Monday

Dec. 22, 2014

www.bloombergbriefs.com

Due to the holidays, our next issue will be published Monday, Jan. 5, 2015.

QUOTED

EDITOR'S CORNER

"You can borrow money too

cheaply if youre a risky
company. ... It's a bubble that's
going to burst in the next couple
of years."

A Different Cast of Players Led This Fall's Big Buyouts

BY JOHN E. MORRIS, BLOOMBERG BRIEF EDITOR

For four years, M&A defied all predictions and the laws of finance.
Cash-rich corporate balance sheets, slow growth and cheap debt
didn't spur a wave of strategic mergers until 2014.
The private equity business should be getting a lift from similar
irresistible forces the same cheap debt plus billions in capital
itching to be invested. Yet buyout volume is up only 20 percent this
year over last, or half the gain in overall M&A.
Still, there are signs that things may be picking up. The $8.6 billion
buyout of the retailer PetSmart Inc. last week was the largest private
equity deal of the year, and the fifth take-private of a U.S. company
worth more than $2 billion since the end of the summer (see table
below). Last week also brought a $3.4 billion take-private of Riverbed Technology Inc.
This is no replay of 2006-07, however, because the biggest U.S. private equity shops
are conspicuously absent from the list below, with one exception (Bain Capital). Instead
the deals have been led by non U.S. buyout shops (the U.K.'s BC Partners, Sweden's
EQT Partners and Canada's Onex Corp.) or firms with sector expertise (technology in
the case of Vista Equity Partners LLC and Thoma Bravo LLC and energy in the case
of EnerVest Ltd. and FourPoint Energy).
In other cases, insurers, infrastructure funds and non-U.S. public pension plans with
long investment horizons are participating. Note that Canadian buyers played key roles
in four of the top six deals since September provincial pension funds from Quebec,
Ontario and British Columbia plus Onex.
It suggests that the current market caters to buyers whose investment needs differ
from most private equity firms' and to buyers with a unique ability to add value.

Largest Buyouts Since Sept. 1

ANNOUNCED

TARGET

COUNTRY

ACQUIRER

VALUE ($M)

Carl Icahn discussing the high-yield debt

market

Two years after he first alleged that

Herbalife is a pyramid scheme, activist
investor Bill Ackman of Pershing
Square Capital posted a three-hour
video of a 2005 internal Herbalife sales
training session he claims supports his
claims. Herbalife shares rose 1 percent
the day he appeared on Bloomberg TV
and urged investors to watch the video.

WEEK IN NUMBERS
42 percent: Proportion of last week's
deal volume accounted for by the top
three deals.
18.3x: Ebitda multiple on the buyout of
Riverbed Technologies by Thoma
Bravo and Teachers' Private Capital.
$230 million: Profit activist investor
Jana Partners will collect in the buyout of
PetSmart.

12/14

PetSmart Inc

US

BC Partners, Caisse de depot du

Quebec, GIC Special Investments et al

8,623

IN THIS ISSUE

11/12

Oi's Portuguese telecom

assets

PT

Apax Partners, Bain Capital

7,805

10/20

Cleco

US

John Hancock Life, British Columbia

Investment Management Corp,
Macquarie Infrastructure

4,685

OUTLOOK FOR 2015: Bloomberg

News's Real M&A columnists look at the
megadeals that may happen in 2015.

11/24

SIG Combibloc

CH

Onex Corp

4,443

9/29

Tibco Software

US

Vista Equity Partners

4,101

12/15

Riverbed Technology

US

Teachers' Private Capital, Thoma Bravo

3,373

11/6

Siemens hearing-aids unit

DE

EQT Partners

2,666

9/2

Compuware

US

Thoma Bravo

2,113

11/3

IHS Holding (minority stake)

NG

Private Investor

2,000

10/3

Oil and gas properties

US

EnerVest, FourPoint Energy

1,950

Source: Bloomberg MA<GO>

Bailouts of same sponsors' prior investments and deals led by strategic buyers are excluded.

BUYERS & SELLERS. Jeff Immelt said

GE has "a full plate" with its $17 billion
pending acquisition of Alstom's turbines
business.
ACQUISITION FINANCE. How Forest
Oil avoided triggering the
change-of-control clause in its bonds,
saving itself $100 million and sending the
price of its bonds down sharply.

