2011 Mid-Year Mergers & Acquisitions Update [Part2]

 

M&A Activity Increased Across All Industries/Sectors

Overall volume of merger and acquisition activity has risen during the first half of 2011 (up to July 31 2011) and is expected to continue into 2012. However, the total value of M&A activity is for 2011 is expected to be less than in 2010, as blockbuster-sized deals slow. Most mega-sized deals (over $10-$15 billion) have already occurred within the last few years after the peak of the financial crisis, and there have only been a handful during the first half of 2011. Although we know of one company that will likely contribute to the number of large deals in the next half of the year.  On 7/8/2011, Berkshire Hathaway CEO & chairman, Warren Buffett, said in an interview from Sun Valley that Berkshire doesn’t have any acquisitions in the works but hopes to see its second deal of 2011 by the end of the year.

As discussed in Part 1, it is expected that the majority of deals will involve (usually smaller) business & operational units, individual assets, and ownership stakes, across all sectors for the remainder of 2011 and going forward.  Takeover activity has not been isolated during the first half of the year, and has been across all market sectors & industries. Although some industries have seen more activity than others.  We can expect this broad M&A trend across industries & sectors to continue (see Part 1 for a general discussion).

 

Technology:

The technology sector has seen a resurgence in merger & acquisition activity, which really picked up this year with some significant deals.  Deal making has been mainly driven by companies looking to expand or increase market share, and others shedding non-core technologies.  Technology has always been a extremely competitive industry, and with demand slowing, sustainable growth has been a concern.. We can expect a moderate number of deals going forward, especially as we see more technology startups going the IPO route, which move them away further from takeover deals. Some noteworthy deals during the first half of 2011 include:

• Texas Instruments agreed to takeover National Semiconductor ($6.5 billion).
• Western Digital Corp purchased Hitachi Ltd’s hard disk drive operations ($4.3 billion).
• Seagate bought Samsung’s hard-disk unit ($1.4 billion).
• Google Inc acquired AdMeld ($400 million).
• Nvidia acquired of phone-chip maker Icera ($367 million).
• Lenovo Group purchased Medion ($340 million).
• Sandisk Corp acquired Pliant Technology Inc ($327 million).
• Twitter acquired TweetDeck (undisclosed – estimated $40 – $50-million).
• Specific Media’s purchased Myspace from News Corp ($35 million).

 

Telecommunications:

The telecom industry has seen a few significant takeovers during the first half of 2011, with the main driver behind those acquisitions being to bolster growth. We can expect a relatively small number of deals for the remainder of the year, particularly with telecommunications gear makers. Gear makers have been facing increasing competition among industry players, with consumer demand far from being certain. This is likely to to result in a more cautious approach.  However, we may see deals involving carriers/operators which have experienced relatively stable revenues. A few significant takeover deals so far this year have included:

• Vivendi bought out Vodafone’s stake in SFR ($11.31 billion).
• Microsoft Corp agreed to takeover of Skype ($8.5 billion).
• Level 3 agreed to buy Global Crossing ($1.9 billion).
• Ericsson’s acquired privately owned Telcordia Technologies ($1.15 billion).

Commodities:

In the previous section above, commodities have been briefly discussed (mining).  On a general level, the commodities industry has seen continued M&A interest, but significantly more in the metals & mining and energy related industries.  Energy related industries will be discussed separately below.

 

Energy – Oil, Natural Gas, Exploration, Pipelines, Utilities:

Cash rich, looking to replenish & increase supply pipeline, as long energy demand continues to increase. As with other commodities, traditional sources of energy require exploration & development activities, which can become very costly & lengthy before significant discoveries are made. In terms of power generation & utility companies, acquisitions represent one of the few (and sometimes the only) method of expanding market share and supply.  We expect many energy companies (most of which are cash rich) to continue looking towards acquisitions as both an attractive alternative and complement to their own internal expansion activities. Some noteworthy M&A deals during the first 6 months of 2011 include:

• Ensco Plc’s merged with Pride International Inc ($7.3 billion) [offshore oil & gas].
• Alpha Natural Resources agreed to purchase Massey Energy Co ($7.1 billion) [coal industry].
• Energy Transfer Equity L.P. bid for Southern Union Co ($4.11 billion). Williams Companies Inc made an competing offer ($4.9 billion) [natural gas].
• The Canada Pension Plan Investment Board (CPPIB) along with Allianz Capital Partners GmbH and the Abu Dhabi Investment Authority acquired a 24.1% stake in the Gassled Joint Venture from Statoil ASA ($3.25 billion).
• General Electric Co acquired oil services unit of Britain’s John Wood Group ($2.8 billion).
• Iberdrola of Spain agreed to purchase Elektro Eletricidade e Servicos of Brazil ($2.4 billion).
• Atlantic Power Corp agreed to buy Capital Power Income L.P. ($1.12 billion) [power generation].
• India’s Tata Steel Ltd. agreed to sell its 26.27% stake in coal-mining company, Riversdale Mining Ltd. to Rio Tinto ($1.12 billion).
• Fortis Inc. acquired Central Vermont Public Service Corp. ($700 million) [electric utility].
• The Canadian government sold nuclear reactor division Atomic Energy Canada Ltd  [AECL] to SNC-Lavalin Group ($15.4 million plus royalties, coverage of past liabilities, and up to C$75 million government contribution to complete development program).
• Mitsubishi Corp agreed to sell a 5 % stake in Cordova Embayment project (British Columbia) to state-run Korea Gas Corp (undisclosed value) [shale gas].

Financial Services & Banking:

Global consolidation of world financial exchanges continued in 2011. But deals involving bourses (stock exchanges) are complicated because they touch on national policy issues and are under more government scrutiny.  We may see a few more going forward, but because most of the major players have already made moves during the first half of the year, there will likely be less. It is also likely that deals going forward would include exchanges in emerging markets.  Large to mid-sized banking M&A is expected to continue at relatively the same slow pace, and is not likely to increase significantly. Most of the largest deals have already occurred within the last 2-3 years (at and after the peak of financial crisis).  The stronger financial institutions have already merged with or bought out the collapsing ones, while others have been nationalized.  However, there should still be a fair number of U.S. acquisitions involving the the assets & deposits of small regional banks that fail, by other small & mid-sized regional institutions. Most of these failed bank takeovers are likely to occur through the Federal Deposit Insurance Corporation (FDIC).  In addition, M&A deals involving individual units, portfolios, assets, etc., should continue at the same moderate or slightly slower pace.  On a global level, larger takeovers will likely involve financial intuitions in emerging markets. It is expected that such deals will include intuitions from more developed nations in search of growth, or from other emerging market nations looking to grow their presence.  We also expect to see more mobile & digital payment / transaction related companies involved in acquisition deals by larger financial services companies, as consumers & businesses continue to evolve towards these financial technologies.  Some of the M&A highlights in the industry include:

• Nasdaq OMX and IntercontinentalExchange (ICE) announced a hostile takeover offer for NYSE Euronext ($11.3 billion).  The bid was later withdrawn following discussions with the Antitrust Division of the US Department of Justice.
• Deutsche Boerse and NYSE Euronext agreed to a merger to form a global exchange operator ($9.5 billion).
• Capital One bought ING Direct USA, from ING Groep ($9 billion).
• Maple Group Acquisition Corporation filed for a hostile takeover bid for TMX Group ($3.88 billion).
• PNC Financial Services agreed to buy the U.S. retail banking operations of Royal Bank of Canada (RBC) ($3.45 billion). PNC also agreed to buy credit card portfolios from RBC ($165 million).
• London Stock Exchange Group (LSE), agreed to a merger with TMX Group ($3.3 billion) (abandoned on 6/29/2011).
• Fiserv Inc. purchased privately held digital payments services company CashEdge Inc. ($465 million).
• Visa Inc. purchased Fundamo, a South African mobile financial services firm ($110 million).
• A group of investors led by Kleiner Perkins Caufield & Byers purchased a stake in mobile-device payment startup, Square Inc. ($100 million).
• Wells Fargo & Co acquired the U.S. based operations of Foreign Currency Exchange Corp. from the Bank of Ireland Group (undisclosed value).

