Filed under: Deals

Cadence Design Systems Inc. (NASDAQ: CDNS) is the largest player in developing platforms for building integrated circuits. The company generates about $1.6 billion in revenues and has 5,100 employees.

Now, Cadence wants to get even larger. This day, the company announced an unsolicited $1.6 billion bid for Mentor Graphics Corp. (NASDAQ: MENT). The offer is $16 per share.

Mentor is a huge player in testing semiconductors, which should be a nice compliment to Cadence. And over the past couple months, Cadence has been trying to court Mentor.

But all advances were rejected. So why not go hostile?

While there are revenue synergies, it looks like the large advantage to the acquisition may be the cost savings. This is especially important as the global revenues of the semiconductor industry trail off.

But for a company like Cadence - which has a market cap of $2.8 billion - the acquisition of Mentor is a large deal and does carry some risk.

In today’s trading, the shares of Cadence are down 6% to $10.89.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the internet Guide to Decoding Financial Statements. He also operates MergerBook.com.

Share This

Share This

Filed under: Deals, Apollo Management

The potential collapse of the $10.6 billion buyout of Huntsman Corp. (NYSE: HUN) is hardly a shock.

For one thing, rising oil prices are crushing specialty chemical makers. Another thing is that the deal was announced almost a year ago, an eternity for the closing of a merger and acquisition. The Wall Street Journal argues that private equity shop Apollo Management and its Hexcion Specialty Chemicals Inc. are making a “novel” argument to get out of the deal.

“In a complaint filed in the Delaware Court of Chancery, Hexion said Huntsman’s poor financial results — increased net debt and lower-than-expected earnings — would render the combined company insolvent,” the paper stated, adding that legal experts expect Huntsman to file a countersuit. Of course, shares of Salt Lake City-based Huntsman were plunging in premarket action and will likely open much, much lower. CNBC’s David Faber points out that the Huntsman deal was “held out” to be the strongest of the LBO deals. That’s scary.

In a press release, Huntsman CEO Peter Huntsman said, “These actions appear to be a blatant attempt to deprive our shareholders of the benefits of the Merger Agreement that was agreed to nearly a year ago.” The company added that it intends to “vigorously enforce” its rights under the merger agreement and seek to consummate the merger under the agreed upon terms.

Another buyout deal, the $6.1 billion buyout of Penn National Gaming Inc. (NASDAQ: PENN) by Fortress Investment Group and Centerbridge Partners, also remains in flux. The New York Times reported in May that the banks were balking at the original terms of the buyout. Penn National Gaming recently extended the closing date of the merger to grant more time for regulatory approvals.

Private equity firms continue to write massive checks. Blackstone Group (NYSE: BX) today concurred to buy Apria Healthcare Group Inc. (NYSE: AHG) for $1.6 billion. Shares of the home healthcare company are surging on the news.

Whether the parties involved in the Huntsman deal will resolve their differences remains to be seen. The squabbles over these deals, including the Clear Channel Communications buyout, underscore how tough the market is for everyone. Companies looking for a massive payout will need to look elsewhere

Share This

Share This

Filed under: Deals, Bain Capital

The Japanese market for buyouts is certainly alluring, since there are lots of opportunities to cut costs. But it has been tough for US private equity firms to break in.

But today there was a success: D&M Holdings Inc. concurred to a $470 tender offer from Bain Capital Partners. This is according to a report in The Wall Street Journal.

D&M sells premium and super premium audio and video products, with brands like Denon and Snell. The company got its begin in 1910 and has since engaged in a variety of acquisitions, such as for McIntosh Laboratory, Allen&Heath Holdings and Boston Acoustics.

D&M does have an attractive long-term potential. With the surge in wealth in Asian countries, there is prone to be strong demand for D&M products. And, with the financial backing of Bain, there are likely to be more bolt-on acquisitions to enhance the D&M platform.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Share This

Share This

Filed under: Deals, Raising money, Warburg Pincus, Engagements, Venture capital industry, Private equity industry, Investments, Public or private?

Most private equity firms hunt for stable companies with stable cash flows that are either cheap or inefficiently operated. These companies can then be resold for more money or taken public, or the strategy can fit into the Warren Buffett time frame of “forever.” Biotechnology has long been the realm for only public companies, but that is changing.

Private equity firm Warburg Pincus has already made some biotech plays that seemed to be a harbinger of the trends here, and even more so when you consider foreign drug companies buying US-based biotechs on the cheap with that US Peso of a currency we’ve.

A new fund called GANIC Pharmaceuticals has been launched this week, with Warburg Pincus as the main backer. the private equity firm made an initial investment in GANIC from the Warburg Pincus Private Equity X, L.P., a $15 billion fund which closed in April. As of now, we do not have any exact launch figures for the size of the investment that was given to GANIC.

GANIC’s management is all former senior executives of MedPointe Pharmaceuticals and the company will will focus on building a substantial enterprise by acquiring revenue generating companies, portfolios, and/or products and by investing in innovation and acquiring pipeline development assets.
Continue reading at BioHealthInvestor.com to hear estimates of the size and strategies that the fund may employ.

Share This

Share This

Filed under: Deals, Engagements

If you take Microsoft Corp. (NASDAQ: MSFT) CEO Steven Ballmer at his word, the company has no intentions of raising its current $31 a share, $43 billion offer to acquire Yahoo! Inc. (NASDAQ: YHOO). But those following the seemingly never-ending saga (and one that appears destined to continue indefinitely) still see a higher offer in Yahoo!’s future.

Yahoo!’s first-quarter earnings report on Tuesday in and of itself won’t get Microsoft to increase its offer. But they do give the company some leverage if and when it chooses to enter into serious negotiations with Microsoft.