Dec. 22, 2014

Bloomberg Brief

Mergers

STORYCHART
PetSmart Is Latest in a Spate of Large LBOs as Rate Rise Threatens Future Deals
COMPILED BY DEIRDRE FRETZ AND
JOHN E. MORRIS, BLOOMBERG BRIEF
EDITORS

BC Partners announced last week it is

taking PetSmart Inc. private in a deal
valued at about $8.6 billion, the largest
leveraged buyout of the year. The
pet-supplies chain drew bids from at least
three buyout firms, according to a
Bloomberg News story by Alex Sherman,
Brooke Sutherland and Tara Lachapelle.
LBO firms have $463 billion dollars to
spend on new deals according to data
from Prequin, which could finance a wave
of deals. A sudden jump in leveraged loan
costs threatens the resurgence of a new
LBO boom.
Click the chart to launch an Interactive
Story Chart.

PetSmart Tops List of 2014 LBOs

Bloomberg Brief

Dec. 22, 2014

Mergers

INVESTING
BC Partners' $8.6 Billion Buyout of PetSmart Sets Two Records
BY ALEX SHERMAN, BROOKE
SUTHERLAND AND TARA LACHAPELLE

Leveraged buyouts may be back in

vogue. In a year when merger activity
was dominated by companies combining
with one another, private equity deals
have started to make a small comeback.
The 12 LBOs announced since the start
of November including deals for
PetSmart Inc. and Riverbed
Technology Inc. last week marked the
busiest two-month period for such
transactions since 2010, according to
data compiled by Bloomberg.
The PetSmart take-private was both the
largest private equity-led acquisition this

year and the largest buyout in the U.S.

ever led by a European financial sponsor,
according to data compiled by Bloomberg
(see table below).
Financial buyers are showing a
renewed interest in publicly traded
companies such as PetSmart, which drew
bids from at least three buyout firms. The
pet-supplies chain had the characteristics
they look for: A cheap stock, low leverage
and room for operational improvement.
The pickup in LBOs will probably
continue into 2015, though its unlikely to
break any records. Buyout firms still have
to contend with stock prices near all-time
highs and an increasingly jittery junk-bond

market, and theyre largely restricted from

attempting the megadeals theyve been
known for.
Lots of buyout firms raised capital over
the past two years, said David Fann,
chief executive officer of TorreyCove
Capital Partners, which advises investors
in private equity. The firms are eager to
put money to work, but also trying to stay
disciplined.
While activity has picked up, its still
nowhere near the boom levels of 2006
and 2007, when private equity firms
joined together to make huge bets on
companies (see chart on page 1).

Largest Buyouts in the U.S. Led by European Private Equity Firms

ANNOUNCED

TARGET

ACQUIRER

ACQUIRER
COUNTRY

VALUE ($M)

UK, CA, SP

8,623

12/14/14

PetSmart Inc

BC Partners Holdings Ltd., Caisse de depot et placement du Quebec,

GIC Special Investments Pte Ltd et al

5/11/07

Pegasus Aviation Finance Co

Terra Firma Capital Partners Ltd

UK

5,200

7/19/07

Williams Scotsman International Inc

TDR Capital LLP

UK

2,192

5/29/00

Dayco Inc

BC Partners Holdings Ltd

UK

1,880

7/5/07

Samsonite LLC

CVC Capital Partners Ltd

UK

1,554

10/22/12

Ancestry.com Inc

Permira Holdings Ltd

UK

1,412

5/15/13

Coinmach Service Corp, AIR-serv Group LLC

Pamplona Capital Management LLP

UK

1,400

4/11/08

TriZetto Corp

Apax Partners LLP

UK

1,187

6/17/03

Jostens Inc

Credit Suisse (DLJ Merchant Banking)

CH

1,067

11/4/10

Bumble Bee Foods LLC

Lion Capital LLP

UK

980

4/13/11

BakerCorp International Inc

Permira Holdings Ltd

UK

960

4/4/11

Epicor Software Corp/Old

Apax Partners LLP

UK

936

5/23/13

rue21 inc

Apax Partners LLP

UK

934

4/4/11

Activant Solutions Inc

Apax Partners LLP

UK

890

2/1/06

Aearo Technologies LLC

Permira Holdings Ltd

UK

765

8/18/05

Global Plastic Closures business

PAI Partners SAS

FR

750

7/5/07

ALM Media Properties LLC

Apax Partners LLP

UK

630

6/26/06

American Safety Razor Co LLC

Lion Capital LLP

UK

625

11/16/12

Cole Haan Inc

Apax Partners LLP

UK

570

7/22/09

Bankrate Inc

Apax Partners LLP

UK

535

Source: Bloomberg Briefs, Bloomberg MA<GO>

Excludes consortium deals led by U.S. firms.

