21 February 2011

Mid-February deal snapshot

The long-awaited acquisition of US biotechnology group Genzyme by the French pharmaceutical giant Sanofi-Aventis finally arrived in February, with the European Commission and the US Federal Trade Commission giving the takeover – one of the largest global M&A deals in recent years – a green light on 16th February.

In a slight change of plans, the suitor upped its offer to USD 74.00 per share in order to win over Genzyme’s board, which rejected the earlier bid of USD 69.00 per stock as seriously undervaluing the company. Considering this new, upscaled proposal is now worth USD 20.10 billion, it is perhaps unsurprising that the takeover has found favour with Genzyme’s executives, which have now unanimously approved of the approach.

Crucially, it should be noted that Sanofi-Aventis proffered another sweetener, giving investors in the Massachusetts-based developer the right to receive further payments if specific milestones are met in relation to the 2011 production volumes of key candidates Cerezyme and Fabrazyme.

The next blockbuster deal on the list by 18th February was the announced USD 10.19 billion-tie-up between the US securities exchange operator NYSE Euronext and its German equivalent, Deutsche Börse. News that the two bourses were in advanced takeover discussions first emerged on 9th February and came in the same week that the London Stock Exchange Group announced it had agreed to buy TMX Group, the Canadian owner of the Toronto Stock Exchange, the Montreal Exchange and the junior TSX Venture Exchange, for USD 3.18 billion.

NYSE Euronext and Deutsche Börse left shareholders and investors on tenterhooks for six days, revealing on the 15th that they have entered into a business tie-up which is expected to pave the way for the world’s largest exchange group by revenue and earnings before interest, tax, depreciation and amortisation (EBITDA). To satisfy curious readers, the combined entity will have 2010 net revenue of USD 5.40 billion and 2010 EBITDA of USD 2.70 billion.

While these aforementioned deals are the only ones which broke the USD 10.00 billion-barrier in February, according to Zephyr, the M&A database, there were numerous other announced or completed transactions worth more than USD 1.00 billion at the time of writing, such as the pending acquisition of US offshore drilling group Pride International.

At a value of USD 7.31 billion, the cash-and-stock transaction, which was announced on 7th February, was worth just USD 2.88 billion less than that of NYSE Euronext/Deutsche Börse. The bidder, Ensco, being an offshore drilling contractor to the petroleum industry, wants to take over Pride to create the second largest offshore driller in the world with 74 rigs and an estimated enterprise value of USD 16.00 billion. While the acquisition sounds pretty straightforward, the deal could well jump-start an industry shake-up in the wake of the Deepwater Horizon disaster in the US Gulf of Mexico last year.

© Zephyr