Wealth & Asset Management, Investment Capital Firms, Investment Banking, Hedge Funds, Private Equity:

During the first half of 2011 we saw M&A activity pick up a bit, with deals involving wealth & asset management, and investment banking. Underlying asset valuations have continued to improve, which also contributed to an increase in assets under management at wealth management firms. The number of new clients have increased overall, along with management revenues.  Overall, investors have gained more confidence earlier in the year, compared to 2010.  They have been looking for better returns, and were more willing to take on additional risk. This has increased demand for investment related services.  We can expect activity involving these groups to continue at the same pace, as Greece concerns and a weak U.S. economy linger.  Investors still remain cautious, which will be a limiting factor. During the first 6 months of 2011, investment related organizations have been both buyers & sellers. Some firms have been driven by the desire to expand their assets and investment services, while some of the businesses in the investment industry themselves have low valuations. Others have looked to bolster capital or (perhaps after having been financially weakened from bad bets during the financial crisis).   Some noteworthy deals include:

• AXA Private Equity agreed to purchase a portfolio of private equity assets from Citigroup ($1.7 billion).
• National Bank announced it has agreed to acquire the balance of Winnipeg-based brokerage, Wellington West Financial ($333 million).
• Wells Fargo & Company announced that Wells Fargo Bank N.A. agreed to acquire the remaining equity interest in CP Equity LLC, the sole owner of Castle Pines Capital LLC and its affiliates  (undisclosed value).
• China Development Bank Corp’s investment unit agreed to purchase a stake in U.S. buyout / private equity firm TPG Capital (value undisclosed).
• HSBC Holdings PLC, Europe’s biggest bank, announced it will merge its Saudi Arabian wholesale and investment banking business with Saudi British Bank’s SABB Securities to create HSBC Saudi Arabia (undisclosed value).

Insurance:

Insurance companies have been busy with merger & acquisition deals during the first half of the year.  Like banking and the financial services sector, we will likely continue to see individual units/divisions & assets involved, rather than mega-sized deals for an entire company. Some interesting deals in 2011 so far include:

• AXA SA (Europe’s second-largest insure) sold its Canadian unit to Intact Financial Corp. ($2.7 billion) .
• Transatlantic Holdings and Allied World Assurance Company Holdings merged ($3.2 billion stock-for-stock deal).
• Swiss Re (the world’s second-biggest reinsurer) purchased assets (300,000 policies) from American Life Insurance Company (around $2.63 billion).
• Carlyle Group purchase RAC car-breakdown service and financial-services business from Aviva PLC (U.K. insurer) ($1.61 billion).
• Allstate Corp., agreed to buy Esurance and Answer Financial from White Mountains Insurance Group Ltd. ($1 billion).
• Chinese property, casualty and life insurer CNinsure Inc announced that a consortium consisting of TPG Asia, Kingsford Resources Ltd (a company controlled by CNinsure’s CEO), and CDH Inservice Ltd. proposed to take the company private ($953 million).
• Property and casualty insurer ACE Ltd bought out the other 49% of its Malaysian joint venture, ACE Synergy Insurance Berhad, from Advance Synergy Capital Berhad ($39 million).

Pharmaceutical & Biotechnology:

Consolidation in the pharmaceutical & biotechnology industry continued with many takeover deals in 2011, and we expect activity to continue at the same pace through the year and into 2012.  Most of the transactions involved the industry’s larger (cash rich) players acquiring smaller ones.  It is not expected that there will be any large-scale mergers between the industry giants, as they have already taken place within the last three to four years.  We can expect that deals above the $10 billion level will decrease as well, especially with after the Sanofi & Genzyme and Takeda & Nycomed takeovers.  Activity has been spurred by growth objectives and the need to fill their drug pipeline, as they start dealing with major patent cliffs and intense competition from generics.  We expect to see more contingent value rights, or CVRs to be included in deals, as the use of them allows for the target company to be compensated for drugs that are under development in their pipeline.  It also allows the acquiring company to offset the risks involved in new drug developments (that might not become successful). It is likely that there will be more deals involving individual units/divisions & assets as well. Many larger companies have been divesting non-core assets while acquiring units & operations that bolster their core businesses. Some noteworthy deals in the first half of 2011 include:

• Sanofi-Aventis SA and Genzyme Corporation announced a cash takeover agreement  ($20.1 billion).  In addition to the cash payment, each Genzyme shareholder would receive one Contingent Value Right (CVR) payment based on specific drug milestones. The deal ended a long-sought takeover that started in 2010 and became the second largest biotech acquisition in history.
• Takeda Pharmaceutical Co. bought Switzerland’s Nycomed ($13.6 billion / €9.6 billion).
• Teva Pharmaceutical Industries Ltd. agreed to buy Cephalon Inc.($6.8 billion).  Valeant Pharmaceuticals International, Inc. withdrew its consent solicitation.
• Pfizer Inc struck a deal to sell its Capsugel unit, to Kohlberg Kravis Roberts & Co. (KKR & Co.) ($2.38 billion).
• Canada’s Valeant Pharmaceuticals International Inc announced its purchase of Lithuania-based AB Sanitas to expand its European branded generics portfolio ($442.9 million).
• Merck acquired Inspire Pharmaceuticals ($430 million).
• Johnson & Johnson’s Cilag GmbH unit purchased the over-the-counter brands of J B Chemicals & Pharmaceuticals Ltd. ($260 million).
• The U.S. unit of Cadila Healthcare (part of the Zydus Group) agreed to acquire the assets of Nesher Pharmaceuticals (undisclosed value).

 

Health Care Services & Medical Devices:

During the first few months of the year, there have been a moderate number of deals involving health care, particularly within services and medical devices.  We expect a moderate continuation, with most deals valued below $1 billion, and a few up to the $5 billion level.  We expect to see very few large scale deals above $10 billion (mainly by larger drug & medical companies).  Some of the deals that occurred during the first half of the year include:

• Johnson & Johnson announced the purchase of Swiss medical device maker Synthes Inc ($21.3 billion).
• Laboratory equipment company Thermo Fisher Scientific Inc agreed to acquire private equity-owned Phadia, Sweden-based maker of allergy and autoimmune tests ($3.5 billion).
• Private equity firm Clayton, Dubilier & Rice announced its purchase of healthcare and physician services company Emergency Medical Services Corp ($3 billion).
• AstraZeneca PLC agreed to sell its Sweden-based dental implants and medical devices unit Astra Tech  to U.S.-based Dentsply International Inc. ($1.8 billion).
• Alkermes Inc., U.S. based maker of the Vivitrol addiction therapy, agreed to buy Dublin (Ireland) based Elan Drug Technologies, a unit of Elan Corp ($960 million). Elan Drug Technologies works with pharmaceutical companies to make products easier to take.
• Stryker Corp. agreed to acquire Orthovita Inc., a maker of orthobiologic & biosurgery products ($304 million).
• WellPoint Inc announced it will buy privately held Medicare specialist CareMore to expand its presence in the U.S. government program for the elderly. (undisclosed value).

 

Real Estate:

In the first half of 2011 there has been many real estate acquisition deals, mainly involving property portfolios and individual buildings, especially in commercial office and healthcare related property. There has also been complete takeovers as well. We expect this trend to continue for the remainder of the year and into 2012, as property valuations in the United States remain low, and stronger global players look to expand. We also expect the trend to continue internationally (although to a lesser degree). Some noteworthy deals during the first 6 months of 2011 include:

• Private equity firm Blackstone Group LP  bought nearly 600 U.S. strip malls and other properties from Australia’s Centro Property Group ($9.4 billion).
• Ventas Inc  announced its purchase of Nationwide Health Properties, creating the largest healthcare real estate investment trust in the United States. ($7.4 billion).
• The Canada Pension Plan Investment Board (CPPIB), purchased a 50% stake in the Northland Shopping Centre in Australia ($469 million).
• Chevron Corp. bought the Four Allen Center office tower in Houston (former headquarters of Enron Corp.) from Brookfield Office Properties Inc.($340 million).
• The Canadian Pension Plan Investment Board acquired a 50% stake in Hong Kong Interlink ($285 million).
• Brookfield Office Properties Inc. announced its intention to secure an indirect interest in Australian office towers the Southern Cross West in Melbourne and BankWest Tower in Perth ($263 million).
• RioCan Real Estate Investment Trust purchased and/or increased its ownership interest in 16 properties in Canada and the U.S. (C$230 million).
• The Ontario Municipal Employees Retirement System (OMERS) purchased a 50% stake in MidCity Place in London, through its Oxford Properties real estate unit, from an affiliate of U.S. private equity firm Beacon Capital Partners LLC. (undisclosed value).