Bloomberg Brief

Dec. 22, 2014

Mergers

REAL M&A
A Guide to 2015 for Deal Watchers: Pfizer to MegaBrew
BY TARA LACHAPELLE AND BROOKE
SUTHERLAND

If 2014 was the year of the megadeal,

2015 may be the sequel.
Some of the worlds biggest
corporations embarked on hefty
acquisitions this year, from Comcast
Corp.s $68 billion deal for Time Warner
Cable Inc. in February to last month,
when Halliburton Co. and Actavis Plc
announced a combined $100 billion in
takeovers on the same day. Transactions
that exceeded $10 billion in value
accounted for almost a record proportion
of the $2.9 trillion of merger agreements
struck in 2014, according to data
compiled by Bloomberg.
Companies put cash to work on
acquisitions for a number of reasons
dimming growth prospects, competitive
pressures and more recently, turmoil in oil
markets. Some sought partners without
coming to terms on a deal. For the
companies that missed out on the action,
2015 may be their year.
People are very optimistic about M&A,
Phil Colaco, managing director at Deloitte
Corporate Finance, said in a phone
interview. If the stock market
performance is even moderate, I think
youll see the average size of deals going
up and see some of these bigger deals
happen.
Here are a few possibilities:
PFIZERS NEXT MOVE Pfizer Inc.
is the one to watch in the pharmaceutical
industry after the $201 billion drugmaker
was spurned by AstraZeneca Plc this
year. As the company faces flat sales and
limited upside to its stock price, a big
acquisition could be the remedy, and its
already shown a willingness to be bold.
AbbVie Inc. stands out among the
handful of logical candidates. Sales of
AbbVies rheumatoid arthritis medicine
Humira are projected to climb 20 percent

by 2020 and it could bolster the

established-products unit that New
York-based Pfizer may eventually split off.
AbbVies shares also trade at a cheaper
valuation than most of the other
companies that have been speculated
targets for Pfizer.
MEGABREW Thats the
nickname for the much-speculated
merger of beer giants Anheuser-Busch
InBev NV and SABMiller Plc. Some
analysts have said its probably only a
matter of time before Leuven,
Belgium-based AB InBev, the $184 billion
Budweiser brewer, makes a bid for its $85
billion rival so that it can tap into
faster-growing regions such as Africa.

"If the stock market

performance is even
moderate, I think youll
see the average size
of deals going up and
see some of these
bigger deals happen."
PHIL COLACO, DELOITTE CORPORATE
FINANCE

It may come down to price. London-based

SABMiller failed in September in trying to
buy Heineken NV, a deal that would have
helped shield itself from getting bought.
While SABMillers valuation isnt far from
the more than eight-year high it reached
in September, any pullback in the shares
may create an opportunity for AB InBev to
strike.

VODAFONE-LIBERTY Vodafone
Group Plc is under pressure to come up
with a countermove after BT Group Plc
ratcheted up the competition for bundled
mobile, wireline, TV and Internet services
in Europe this year by going after wireless
provider EE. John Malones Liberty
Global Plc may be Newbury,
England-based Vodafones best option for
a transformational deal. While a
transaction wouldnt be without hurdles,
the shift toward quad-play packages
makes a combination with London-based
Liberty a must rather than an option,
according to Ottavio Adorisio of Societe
Generale. Vodafone Chief Executive
Officer Vittorio Colao is considering it,
people familiar with the matter said this
month.
DANONE-MEAD JOHNSON
Speculation about this deal cooled when
Danone SA said it planned to keep its
medical-nutrition division, as proceeds
from selling that unit could have helped
fund a takeover of Mead Johnson
Nutrition Co. The merger still makes
sense, though. Buying Mead Johnson
would give Danone a greater presence in
baby food, a fast-growing industry in
which Danone is a distant second place
to Nestle SA. Shares of the Paris-based
company are trailing the broader U.S. and
European markets, while Glenview,
Illinois-based Mead Johnson trades near
a record. After a year in which
shareholders often rewarded companies
that made acquisitions, Danone could
face pressure to finally pursue a deal.
Representatives for Pfizer, AB InBev,
SABMiller, Vodafone, Liberty Global and
Mead Johnson declined to comment.
Representatives for North Chicago,
Illinois-based AbbVie and Danone didnt
respond to phone calls or e-mails seeking
comment.

