Market Overview

Benzinga's M&A Chatter for Monday May 21, 2012

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The following are the M&A deals, rumors and chatter circulating on Wall Street for Monday May 21, 2012:

Yahoo! and Alibaba Reach Agreement on Comprehensive Plan for Alibaba Stake

The Deal:
Yahoo! (NASDAQ: YHOO) and Alibaba Group (ALBCF) announced Sunday they have entered into a definitive agreement for a staged and comprehensive value realization plan for Yahoo!'s stake in Alibaba.

The first step is the repurchase by Alibaba of up to one-half of Yahoo!'s stake, or approximately 20% of Alibaba's fully-diluted shares. The purchase price will be based on a valuation of Alibaba to be established through equity financings that Alibaba intends to undertake to finance the transaction, subject to a floor valuation of approximately US$35 billion. The agreement includes substantial financial incentives for Alibaba to raise the additional equity at a valuation higher than US$35 billion. At the minimum price and assuming the initial repurchase of the full 20% stake, Yahoo! would receive from Alibaba consideration of approximately US$7.1 billion, composed of at least US$6.3 billion in cash proceeds and up to US$800 million in newly-issued Alibaba preferred stock.

The agreement also establishes a framework for Yahoo! to monetize its remaining interest in Alibaba in stages. First, at the time of an initial public offering of Alibaba in the future, Alibaba will be required either to repurchase one-quarter of Yahoo!'s current stake at the IPO price or allow Yahoo! to sell those shares in the IPO. Second, following such an IPO, Yahoo! has registration rights and rights to marketing support from Alibaba to enable Yahoo! to dispose of its remaining shares, at times of Yahoo!'s choosing following a customary lock-up period.

The transaction is subject to customary closing conditions. Alibaba will be required to close the repurchase with respect to at least one-quarter of Yahoo!'s current stake in Alibaba regardless of the amount of financing raised, and up to one-half of Yahoo!'s current stake if it obtains the requisite financing. Alibaba intends to finance the repurchase through a combination of its own cash resources, debt, equity and equity-linked financing. The transaction is expected to close within approximately six months.

Yahoo! closed at $84.80 on Monday, a gain of 4.94% on almost 8 times the average daily volume.

DaVita and HealthCare Partners Announce Merger Agreement

The Deal:
DaVita (NYSE: DVA), a leading provider of kidney care services for those diagnosed with chronic kidney disease, and HealthCare Partners, the country's largest operator of medical groups and physician networks, announced Monday that they have entered into a definitive merger agreement. The two companies expect to close the transaction early in the fourth quarter of this year. Upon closing, the combined company will be named DaVita HealthCare Partners.

The purchase price to be paid by DaVita is approximately $4.42 billion, subject to post-close adjustments and contingent consideration. The purchase price consists of $3.66 billion in cash and approximately 9.38 million shares of DaVita common stock (which had a value of $758 million based on the closing price of DaVita's common stock on May 18, 2012). DaVita expects to fund the cash portion of the purchase price through a combination of available cash, additional borrowings under DaVita's existing senior secured credit facilities (which are expected to be amended to permit these borrowings), and additional debt financing.

The merger agreement provides that as additional consideration, DaVita will pay to the owners of HealthCare Partners a total of up to an additional $275 million in cash if certain performance targets are achieved in 2012 and 2013 by the HealthCare Partners subsidiary of DaVita HealthCare Partners.

DaVita closed at $84.80 on Monday, a gain of 4.94% on almost 8 times the average daily volume.

Eaton to Acquire Cooper Industries to Form Premier Global Power Management Company

The Deal:
Diversified industrial manufacturer Eaton Corporation (NYSE: ETN) and electrical equipment supplier Cooper Industries plc (NYSE: CBE) announced Monday they have entered into a definitive agreement under which Eaton will acquire Cooper in a transaction that will significantly increase the capabilities and geographic breadth of the combined company's power management portfolio and electrical business.

Under the terms of the Transaction Agreement, Cooper Shareholders will receive $39.15 in cash and 0.77479 shares of New Eaton for each Cooper share. Based on the Closing Price for Eaton common stock on Friday May 18, 2012, Cooper Shareholders will receive cash and shares valued at $72.00 per share, representing a premium of 29 percent and a total transaction equity value of approximately $11.8 billion. Eaton Shareholders will receive one share of the new company for each share of Eaton that they own upon closing. The transaction will be taxable, for U.S. federal income tax purposes, to both the Eaton Shareholders and the Cooper Shareholders.

Cooper Industries closed at $69.88 on Monday, a gain of 25.14% on 28 times the average daily volume.

Nordson Corporation Enters Agreement to Acquire EDI Holdings

The Deal:
Nordson Corporation (NASDAQ: NDSN) announced Monday it has entered into a definitive agreement to acquire Chippewa Falls, Wisconsin-based EDI Holdings (Extrusion Die Industries), a leading provider of slot coating and flat polymer extrusion dies for plastic processors and web converters. The $200 million purchase price, subject to adjustment as provided in the purchase agreement, will be financed with availability under an existing $500 million revolving credit facility. The transaction is expected to close during Nordson's third quarter pending customary closing conditions and regulatory reviews.

EDI employs approximately 317 people, has additional operations in Cologne, Germany and Shanghai, China, and will operate as part of Nordson's Adhesive Dispensing Systems segment. EDI's operations include its March 2012 acquisition of Premier Dies Corporation, a complementary provider of slot coating and flat polymer extrusion dies that expands EDI's product and technology offering. Nordson expects the acquisition of EDI to be accretive to the company's earnings in the first full year of operation.

Nordson Corporation closed at $49.00 on Monday, a gain of 1.66%. Nordson rose an additional 6% after-hours.

Motorola Mobility Holdings Confirms Acquisition by Google to be Completed This Week

The Deal:
Motorola Mobility Holdings (NYSE: MMI) announced Monday Google's (NASDAQ: GOOG) acquisition of the company will be completed early this week.

MMI's 8-K stated: "On May 19, 2012, Motorola Mobility Holdings received notice that the Anti-Monopoly Bureau of the Ministry of Commerce of China issued its decision clearing Google's acquisition of Motorola Mobility. As the transaction has now received all required regulatory approvals, the companies are moving to close the transaction within two business days."

Motorola Mobility Holdings closed at $39.98 on Monday, a gain of 1.99% on 6 times the average daily volume.

General Cable Corporation to Acquire Alcan Cable, the Wire and Cable Business of Rio Tinto plc

The Deal:
General Cable Corporation (NYSE: BGC) announced Monday that it has agreed to acquire Alcan Cable, the wire and cable business of Rio Tinto (NYSE: RIO). The purchase price is $185 million in cash, subject to customary adjustments primarily related to working capital levels at closing as provided in the definitive purchase agreement. The Company expects to use its Asset Based Revolving Credit Facility to principally fund the transaction. The transaction is expected to close in the second half of 2012, subject to receipt of regulatory approval.

General Cable Corporation closed at $29.55 on Monday, a gain of 9.20% on 1.3 times the average daily volume.

Posted-In: Long Ideas News Short Ideas Rumors M&A Global After-Hours Center Movers


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