Monday Morning M&A Roundup (DEC 18, 2006)

There is a reason the term MERGER MONDAY was coined, and this Monday is certainly living up to its name.  It is likely that the year-end could be blamed for this as many firms will all but effectively shut down M&A departments later this week until after the first of January.  Some of these deals make sense, but it is getting obvious that private equity firms are starting to chase performance by simply committing large amounts of capital now that we have entered the realm of teh mega-mergers and barriers to such deals being removed by the capital markets.  Right now many of the larger private equity firms are really looking at a premium to committing capital in large deals rather more small deals that offer better values.  This doesn’t even include some of the smaller deals and unit transcations.

(AHO) Royal Ahold is in talks with private equity over potentially selling is US food service unit; reports put this as much as $4B to $5B.

(BMET) Biomet has agreed to be acquired for some $10.9 Billion in cash, a $44 offer from buyers include Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts and the Texas Pacific Group, along with one of Biomet’s founders, Dane A. Miller.  BMET was up 1%, now down 1.2%; BAIT SHOP traders should consider taking profits if they don’t want to just sit in waiting for money market returns or hoping for a higher buyout offer.  This is 10% higher than what I estimated they would have to pay had they made this offer 6 weeks ago.

(BUCY) Bucyrus pays $731M to acquire DBT GmbH in Germany.

(CMX) Caremark gets $26 Billion merger from Express Scripts for $58.80, threatening the CVS deal.  CMX shares are up 9% to $55.00.  CVS trading up almost 1% as it would receive a break-up fee.

(ELK) ElkCorp is being acquired by the Carlyle Group for $38.00 per share, the company makes building materials but is mostly known to the public for its roofing operations.

(H) Realogy gets $30.00 per share cash offer in a buyout from Apollo Management in a $9 Billion deal after debt assumptions.  Realogy is the old Cendant unit spun-off.

(HET) Harrah’s board met over weekend to discuss the potential buyout from groups.

(ICOS) Icos gets $32.00 offer revised to $34.00 from Lilly, ICOS shares up 1.5% at $33.85.

(LORL) Loral is paying $2.8 Billion to acquire BCE’s Telesat Canada, so forget about that IPO now. This is leveraged as LORL has a current market cap of $672M.  This was BCE’s largest hope as they were trying to monetize the unit and have had to file and withdraw for an IPO of it before.

(NHY-ADR) Norsk Hydro is being acquired for oil and gas drilling operation by Statoil in Norway, which now looks like will be the largest offshore driller in the world.  This could make other EU and US drillers and servicers look to get back into the M&A game.

(SRA) Serono’s acquisition by Merck KGaA was approved by the European Commission.

(SWHC) Smith & Wesson is paying $102M to acquire Thompson/Center Arms and raised 2007 & 2008 guidance as result of additional company.  SWHC up almost 1% at$10.35 pre-market.  Smith & Wesson had already telegraphed this in recent filings that it was raising cash for buyouts.

Jon C. Ogg
December 18, 2006