Bloomberg Brief

Dec. 22, 2014

Mergers

ACQUISITION FINANCE
Forest Oil Changes Deal Structure to Avoid Replacing Old Debt
BY CHRISTINE IDZELIS AND LAURA J.
KELLER

Forest Oil Corp.s bonds lost nearly

half their value last week after the oil and
gas company employed a rarely used
loophole to avoid buying back its bonds at
a premium when it merged with Sabine
Oil & Gas LLC.
The move came after a sharp run-up in
financing costs for non-investment-grade
energy companies as the price of oil has
fallen. Leaving Forest Oils bonds
outstanding will save the combined
companies at least $100 million in
transaction costs and interest expenses
over the next three years, the companies
said when they announced the change in
the deal structure Dec. 16. The merger
was completed that day.
The change means that the $850 million
in bridge financing that Barclays Plc and
Wells Fargo & Co. committed to provide
in May to cover the purchase of Forests
$800 million of bonds will not be needed,
the company said last week.
A provision in Forest's bonds requires it
to buy back the debt at 101 cents on the
dollar when there is a change of control at
the company. The method used to get
around that clause has been used just
once during the last seven years,
according to Adam Cohen, founder of
debt researcher Covenant Review.
People are in the shock phase right
now, Cohen, whos based in New York,
said in a telephone interview. The
company repeatedly told bondholders
they would be paid a premium as a result
of the merger.
Forest Oils bonds lost nearly half their
value after the company revised its
merger agreement with Sabine to
eliminate an offer to redeem the debt at
101 cents on the dollar. The method used
to get around the change-of-control
provision isnt common in mergers and
has been used just once during the last
seven years, according to Cohen.
While Sabine will own a majority of the
combined companies, the revised deal
terms limit its ultimate voting power to
49.9 percent, just short of triggering the
change-of-control provision for

Tweak to Merger Followed Rise in Energy High-Yield Rates

Since September the average cost of financing (yield to worst) for non-investment-grade energy
companies has converged toward that for CCC-rated companies, among the lowest-quality
borrowers, which would not have access to affordable funds in the current market.

"The question is, does

this become more
common?"
ADAM COHEN, COVENANT REVIEW

Denver-based Forest Oils $800 million of

bonds, according to Covenant Review.
Sabine will own 73.5 percent of the
Houston-based company and control five
of the seven seats on its combined board,
according to a Dec. 16 statement.
Station Casinos avoided paying
bondholders a change-of-control premium
in its 2007 buyout by Colony Capital
because the private-equity firms majority
stake was non-voting, according to
Cohen.
At that time, people said thats a
one-time thing and it would never happen
again, said Cohen. The question is,
does this become more common?
Ash Spiegelberg, a spokesman for
Forest Oil at Brunswick Group, didnt

immediately comment. Julie Hamilton

Oakes, a spokeswoman for Sabines
owner First Reserve Corp. at Prosek
Partners, declined to comment about the
merger.
Forest Oils $578 million of 7.25 percent
notes due 2019 traded at 44 cents on the
dollar to yield 31.2 percent on Dec. 19,
down from as high as 100.6 cents on May
6 when the merger agreement was
announced, according to Trace, the
bond-price reporting system of the
Financial Industry Regulatory Authority.
The debt is down 48 percent since Dec.
15, the day before the completed merger
was announced with revised terms
eliminating the need to repay bondholders
at 101 cents.
Forest said as recently as Nov. 10 in a
filing with the U.S. Securities & Exchange
Commission that it would pay
bondholders under the change-of-control
provision.
Forests $222 million of 7.5 percent
notes due in September 2020 traded at
46 cents on the dollar on Dec. 18 to yield
26.2 percent, according to Trace. They
traded at 102.5 cents on May 6.

Bloomberg Brief

Dec. 22, 2014

Mergers

VERBATIM
Icahn Sees Risk in High-Yield, Says Activists Should Avoid 'Instant Gratification'

Photo: Bloomberg: Peter

Foley

Carl Icahn

Carl Icahn, the

78-year-old activist
investor and chairman of
Icahn Enterprises LP,
has stakes in casinos, an
auto parts maker, a meat
casings company, a
home-fashions business
and enough railroad cars
to stretch from Ohio to
Manhattan. He spoke
with Bloomberg.com's

Ben Steverman about the looming risks in junk

bonds, the opportunities in falling oil prices and
faulty corporate governance.

Q: Is there a mistake a lot of investors

make?
A: Yes, they invest.
I'm being facetious, but not completely.
Investing can be very dangerous and that
especially holds true when the market has
increased for a number of years, as is the
case today.
A: Whats the biggest source of risk
for investors now?
Q: Theres still risk in the financial
markets, even though the economy looks
pretty good. The one area I think is
getting to be a bubble is the high-yield
market. These bonds are still at way too
low an interest rate. In other words, you
can borrow money too cheaply if youre a
risky company.
There are arguments that theres a lot
of cash flow to cover the interest
payments on the bonds. But some of that
cash flow is ephemeral its not likely to
last. Its a bubble thats going to burst in
the next couple of years.
Q: With the price of oil falling, people
have been raising concerns about the
high-yield bonds of energy companies.

