acquisition of the Buffer Zone using other cash resources available to it.
  
  
• Akamai Technologies, Inc. (Nasdaq: AKAM) and Verivue announced today that the two companies have signed a definitive agreement for Akamai to acquire Verivue in a cash transaction. The acquisition is expected to complement Akamai's Aura Network Solutions and accelerate Akamai's time to market in providing a comprehensive, licensed content delivery network (CDN) solution for network operators.
  
  According to market research firm IDC, network operators worldwide are looking at ways to leverage on-net CDNs to improve the performance of their own digital cable and IPTV premium services and extend their managed multiscreen offerings. Operators can position their on-net CDNs and other network resources as optimized on-ramps that content publishers, OTT content aggregators, application developers, and set-top box vendors can use to reach a critical mass of potential viewers and provide a better end-to-end experience for their end users.
  
  Founded in 2006, Verivue has approximately 60 employees. The closing of the transaction, which is subject to customary closing conditions, is expected to occur by the end of 2012.

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