Hopes of an economic recovery and winding down of the reporting season have once again brought merger and acquisition-related activities into focus. Although not many deals were revealed in the week ended March 12, some of those announced involved billions of dollars.
Extending a trend seen in the past few months, China's strong economy encouraged PetroChina Co. Ltd., the listed arm of state-owned China National Petroleum Corp., to make a joint bid with British oil giant Royal Dutch Shell plc for Australia's Arrow Energy Limited. The deal is speculated to raise regulatory eyebrows.
After months of speculation, MetLife is buying the international life insurance unit from troubled insurer AIG. The deal is expected to open a wide range of opportunities for MetLife and is seen to add to earnings from 2011.
During the week, independent oil and gas producer Devon Energy decided to sell certain assets to UK-based BP plc, so that it can turn the focus entirely to its core operations.
Among other news, nitrogen products maker Terra Industries Inc. said it has found the offer from CF Industries Holdings Inc. to be superior to that of Yara International ASA. In response, Yara said it does not intend to raise its offer.
Arrow Energy receives joint bid from Shell, PetroChina
Australia-based coal seam gas producer Arrow Energy Limited (AOE.AX) said Sunday evening that it received a conditional takeover offer from a company jointly owned by Royal Dutch Shell plc (RDS-A, RDS-B, RDSA.L, RDSB.L) and PetroChina Co Ltd.(PTR), sending its shares up on Monday.
Arrow stock, which had ended the regular trade Friday at A$3.48, settled Monday at A$5.11 on a volume of 47.13 million shares, in comparison with a 3-month average volume of 3.91 million shares. The stock's surge gave rise to speculation that it is time to sell it.
Under the non-binding indicative proposal, Arrow's shareholders would receive a consideration of A$4.45 cash per Arrow share plus a share in a new entity comprising Arrow's international business. The cash offer represents a 28% premium over Arrow's closing trading price of A$3.48 on March 5 on the Australian Securities Exchange and values the company at about A$3.26 billion.
There are apprehensions that Australia's Foreign Investment Review Board may not approve the transaction, as the nation has been cautious about letting others tap into its resource companies. The offer also requires the backing of New Hope Corp., which owns almost 17% of Arrow.
Arrow had last month reached an agreement to buy LNG Ltd.'s Fisherman's Landing LNG project in Queensland. That deal is now feared to be jeopardized.
Meanwhile, reports said that if Shell's bid for Arrow succeeds, AGL Energy Ltd., which holds 50% in the Moranbah coal seam gas field with Arrow, may join Shell in a liquefied natural gas project in Queensland. AGL is also reported to consider selling its stake in the project to Shell.
AIG To Sell ALICO Unit To MetLife
Insurer American International Group, Inc., or AIG, (AIG) is selling its foreign life insurance unit to MetLife, Inc. (MET) for about $15.5 billion, the company said Monday. The sale of the unit, called American Life Insurance Co., or ALICO, is expected to bring in $6.8 billion in cash, and about $8.7 billion in MetLife equity securities.
AIG closed Monday at $29.10, higher than the previous close of $28.08, on 27.29 million shares. MET shares also witnessed upward movement Monday, closing at $40.90, compared to the previous close of $38.92, on 15.60 million shares.
The ALICO deal, already approved by the boards of directors of both the companies, is expected to close by the end of the year. The deal will help MetLife, the largest life insurer in the U.S. and Mexico, expand geographically as well as product-wise. The acquisition will add 20 million new customers and increase the company's international footprint to 55 countries from 17 countries. MetLife will become a leading competitor in Japan, the world's second-largest life insurance market. The company will also become a top player in many high growth emerging markets in Central and Eastern Europe, the Middle East and Latin America.
MetLife expects the transaction to increase its 2011 operating earnings by about $0.45-$0.55 per share. The insurer believes the deal will enable it to increase its estimated 2011 year-end operating return on equity by 140 to 160 basis points.
For troubled AIG, in which the government has a near 80% stake, the asset sale will give the much required cash to repay debt. Last week, AIG agreed to sell its Asian life unit American International Assurance to Britain's Prudential plc for $35.5 billion, in the largest deal to date in the insurance sector.