A: That might be construed as proof of

what Im saying. Six months ago, you
would have said those are fine. Now there
are a lot of questions about them.
Q: To shift from the short term to the
long term: What are promising
opportunities for investors, say, 10
years down the road?
A: Oil will be a great opportunity, but not
now. The energy sector is probably in for
more problems. Oil prices will probably go
down more, and these energy companies,
especially oil service companies, are
going to be hurt. But then I think there will
be a tremendous opportunity.
Oil prices will eventually recover,
because worldwide demand will continue
to grow and supply will diminish, due to

"These things the

opportunity in oil and
the bursting of a
high-yield bubble
dont always happen
that quickly."
depletion. Additionally, the cost of finding
oil is growing. We are not coming up with
enough alternative energy that quickly.
But these things the opportunity in oil
and the bursting of a high-yield bubble
dont always happen that quickly. Hell,
Ive been short the Eurobond now for
three years. I suffered through the upside
on it. I shorted [Eurobonds], and then
gritted my teeth and just waited. And now
Im making a good deal of profit.

Q: One criticism of shareholder

activism is that it might encourage
more short-term thinking by CEOs or
investors.
A: Some activists look for immediate
gratification. That is a problem. But I can
speak for myself, and weve kept stocks
an average of 8, 10 years.
With true activism, like in all investing,
you have to have patience. On Forest
Laboratories, I waited three years. (In
July, Actavis Plc acquired Forest
Laboratories Inc. in a $25 billion deal, less
than a year after Icahn successfully
pushed Forests board to replace its CEO
of 36 years.)
If you bought IEP [Icahn Enterprises] in
2000, your annualized return would be
over 20 percent. But there are years
when you lose money, because you have
to wait. Thats what activisms about. In
the long run its a good model.
Q: In August, you said income
inequality was one of the financial
woes connected to a lack of
shareholder democracy.
A: The CEO is undoubtedly the most
important person in a company. But its
absurd to pay the CEO a thousand times
more than the worker, especially when
the company is doing poorly and the
shareholders are losing.
Q: So a lot of these CEOs are not only
ineffective but are paid too much?
A: There are very good CEOs and very
good boards, but the system itself is
dysfunctional. Its all camouflaged today
because the economys good, interest
rates are low and the market is high. So
shareholders arent really upset by it.
Its called a democracy, but its a
misnomer. Its more of a totalitarian state,
a dictatorship or at the very least a
monarchy. Thats what you really have.

Bloomberg Brief

Dec. 22, 2014

Mergers

WEEK IN REVIEW: M&A TRENDS COMPILED BY JOHN E. MORRIS, BLOOMBERG BRIEF EDITOR
Telecom, Oil and Gas, Retail Deals Push Up Weekly Total
Pace of Dealmaking

The three top deals this past week for EE Ltd., Talisman
Energy Inc. and PetSmart Inc. together were worth more
than $41 billion, or 42 percent of the global M&A volume for the
week, which was $97.4 billion. The total year to date through
Friday was $3.2 trillion.

Sector Breakdown
The EE deal, together with $2.9 billion takeover of
Switzerland's Orange Communications SA by NJJ Capital
SASU, helped swell the communications sector's share of last
week's volume. Deals for insurer Catlin Group Ltd. and two real
estate deals pushed up the share for financials.

Regional Breakdown
Most of this year's rebound in merger activity has centered on
North American targets, and last week was no exception. Four of
the largest deals were for U.S. targets, and the number two deal
was for Canada's Talisman Energy Inc.

Bloomberg Brief

Dec. 22, 2014

Mergers

WEEK IN REVIEW: TOP DEALS

Largest Deals Announced and Amended Dec. 13-19
ANNOUNCED

TARGET

INDUSTRY

COUNTRY

ACQUIRER

VALUE
($M)

12/15

EE Ltd

Telecommunications

GB

BT Group PLC

GB

19,553

12/16

Talisman Energy Inc

Oil & Gas

CA

Repsol SA

ES

12,949

12/14

PetSmart Inc

Retail

US

BC Partners Holdings Ltd, Caisse de depot et

placement du Quebec, GIC Special Investments
Pte Ltd et al

UK et al

8,623

12/17

Catlin Group Ltd

Insurance

BM

XL Group PLC

12/15

Riverbed Technology Inc

Computers

US

Teachers' Private Capital, Thoma Bravo LLC

12/18

Orange Communications SA

Telecommunications

CH

12/15

Apache Julimar Holdings Pty Ltd, Kitimat

LNG export terminal

Oil Field Services

12/19

Highland Hospitality Portfolio (remaining

28.2%)

