Notable Mergers and Acquisitions of the Day 08/10: (COF)/(HBC) (ALR) (TRGL)

• Capital One Financial Corporation (NYSE: COF) entered a definitive agreement under which Capital One will acquire HSBC's (NYSE: HBC) domestic credit card business, including its approximately $30 billion credit card portfolio, for $2.59 billion.
  
  Despite the expected addition of approximately $30 billion of HSBC credit card loans, the company does not expect a significant increase in total assets. The company expects to fund HSBC credit card loans primarily with cash and the proceeds from the balance sheet repositioning related to the pending ING Direct acquisition.
  
  
  The transaction delivers compelling long-term shareholder value, as it is expected to improve Capital One's earnings and long-term capital generation trajectory. The transaction is expected to deliver high teens GAAP and operating EPS accretion in 2013. The transaction is expected to deliver an IRR greater than 20 percent, return on invested capital greater than 25 percent in 2013, and an improvement in return on tangible equity of approximately 400 basis points in 2013. While the transaction is expected to result in dilution to tangible book value per share, the strong accretion to EPS will result in an expected earn-back period of four years.
  
  Closing is expected in Q212.
  
  In connection with the transaction, Capital One expects to realize cost synergies of approximately $350 million and incur restructuring costs of approximately $420 million.
  
  Morgan Stanley, Centerview Partners LLC, and The Kessler Group acted as financial advisers to Capital One and Wachtell, Lipton, Rosen and Katz, and Morrison & Foerster acted as legal advisers.
  
  
• Alere Inc. (NYSE: ALR) has made additional open market purchases of 1,101,702 shares of Axis-Shield stock, bringing its total current ownership position to 4,546,697 shares, or approximately 9.09 percent, of Axis-Shield's issued and outstanding ordinary share capital.
  
  
• Toreador Resources Corporation (NASDAQ: TRGL) and ZaZa Energy, LLC has signed a definitive agreement to combine the companies.
  
  Under the terms of the transaction, ZaZa equity holders will receive approximately 76.2 million shares, representing 75 percent of the new company, ZaZa Energy Corporation, as well as $50 million in notes or cash. Toreador stockholders will receive approximately 25.4 million shares, representing 25 percent of the new Company. The transaction has been unanimously approved by the Toreador Board of Directors and the equity holders of ZaZa.
  
  The Company will be headquartered in Houston, Texas, with offices in Corpus Christi, Texas and Paris, France, and is expected to trade on the NASDAQ under the stock ticker symbol “ZAZA”.
  
  The transaction is subject to Toreador stockholder approval, regulatory approvals and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2011.

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