Following the announcement of the transaction, FBR Research said the most attractive aspect of the deal is that it appears to be accretive to earnings per share in 2011. Subsequently, the brokerage raised its 2011 estimate on MET to $5.45 per share from $5.00 per share. On average, 17 analysts polled by Thomson Reuters look for 2011 earnings of $5.16 per share.
Abbott To Buy Facet Biotech
Abbott Laboratories (ABT) is buying Facet Biotech Corp. (FACT) for $27 per share in cash, in a deal worth about $450 million, the company said Tuesday. The deal represents nearly a 64% premium to Facet's closing stock price of $16.51 on Monday.
The deal will help Abbott expand its biologics capabilities in two key therapeutic areas, immunology and oncology, and will also help strengthen its pharmaceutical pipeline. Facet is jointly developing multiple sclerosis drug daclizumab with Biogen Idec Inc. (BIIB).
Abbott shares closed Tuesday's regular trading session at $54.80, up $0.38, on 5.90 million shares, and lost $0.35 in the extended session.
Facet shares settled down $0.30 or 1.82% Tuesday at $16.21, on 1.07 million shares. However, the stock surged $10.90 or 67.24% in after hours trading. The stock soared Wednesday to close at $27.01.
However, Moody's Investors Service is skeptical of Abbott's move. Wednesday, the ratings agency warned Abbott of a possible downgrade, while affirming its ratings and negative outlook.
"Moody's recognizes that Facet will offer additional pipeline products in the areas of multiple sclerosis and oncology. However, following Solvay and a series of other acquisitions, this transaction highlights the company's continued strong appetite for acquisitions. Also, based on Facet's recent stock price, this transaction appears richly priced,'' Moody's noted.
"Abbott's pursuit of additional acquisitions or ongoing liquidity constraints could result in a ratings downgrade," said Diana Lee, a Moody's Senior Credit Officer.
Abbott last month closed the EUR 4.5 billion Solvay acquisition, which is expected to help the company diversify its pharmaceutical portfolio and expand its presence in key high-growth emerging markets.
Devon Energy To Sell Certain Assets To BP
Devon Energy Corp. (DVN) has agreed to sell its assets in the deepwater Gulf of Mexico, Brazil and Azerbaijan to British oil giant BP plc (BP,BP.L) for $7.0 billion, the companies said Thursday.
Devon embarked on sales of its Gulf of Mexico and international assets last November, after deciding to concentrate on its North American onshore assets.
Further, Devon and BP decided to form a heavy oil joint venture to develop BP's Kirby oil sands leases in Alberta, Canada.
DVN closed Thursday's regular trade higher by $0.35 or 0.49% at $72.04. The stock added $0.70 in the extended trade.
RELATED NEWS
Bidding War For Terra...
Terra Industries Inc. (TRA), which received a revised takeover offer from CF Industries Holdings Inc. (CF) last week, said Wednesday that it found CF's offer superior to the one from Norway's Yara International ASA (YAR.OL,YARIY.PK). TRA closed Wednesday's regular trade at $46.95, up from the previous close of $45.83.
Phosphate fertilizer producer CF offered $37.15 in cash and 0.0953 of a share of its common stock for each Terra share, with the offer totaling about $4.7 billion.
Last month, Terra agreed to be acquired by Yara, the world's largest fertilizer maker, for $41.10 per share in cash or about $4.1 billion.
Wednesday, Terra gave Yara five business days to come up with a competing offer. But, as early as Friday, Yara said it would not raise its offer.
Meanwhile, Canadian fertilizer company Agrium, Inc. (AGU, AGU.TO), which has been wooing CF for over an year, said Friday that it has decided to abandon the pursuit.
EC approves Stanley Works' acquisition of Black & Decker
The European Commission Friday cleared the proposed acquisition of power tools maker Black & Decker Corp. (BDK) by peer Stanley Works (SWK), as there is limited overlap between their product markets.
The all-stock merger deal, which is valued at about $4.5 billion, was signed in November 2009. It is expected to create an accretion of $1.00 per share in the third year after closing.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.