REITS

12/18

Pantry Inc/The

12/18

IE

3,985

CA, US

3,373

NJJ Capital SASU

FR

2,857

Woodside Petroleum Ltd

AU

2,750

US

Ashford Hospitality Trust Inc

US

1,735

Retail

US

Alimentation Couche-Tard Inc

CA

1,713

Bumble Bee Seafoods LP

Food

US

Thai Union Frozen Products PCL

TH

1,510

12/19

DNB Nor Eiendomsinvest I ASA,

SveaReal Fastigheter AB

Real Estate

Starwood Capital Group LLC

US

1,491

12/15

Emerson Electric power transmission

solutions unit

Electrical Compo & Equip

US

Regal-Beloit Corp

US

1,440

12/15

ADM global cocoa business

Food

US

Olam International Ltd

SG

1,300

CN

1,259

NL

1,172

Various

1,100

AU, CA

SE, NO

12/19*

Club Mediterranee SA

Entertainment

FR

Fosun International Ltd, Ardian,Beijing Utour

International Travel Service Co Ltd

12/17

Volcano Corp

Healthcare-Products

US

Koninklijke Philips NV

12/17

Dynacast International Inc

Metal Fabricate/Hardware

US

Partners Group Holding AG, Kenner & Co Inc et al

12/18

Xerox ITO business

Computer Services

US

AtoS

FR

1,050

12/16

Arx Holding Corp

Insurance

US

Progressive Corp/The

US

875

12/16

PrimeCredit Ltd, Shenzhen Prime Credit

Ltd

Financial Services

Various

700

12/18

Carrefour Brasil

Food

Peninsula Participacoes Ltda

BR

677

12/15

CRH clay & concrete products

businesses, UK and US

Building Materials

Bain Capital Partners LLC

US

648

12/18

FL Mobile

Software

US

Tack Fiori International Group Ltd

HK

630

12/15

Eltek ASA

Telecommunications

NO

Delta Electronics Inc

TW

601

12/18*

GFI Group Inc

Diversified Finan Serv

US

BGC Partners Inc

US

597

12/17

Leighton building services unit (50%)

Building Maint & Services

AU

Apollo Global Management LLC

US

571

HK, CN
BR
UK, US

China Travel Service Holdings Hong Kong Ltd,

Pepper Australia Pty Ltd, York Capital Management
Global Advisors LLC

Source: Bloomberg MA<GO>

Pending and completed M&A and investment transactions announced or amended in the past week. Real estate assets are excluded. * Amended offer.

COUNTRY

Bloomberg Brief

Dec. 22, 2014

Mergers

BUYERS AND SELLERS WHAT COMPANIES ARE SAYING ABOUT ACQUISITIONS AND DIVESTITURES
GE Has 'Plenty on Its Plate' With $17 Billion Alstom Deal Pending, Immelt Says
COMPILED BY JOHN E. MORRIS

General Electric Co.

During a Dec. 16 investor
meeting Chief Executive
Officer Jeffrey R. Immelt
answered questions about
the company's appetite for
M&A and the impact of
falling oil prices on its
energy equipment
Photo:
Bloomberg/Scott Eels

Jeffrey Immelt

business, which he has

built up through
acquisitions. GE's $17.1
billion purchase of Alstom

SA's steam turbines business is still pending. In

September GE agreed to sell its consumer
appliance business to Electrolux SA for $3.3
billion. His remarks have been edited and
condensed.

Q: None of us would have expected a

deal the size of Alstom. So how are
you now thinking about big
acquisitions considering you've done
the biggest deal ever?