 

Industrial, Manufacturing, Chemicals, Engineering Services:

Takeover deals involving industrial, manufacturing, chemical, and engineering services companies have occurred more on an international level.  It is expected that this consolidation trend continue for the remainder of the year, as companies look to gain access to other international & emerging markets, as well as to improve core businesses. Some of the highlights include:

• Warren Buffett’s Berkshire Hathaway Inc. agreed to acquire specialty chemical company The Lubrizol Corporation ($9.7 billion).
• Belgian chemicals & plastics company Solvay S.A. bought French specialty chemicals maker Rhodia S.A., ($4.84 billion / €3.4 billion).
• Graham Packaging Co. announced the signing of a definitive merger agreement to be acquired by Reynolds Group Holdings Limited ($4.5 billion), which topped an earlier bid by Siligan Holdings.
• International Paper made an offer to acquire Temple-Inland ($3.38 billion). Temple-Inland Inc later adopted a “poison pill” stockholder rights plan to fend off the hostile takeover.
• Ashland Inc. agreed to buy specialty chemicals supplier, International Specialty Products Inc. ($3.2 billion).
• The Caisse de depot et placement, made a joint offer with Clayton, Dubilier & Rice for French engineering group Spie from AXA Private Equity ($3 billion).
• Bubble Wrap maker, Sealed Air Corp., said it will buy privately held cleaning products maker, Diversey Holdings ($2.9 billion).
• Onex Corp and its affiliates sold injection molding equipment and services business, Husky International, to private equity firms Berkshire Partners and the Ontario Municipal Employees Retirement System (OMERS) ($2.1 billion).
• U.S. crane maker Terex made a takeover offer for Germany’s Demag Cranes ($1.31 billion / €884 million).
• Harbin Electric, a maker of electric motors, signed an agreement to be sold to its chief executive ($750 million).
• Kyocera Corporation purchased Danish carbide tool maker, Unimerco ($247.2 million).
• AkzoNobel, the world’s largest paints firm, agreed to buy Hong Kong listed plastics coatings group, Schramm Holding (€142 million euros).
• 3M Company acquired Advanced Chemistry & Technology Inc. (AC TECH), a quick cure, light-weight polysulfide sealants for aerospace applications (undisclosed value).
• Royal Philips Electronics NV agreed to buy lighting maker, Indal Group of Spain (undisclosed value).
• Israel Chemicals purchased Grupo Empresarial Agromediterraneo (holding company of Antonio Fuentes Mendez), Spain’s largest producer of specialty fertilizers (undisclosed value).

 

Agriculture & Food:

Merger and acquisition activity has increased within agriculture & food related industries during the first half of the year.  Although there has been short term pullbacks, the demand for food has increased worldwide, with predicted future demand being even larger. Many established companies have been looking to also capture a share of important emerging markets. This can be seen especially with the complex deal involving Carrefour and Brazil’s Pao de Acucar.  Brazil’s government has even deemed the industry to be of national importance, and has been involved in retaining ownership stakes in companies within such industries.  Consolidation among spirits & alcoholic beverage companies have also continued.  During the first 6 months of the year Diageo PLC and SAB Miller have been particularly active.  It is expected that more consolidation will occur among the spirits & alcoholic beverage players at an international level. In general, deals involving these businesses within the agriculture & food industries are likely to increase for the remainder of the year and into 2012. This will include fertilizer and crop related businesses, to food manufacturers, beverage, specialty (niche markets), grocery retail, and even restaurant chains.   Some notable deals during the first 6 months include:

• Brazilian retail giant Grupo Pao de Acucar (GPA) / Companhia Brasileira de Distribuicao (CBD), agreed to a complex merger which would combine Carrefour (Carrefour Brazil) and Pao de Acucar assets into a new company ($14 billion).  The deal involves a private equity investment vehicle, Gama, created by BTG Pactual (the largest Brazilian independent securities firm) and financed by the state-owned Brazilian National Development Bank / Banco Nacional de Desenvolvimento Economico e Social (BNDES).  BNDES would contribute €1.7 billion, while BTG would contribute €300 million and run Gama.  The deal also depends on rival French supermarket giant Casino (Carrefour’s rival), which is the controlling shareholder of Pao de Acucar.
• SAB Miller said it would keep talking to Foster’s Group (Australia’s largest brewer) rejected their takeover offer ($10.1 billion).
• DuPont announced it had entered into a definitive agreement for the acquisition of Danisco, a global enzyme and specialty food ingredients company ($5.8 billion).
• ConAgra Foods Inc. increased its bid to acquire Ralcorp Holdings Inc. ($4.9 billion).
• Diageo Plc agreed to acquire  Mey Içki, the leading spirits company in Turkey, from TPG Capital (TPG) and Actera (£1,300 million).
• Diamond Foods Inc. purchased Procter & Gamble Co.’s Pringles chips business ($1.5 billion).
• General Mills Inc. said it would purchase 51% stake in French yogurt maker Yoplait ($1.15 billion /  €810-million).
• Nestle SA agreed to buy U.S. gastrointestinal diagnostics firm Prometheus Laboratories (undisclosed value – estimated $1.1 billion).
• Yum Brands Inc (parent of the KFC, Taco Bell and Pizza Hut) offered to buy Little Sheep hot pot chain of China ($586 million).
• Coca-Cola Femsa SAB (Mexico’s largest soft-drink bottler) agreed to purchase the Coke bottling operations of Grupo Tampico SA ($555 million).
• J.M. Smucker Co. purchased Rowland Coffee Roasters Inc. ($360 million).
• U.S. spice maker, McCormick & Co, agreed to buy privately-held Polish peer Kamis ($291 million).
• Diageo PLC’s subsidiary East African Breweries Limited (EABL) has agreed to purchase all of SABMiller Africa BV’s 20% shareholding in Kenya Breweries Limited (KBL) ($225 million).
• Wendy’s/Arby’s Group Inc sold Arby’s Restaurant Group Inc to Roark Capital Group ($130 million).  Wendy’s/Arby’s will retain 18.5% ownership of Arby’s, valued at about $30 million. Roark Capital will also assume about $190 million of Arby’s debt.
• Bakery company, Flowers Foods Inc merged with Tasty Baking Co ($165 million).
• Diageo Plc  (world’s biggest spirits group) announced it will purchase 50% of Guatemala’s Zacapa rum business (undisclosed value).
• Israel Chemicals purchased Grupo Empresarial Agromediterraneo (holding company of Antonio Fuentes Mendez), Spain’s largest producer of specialty fertilizers (undisclosed value).
• U.S. agriculture giant, Cargill Inc., announced it will buy Italian animal feed company, Raggio di Sole, to build its business in dairy and other segments (undisclosed value).

 

Transportation & Automotive:

During the first 6 months of 2011, takeover and acquisition deals in the transportation related industries have increased, including vehicle manufacturers to parts, and logistics.  Businesses have been driven by strategies to increase their market share and expand in the rapidly growing emerging markets such as China and India.  They have also been looking to strengthen core capabilities through acquisitions, as well as dispose of non-core assets in an attempt to remain competitive in the tough transportation environment.  We expect consolidation related to transportation to continue throughout the year at the same pace. Some interesting deals include:

• Hertz Global Holdings topped a rival bid from Avis Budget for Dollar Thrift ($2.1 billion).
• Volkswagen AG formally launched its takeover bid for German truck maker MAN SE in order to to combine MAN and Sweden’s Scania.  VW aims to raise its stake in MAN to 35% to 40% (between €1 billion and €1.5 billion).
• Car rental firm, Avis Budget, agreed to buy Avis Europe Plc, to increase its presence in rapidly growing international markets (£635 million / $1.04 billion).
• Samsung Electronics’ affiliate agreed to partner with POSCO to bid for a stake in South Korea’s top logitics firm Korea Express Co. ($1.4 billion) .  The bid tops retail giant Lotte Group, and food-to-entertainment CJ Group’s offer in the auction.
• Fiat SpA increased its stake in Chrysler Group LLC to 46% and aims to increase it 51%. The remaining 5% will come from the U.S. later this year after meeting previously agreed targets ($1.27 billion).
• Sumitomo Metal Industries Ltd. agreed to buy Pittsburgh based Standard Steel LLC., a maker of train wheels and axles ($340 million).
• British bank Lloyds,  sold truck leasing company Hill Hire to U.S. based Ryder System Inc, as part of Lloyds’ ongoing plan to dispose of non-core assets (£151 million / $247.3 million).
• Spyker Cars NV, signed a deal with two Chinese firms that would transfer control of the Saab Automobile.  Zhejiang Youngman Lotus Automobile Co. had signed a nonbinding memorandum of understanding to take a 29.9 % interest in Spyker (€136 million / $195.1 million). Spyker also signed a non-binding agreement with Youngman and Pang Da Automobile Trade Co. to create distribution & manufacturing joint ventures in China (undisclosed value).
• Qatar Airways, one of the largest carriers in the Arab world,  entered into a strategic equity and commercial partnership to acquire a 35% of Luxembourg’s Cargolux, the leading cargo airline in Europe (undisclosed value – estimated $130 million).
• Westport Innovations Inc purchased Italian fuel system provider, Emer S.p.A ($39.6 million)..
• Canadian National Railway agreed to sell IC RailMarine Terminal Co. to Raven Energy LLC, an affiliate of Foresight Energy LLC and the Cline Group ($73 million).
• Thule AB, the Swedish maker of car roof racks, agreed to purchase family-owned designer of bicyle trailers and strollers, Chariot Carriers Inc. (undisclosed value).
• Precision Castparts Corp, supplier of metal parts for aircraft engines & power plant turbines, agreed to acquire rings operation from General Electric Co’s aviation unit (undisclosed value).
• Garmin Ltd signed a deal to buy Germany based navigation provider Navigon AG, to expand in Europe (undisclosed value).

 

Consumer & Retail:

There has been significant M&A activity within the consumer & retail industries during the first half of the year, with a few larger sized deals over $1 billion. The moderate trend is expected to continue, as retailers look to expand market share in the highly competitive retail sector. It is expected that most deals will remain under $1 billion. Some notable acquisition deals include:

• LVMH Moet Hennessy Louis Vuitton SA struck a deal to acquire Bulgari SpA (€3.7 billion / $5.2 billion).
• VF Corp , owner of clothing brands such as The North Face and Wrangler jeans, announced it will buy shoemaker Timberland Co ($2 billion).
• Green Equity Investors V LP, Leonard Green & Partners LP and CVC Capital Partners has offered to acquire BJ’s Wholesale Club Inc. ($2.8 billion).
• Canadian Tire Corp. Ltd. purchased Forzani Group Ltd. ($771 million).
• Jimmy Choo (upscale shoemaker & retailer) was bought by luxury goods group Labelux, from TowerBrook Capital Partners LP (undisclosed value – estimated £500 million).
• Bain Dollarama (Luxembourg) One S.a.r.l, indirectly owned by Bain Capital, agreed to sell Canada’s Dollarama Inc. to an unidentified financial institution ($297.6 million).
• U.S. footwear retailer Genesco Inc., acquired teen and young adult retailer Schuh Group Ltd. ($162 million).
• HMV Group plc sold its HMV Canada stores to British restructuring specialist Hilco UK (£2.05 million / $3.2 million).
• Kohlberg Kravis Roberts & Co. (KKR & Co.) agreed to acquire Academy Sports and Outdoors (undisclosed values).

 

Note: Keep in mind the information in these articles are not meant to be a set of predictions that are set in stone.  It is meant as a discussion of a range of probable scenarios of what we can expect to see happen, based on the information available today.  By knowing the likely possibilities, we can plan for them.  We can also capitalize on potential opportunities, and not be caught off guard by possible negative events.

DISCLOSURE: I own shares of Wells Fargo, Berkshire Hathaway, Sanofi, Johnson & Johnson, Brookfield Office Properties, Riocan REIT, Coca-Cola.

Thanks and Happy Investing!  – The Investment Blogger © 2011

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