“The most feasible, logical combination is still Microsoft buying them; it just comes down to the last-minute negotiations and whether the first quarter and outsourcing search to Google (NASDAQ: GOOG) are enough of a trump card to raise the bid,” stated RBC Capital Markets analyst Ross Sandler. “Or Microsoft can select not to and go hostile.”

Continue reading at TechConfidential.com.

Share This

Share This

Filed under: Deals, Raising money, GS Capital Partners, Value and lack thereof

Hologic, Inc. (NASDAQ: HOLX) has signed a definitive agreement to acquire Third Wave Technologies, Inc. (NASDAQ: TWTI) for a purchase price of $11.25 per share, or approximately $580 million in all. This represents about a 24% premium to Third Wave’s average trading price over the last three months. The Boards of Directors of both companies unanimously approved the transaction.

This merger is one of the more interesting in medical and diagnostic companies, despite neither company being a household name. Third Wave develops and markets molecular diagnostic reagents for a wide variety of DNA and RNA analysis applications for conditions such as Cystic Fibrosis, Hepatitis C, cardiovascular risk and other diseases. Its HPV market opportunity is a $200 million market and growth in excess of 40% in each of the past five years. Hologic believes the global market for HPV testing will increase to $800 million in the next few years.

Third Wave shareholders will receive an aggregate amount of an estimated $580 million in cash, assuming the conversion of Third Wave’s outstanding convertible notes, warrants and restricted stock. Hologic plans to finance this transaction with a $600 million loan in the form of a senior secured credit facility, and it has secured fully committed debt financing for the full consideration from Goldman, Sachs & Co.

Continue reading for full details and analysis at BioHealthInvestor.com.

Share This

Share This

Filed under: Deals

After some tough fighting, Staples, Inc. (NASDAQ: SPLS) has won its bid for Corporate Express N.V., one of the world’s largest suppliers of office products to businesses and institutions. The deal comes to about $2.6 billion in an all cash transaction. What’s more, Corporate Express has concurred to abandon its buy of rival Lyreco (which was really a defensive ploy anyway).

Staples had to increase its bid several times, from 7.25 euros to 9.25 euros. But it was probably worth it. After all, its core retail business is lagging.

Basically, Corporate Express will provide a strong distribution platform in North America, Canada and Europe. Moreover, the business is growing and there should be some cost savings because of overlap and economies of scale, although these haven’t been estimated yet.

With the deal, Staples will have annual revenues of $27 billion and 94,000 employees across 28 countries.

And, so far in today’s trading, shares in Staples are up 3.71% to $24.01.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the internet Guide to Decoding Financial Statements. He also operates MergerBook.com.

Share This

Share This

Filed under: Deals, Texas Pacific Group

This week, private equity powerhouse, TPG, concurred to invest $353 million for a 23% equity stake in Bradford & Bingley Plc., an ailing UK mortgage broker. In fact, it looks like this deal could be a beachhead for many more transactions in the UK financial services sector (this is according to a piece in the Telegraph).

Europe also binged on credit over the past few years, and things are starting to crack. In other words, there will be a large need for capital infusions to shore up balance sheets.

A variety of financial services companies in the UK are selling at distressed levels (that is, massive discounts to book values). For example, mortgage player, Paragon, trades at a third of its book value. No doubt, there are rumors that the company is attracting private equity interest.

Of course, TPG is not the only firm licking its chops. It looks like The Blackstone Group LP (NYSE: BX), JC Flowers and KKR are also prepping for some deals.

Besides Paragon, it appears that Alliance & Leicester and Northern Rock are in play for private equity deals.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates MergerBook.com.

Share This

Share This

Filed under: Deals

The tit-for-tat between Carl Icahn and Yahoo! Inc. (NASDAQ: YHOO) over how much the World wide web search company is to blame for not concurring to a buy by Microsoft Corp. (NASDAQ: MSFT) keeps escalating, leaving investors scrambling to sort fact from hyperbole.

The latest round came Thursday evening, after Icahn on Wednesday criticized Yahoo! for putting in place a severance plan he claimed acted like a “poison pill” by holding off Microsoft because the associated costs could have topped $2 billion. Yahoo! responded late in the day by claiming its actions were designed to protect the company and shareholders’ interests.

“The retention plan is intended to help us preserve and enhance shareholder value by allowing Yahoo! to continue to attract and retain the industry’s ideal talent, and to grant employees to stay focused on implementing Yahoo!’s business strategy,” said the letter, which was signed by Yahoo! chairman Roy Bostock. “In fact, the plan was adopted in order to protect the value of Yahoo! in anticipation of a possible acquisition by Microsoft, which would have resulted in a lengthy regulatory review and a significant period of uncertainty for our employees.”

Continue reading at TechConfidential.com.

Share This

Share This

Filed under: Deals

Who knew that the severance plan adopted by Yahoo! Inc. (NASDAQ: YHOO) in the aftermath of an acquisition offer by Microsoft Corp. (NASDAQ: MSFT) would turn into a large, contentious issue in a proxy fight staged by Carl Icahn and, now, a shareholder lawsuit?

Lawyers representing the Police and Fire Retirement System of Detroit are asking a Delaware court to invalidate the severance plan, saying the associated costs, estimated at between $500 million and $2.1 billion, could effectively bar Microsoft from acquiring Yahoo!. It was adopted in February after Microsoft offered to acquire Yahoo! for $44.6 billion, and has drawn criticism from Icahn, who has labeled it a “poison pill.” Yahoo! is arguing that it needed to adopt the severance plan in order to retain employees.

The complaint seeks a trial date before Yahoo!’s annual shareholder meeting on Aug. 1.

Continue reading at TechConfidential.com.

Share This

Share This