A: I like the way the company looks right

now. We have exited businesses that
didn't use the GE store. Appliances, we
weren't in it to win, didn't use our core
capability. I like the company the way it
looks today.
The second thing I'd say is, Alstom has
tremendous value-creating potential for
investors, but it's going to take all of our
hard work to do it. We have plenty on our
plate for next year to execute on Alstom.
We're just not that interested in doing
another.
Q: In fact, I think you said that's M&A
for 2015, 2016?
A: Yes.
Q: Here's the corollary question. This
whole supply-driven dynamic we're in
with respect to oil is going to spill into
2016. Why not retain the flexibility
market conditions provided to get
much bigger in energy in certain
locations?
A: It's a great question. We like oil & gas.
We're diversified in oil and gas. We think
this is a seminal business for the world

and we want to be in it. In this kind of

volatility, GE is a very good person for
any [national oil company] or
[international oil company] to do business
with. If you're an IOC, and you want to
test $65 a barrel on your new projects,
you're going to come to GE to do that. So
why would I pay anybody goodwill right
now when our competitive position is
better today, relatively speaking, than it
was a month ago? I think that's the
bottom line right now. There's just no
reason to have to do that.
These are cycles we know. We have
fundamental strength that other people
don't have. We can all arm wrestle over
the value of a conglomerate. This is
exactly the right time to want to be in a
multi-business company. Because
aviation is doing great and transportation
is doing great, and we've got Alstom and
we've got a bunch of other stuff
underway. Those are things that FMC
doesn't have. Those are things that
Schlumberger doesn't have.

Source: Bloomberg Transcripts NH BT <GO>

More Executives on M&A Plans Last Week

SECTOR

DATE

COMPANY

WHAT THEY SAID

RESOURCES

Dec. 18

Coeur Mining Inc.

Miner continues to seek acquisitions but is not seeing many attractive opportunities, CEO said in an
interview. He expects more activity in the sector generally in 2015, especially distressed sales. Click here
to open the story on your Bloomberg terminal.

FOOD

Dec. 18

ConAgra Foods Inc.

Packaged food maker expects "limited acquisition activity in the near term as we pay down debt" from
Ralcorp purchase, CFO said on an earnings call. Click here to open on your Bloomberg terminal.

TELECOMMUNICATIONS

Dec. 18

Windstream Holdings Inc.

Yield-oriented REIT that telecom plans to create via a spinoff will likely make acquisitions, CEO said on a
conference call. Click here to open on your Bloomberg terminal.

TRANSPORT

Dec. 18

Kirby Corp.

"Silver lining" in falling oil prices may be an increase in M&A opportunities, CEO of inland barge operator
said on a conference call. Click here to open on your Bloomberg terminal.

INDUSTRIAL

Dec. 17

Wesco International Inc.

Electrical equipment maker has returned to developing its M&A pipeline after reducing leverage from $1.7
billion Eecol purchase in 2012 and expects more acquisitions to be finalized in 2015 and beyond, CEO
and a CFO said on a conference call. Clickhereto open on your Bloomberg terminal.

Source: Bloomberg News, Bloomberg Transcripts

Dec. 22, 2014

Bloomberg Brief

ACTIVIST SITUATIONS COMPILED BY JOHN E. MORRIS, BLOOMBERG BRIEF EDITOR

Significant Actions at Companies Targeted by Activist Investors

Source: Bloomberg News,NI SHRHOLDACT <GO>

Updated after close of market Dec. 19.

Mergers

10

Bloomberg Brief

Dec. 22, 2014

Mergers

11

MAJOR
MOVE?

DEAL ARBITRAGE
TARGET

ACQUIRER

PAYMENT
TYPE

SPREAD

PROJECTED
ANNUALIZED
RETURN

1W
CHANGE
IN
SPREAD

213.89

C&S

7.0%

12.0%

-0.4%

32.84

C&S

1.4%

4.3%

1.5%

DEAL
SIZE
(M)

