Notable Mergers and Acquisitions of the Day 01/15: (DNR)/(COP) (SJR)/(RCI) (FDX)
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* Denbury Resources Inc. (NYSE: DNR) entered into an agreement to acquire producing property interests in the Cedar Creek Anticline ("CCA") of Montana and North Dakota from a wholly-owned subsidiary of ConocoPhillips (NYSE: COP) for $1.05 billion cash. The assets to be purchased include additional interests in certain of Denbury's existing operated fields in CCA along with operating interests in other CCA fields.
The acquisition is subject to satisfactory completion of customary title and environmental due diligence, as well as the satisfaction of customary closing conditions. The acquisition is expected to close near the end of the first quarter of 2013 with a January 1, 2013 effective date. The purchase price is subject to standard adjustments for revenues and costs of the properties to be acquired from the effective date to the closing date.
Denbury plans to fund the purchase out of the approximately $1.3 billion of cash received from its Bakken sale and asset exchange with ExxonMobil completed in December 2012, $1.05 billion of which was deposited in qualified trust accounts to allow for potential future asset purchases that would qualify for like-kind exchange treatment. The utilization of federal tax rules on like-kind exchanges for both the CCA properties to be acquired and the Rocky Mountain carbon dioxide ("CO2") reserves acquired in the ExxonMobil exchange transaction is expected to allow Denbury to defer more than $400 million of the $500 million of cash taxes originally estimated on the Bakken transaction prior to completing the CO2 reserves acquisition and agreeing to acquire the CCA properties.
Denbury estimates that at year-end 2012 the proved conventional (non-tertiary) reserves associated with the CCA properties to be acquired were approximately 42 million barrels of oil equivalent of which approximately 95% was oil and 4% natural gas liquids and 91% was proved developed producing. Net to the acquired interest, Denbury estimates current average production from the to-be-acquired properties at approximately 11,000 barrels of oil equivalent per day ("BOE/d"), of which 99% is oil and natural gas liquids. Assuming the acquisition closes at the end of the first quarter of 2013, Denbury estimates that its full-year 2013 average daily production would increase by approximately 7,700 BOE/d.
* After markets closed Monday, Shaw Communications Inc. (NYSE: SJR) has entered into agreements with Rogers Communications Inc. (NYSE: RCI) to sell to Rogers its shares in its Hamilton-based cable operations, Mountain Cablevision Limited, grant to Rogers an option to acquire Shaw's spectrum licenses for advanced wireless service in British Columbia, Alberta, Saskatchewan, Manitoba and Northern Ontario and to purchase from Rogers its 33.3% partnership interest in the TVtropolis General Partnership.
The consideration payable by Rogers to Shaw for Mountain Cable, the Spectrum Licenses and other transactions described below, net of TVtropolis, is approximately $700 million of which (a) $400 million represents the purchase price for the Mountain Cable transaction ($250 million of which is an up-front deposit to be received today), and (b) $50 million represents the purchase price of the option granted by Shaw to Rogers to acquire the Spectrum Licenses. The Company acknowledges that the cash consideration to be received by Shaw with respect to Mountain Cable reflects the value of the bundle of transactions taken together, as well as consideration for timing of cash payments between the parties. Shaw is paying $59 million for the remaining interest in TVtropolis and this will be paid today as a deposit. The final option exercise price for the Spectrum Licenses will be settled in connection with the negotiation over the next several months of the provision of certain services, assets or rights by Shaw to Rogers.
* FedEx (NYSE: FDX) was expected to place a bid for TNT Express after a $6.9 billion takeover deal from United Parcel Services (NYSE: UPS) faded away on Monday. But, a proposal may not come along too soon.
Shares of TNT plummeted 41 percent to €4.84 following the news, leading to some of the lowest multiples for profit and sales since the company was spun off of PostNL in 2011, according to Bloomberg-compiled data. TNT was at 0.37 times sales and 6.2 times EBITDA.
FedEx might hold off for now to see whether or not TNT's finances and operation decline before taking any sort of action. That might mean a 12-month wait to gauge how the European market is shaping up.
UPS updates its proposal recently, saying it would divest certain TNT assets and open-up TNT's air network to rivals. The European Union was aiming to form another company with similar market power, according to Competition Commissioner Joaquin Almunia. Ultimately, UPS concessions weren't enough to spur a change of opinion.
To keep up on all the Mergers & Acquisitions data in real-time, go to our new M&A Insider page.
The acquisition is subject to satisfactory completion of customary title and environmental due diligence, as well as the satisfaction of customary closing conditions. The acquisition is expected to close near the end of the first quarter of 2013 with a January 1, 2013 effective date. The purchase price is subject to standard adjustments for revenues and costs of the properties to be acquired from the effective date to the closing date.
Denbury plans to fund the purchase out of the approximately $1.3 billion of cash received from its Bakken sale and asset exchange with ExxonMobil completed in December 2012, $1.05 billion of which was deposited in qualified trust accounts to allow for potential future asset purchases that would qualify for like-kind exchange treatment. The utilization of federal tax rules on like-kind exchanges for both the CCA properties to be acquired and the Rocky Mountain carbon dioxide ("CO2") reserves acquired in the ExxonMobil exchange transaction is expected to allow Denbury to defer more than $400 million of the $500 million of cash taxes originally estimated on the Bakken transaction prior to completing the CO2 reserves acquisition and agreeing to acquire the CCA properties.
Denbury estimates that at year-end 2012 the proved conventional (non-tertiary) reserves associated with the CCA properties to be acquired were approximately 42 million barrels of oil equivalent of which approximately 95% was oil and 4% natural gas liquids and 91% was proved developed producing. Net to the acquired interest, Denbury estimates current average production from the to-be-acquired properties at approximately 11,000 barrels of oil equivalent per day ("BOE/d"), of which 99% is oil and natural gas liquids. Assuming the acquisition closes at the end of the first quarter of 2013, Denbury estimates that its full-year 2013 average daily production would increase by approximately 7,700 BOE/d.
* After markets closed Monday, Shaw Communications Inc. (NYSE: SJR) has entered into agreements with Rogers Communications Inc. (NYSE: RCI) to sell to Rogers its shares in its Hamilton-based cable operations, Mountain Cablevision Limited, grant to Rogers an option to acquire Shaw's spectrum licenses for advanced wireless service in British Columbia, Alberta, Saskatchewan, Manitoba and Northern Ontario and to purchase from Rogers its 33.3% partnership interest in the TVtropolis General Partnership.
The consideration payable by Rogers to Shaw for Mountain Cable, the Spectrum Licenses and other transactions described below, net of TVtropolis, is approximately $700 million of which (a) $400 million represents the purchase price for the Mountain Cable transaction ($250 million of which is an up-front deposit to be received today), and (b) $50 million represents the purchase price of the option granted by Shaw to Rogers to acquire the Spectrum Licenses. The Company acknowledges that the cash consideration to be received by Shaw with respect to Mountain Cable reflects the value of the bundle of transactions taken together, as well as consideration for timing of cash payments between the parties. Shaw is paying $59 million for the remaining interest in TVtropolis and this will be paid today as a deposit. The final option exercise price for the Spectrum Licenses will be settled in connection with the negotiation over the next several months of the provision of certain services, assets or rights by Shaw to Rogers.
* FedEx (NYSE: FDX) was expected to place a bid for TNT Express after a $6.9 billion takeover deal from United Parcel Services (NYSE: UPS) faded away on Monday. But, a proposal may not come along too soon.
Shares of TNT plummeted 41 percent to €4.84 following the news, leading to some of the lowest multiples for profit and sales since the company was spun off of PostNL in 2011, according to Bloomberg-compiled data. TNT was at 0.37 times sales and 6.2 times EBITDA.
FedEx might hold off for now to see whether or not TNT's finances and operation decline before taking any sort of action. That might mean a 12-month wait to gauge how the European market is shaping up.
UPS updates its proposal recently, saying it would divest certain TNT assets and open-up TNT's air network to rivals. The European Union was aiming to form another company with similar market power, according to Competition Commissioner Joaquin Almunia. Ultimately, UPS concessions weren't enough to spur a change of opinion.
To keep up on all the Mergers & Acquisitions data in real-time, go to our new M&A Insider page.
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