EXPECTED
COMPLETION
DATE

OFFER
PER
SHARE

TARGET
PRICE

65,024

06/30/15

228.89

5,102

03/31/15

33.31

Allergan Inc/United States

Actavis plc

Atlas Pipeline Partners LP

Targa Resources Partners LP

Baker Hughes Inc

Halliburton Co

37,531

12/31/15

66.26

57.00

C&S

16.2%

14.9%

-1.1%

CareFusion Corp

Becton Dickinson and Co

12,040

06/30/15

59.90

59.17

C&S

1.2%

2.1%

-0.3%

Cleco Corp

BC Investment Management
Corp. et al

4,685

12/31/15

55.37

53.73

Cash

3.1%

2.8%

-0.4%

Concur Technologies Inc

SAP SE

7,241

12/04/14

129.00

128.81

Cash

0.1%

9.0%

-0.2%

Covance Inc

Laboratory Corp of America

Holdings

5,559

03/31/15

103.87

102.62

C&S

1.2%

3.6%

-0.6%

Covidien PLC

Medtronic Inc

45,870

06/30/15

105.81

101.00

C&S

4.8%

8.1%

-1.2%

DIRECTV

AT&T Inc

66,044

04/30/15

95.00

87.71

C&S

8.3%

19.8%

-0.3%

Dresser-Rand Group Inc

Siemens AG

7,241

09/30/15

83.00

128.81

Cash

0.1%

2.8%

-0.7%

Family Dollar Stores Inc

Dollar General Corp

9,129

12/31/14

40.00

34.84

Cash

14.8%

163.8%

0.0%

Glimcher Realty Trust

Washington Prime Group Inc

3,868

03/31/15

13.83

13.76

C&S

0.5%

1.5%

-0.5%

Hudson City Bancorp Inc

M&T Bank Corp

3,838

12/31/14

10.59

9.79

C/S

8.2%

90.3%

0.0%

Integrys Energy Group Inc

Wisconsin Energy Corp

7,469

09/30/15

83.00

81.11

Cash

2.3%

2.8%

2.0%

International Game Technology

GTECH SpA

6,281

06/30/15

17.86

17.03

C&S

4.9%

8.4%

-1.8%

Kodiak Oil & Gas Corp

Whiting Petroleum Corp

6,038

12/31/14

7.39

7.33

Stk

0.8%

9.6%

0.1%

Lorillard Inc

Reynolds American Inc

26,477

06/30/15

69.67

63.14

C&S

10.3%

17.7%

0.9%

Pepco Holdings Inc

Exelon Corp

12,136

09/30/15

27.25

27.50

Cash

-0.9%

-1.1%

-0.6%

Protective Life Corp

Dai-ichi Life Insurance Co

Ltd/The

5,531

06/30/15

70.00

69.71

Cash

0.4%

0.7%

0.0%

Riverbed Technology Inc

Sycamore Partners

4,065

25.00

20.67

Cash

20.9%

-1.3%

Rockwood Holdings Inc

Albemarle Corp

6,005

03/31/15

79.01

77.95

C&S

1.4%

4.0%

-0.2%

Safeway Inc

Albertsons LLC

8,929

09/30/15

74.30

72.84

C&S

2.0%

2.4%

2.0%

Sapient Corp

Publicis Groupe SA

3,268

03/31/15

25.00

24.70

Cash

1.2%

3.6%

-0.1%

Sigma-Aldrich Corp

Merck KGaA

16,395

12/31/14

140.00

136.60

Cash

2.5%

27.5%

-0.6%

TIBCO Software Inc

Vista Equity Partners

4,101

12/31/14

24.00

24.03

Cash

-0.1%

-1.4%

-1.1%

Tim Hortons Inc

Burger King Worldwide Inc

13,264

98.79

95.31

C&S

3.7%

1.5%

Time Warner Cable Inc

Comcast Corp

68,405

06/30/15

163.99

149.28

Stk

9.9%

16.8%

1.2%

TRW Automotive Holdings Corp

ZF Friedrichshafen AG

12,857

06/30/15

105.60

103.40

Cash

2.1%

3.6%

-0.2%

Williams Partners LP

Access Midstream Partners LP

32,003

06/30/15

54.33

51.74

Stk

5.0%

8.5%

-0.5%

Source: Bloomberg MARB <GO> North American deals

*Spread moved by more than 2% of price target: = up, = down C/S=cash or Stock Updated at close of market on Dec. 19.

Bloomberg Brief

Dec. 22, 2014

Mergers

12

Bloomberg Brief: Mergers

Bloomberg Brief
Executive Editor
Ted Merz
tmerz@bloomberg.net
+1-212-617-2309

Bloomberg News
Managing Editor
Jeffrey McCracken
jmccracken3@bloomberg.net
+1-212-617-8517

Contributing Data Editor

Leslie Hemenetz
lhemenetz@bloomberg.net
+1-212-617-5513

Newsletter
Business Manager
Nick Ferris
nferris2@bloomberg.net
+1-212-617-6975

Advertising
Adrienne Bills
abills1@bloomberg.net
+1-212-617-6073

Contributing Data Editor

Bloomberg Brief
Mergers Editor
Bomin Kim
Reprints & Permissions
Managing Editor
John E. Morris
bkim78@bloomberg.net
Lori Husted
Jennifer Rossa
jmorris89@bloomberg.net
+1-212-617-8596
lori.husted@theygsgroup.com
jrossa@bloomberg.net
+1-212-617-0628
+1-717-505-9701
+1-212-617-8074
To subscribe via the Bloomberg Terminal type BRIEF <GO> or on the web at www.bloombergbriefs.com. This newsletter and its contents may not be forwarded or
redistributed without the prior consent of Bloomberg. Please contact our reprints and permissions group listed above for more information.
2014 Bloomberg LP. All rights reserved.