The week ended June 20 saw very little action in terms of deals. The week opened with Landry's Restaurants, Inc. revealing an agreement to be purchased by its chief executive and founder Tilman Fertitta. Another deal was between Polaris Acquisition Corp. and Hughes Telematics, Inc., with Polaris agreeing to buy Hughes to expand in the telematics industry. During the course of the week, Apria Healthcare Group Inc. agreed to be acquired by an affiliate of Blackstone Group.
CEO Tilman Fertitta to buy Landry's Restaurants
Monday, hospitality and entertainment company Landry's Restaurants, Inc. (LNY) revealed an agreement to be acquired by Fertitta Holdings, Inc. for $21.00 per share in cash or about $1.3 billion that includes about $885.0 million of debt. The transaction is expected to be completed in about four months.
Following the news, the company's stock jumped 20% to $20.15 in pre-market trading, finishing the day's regular trade at $19.77, up from the previous close of $16.79.
The offer price marks a premium of about 37% over the closing share price of the company's common stock on April 3, the last trading day before the revised offer was disclosed. The previous offer valued the stock 11% higher but was reduced later on worsening credit market conditions. The company has 45 days to consider competing bids.
Fertitta is a newly formed entity wholly owned by the company's CEO and original founder Tilman Fertitta. Fertitta, known for transforming troubled companies into money spinners, owns 39% of the company's outstanding shares.
Polaris Acquisition to buy Hughes Telematics
Monday, special purpose acquisition company Polaris Acquisition Corp. (TKP-U) revealed an agreement to acquire Hughes Telematics, Inc., which makes navigation systems for Mercedes-Benz cars, for about $700 million in stock. The transaction is expected to close in the first quarter of 2009.
Shares of Polaris rose 49 cents or 5.1% to $10.20 on the American Stock Exchange soon after the trading began Monday. The stock closed at $10.30.
The deal provides Hughes Telematics with access to additional funds, including an additional $140 million in capital to fund its growth opportunities.
Hughes Telematics is a leader in the high growth telematics industry and is backed by Apollo Management LP. The company's technology informs a service center automatically when there is a crash and also helps locate stolen vehicles.
The merged entity will focus on expansion within the telematics industry. Atlanta-based Hughes' shareholders are expected to initially own around 65% of the combined entity's shares. Hughes shareholders will receive about 45 million shares of Polaris common stock at the close of the transaction, subject to certain adjustments. Hughes management team is anticipated to manage the company.
Cadence Design Systems offers to buy Mentor Graphics; Mentor board rejects offer
Tuesday, Cadence Design Systems Inc. (CDNS), the biggest maker of programs for creating semiconductors, submitted an unsolicited proposal to the Board of Directors of smaller rival Mentor Graphics Corp. (MENT) to acquire the printed circuit-board designer for $16.00 per share, amounting to an enterprise value of $1.6 billion. The deal includes $69 million in debt.
Cadence closed Tuesday's regular trade at $10.84, down $ 0.75 or 6.47%, from the previous close and added two cents in the extended session. Shares of Mentor Graphics surged on the buyout news, adding 21.49% to close at $14.98. The stock gained three cents in the after-hours trade.
The offer marks a 30% premium over the closing price of Mentor Graphics common stock on June 16, the last trading day before the proposal became public. The offer price also represents a 46% premium over Mentor Graphics' average closing price for the past 30 trading days.
Cadence' attempts to woo Mentor Graphics last month did not succeed, with Mentor deciding to remain independent. Mentor, which develops software to test chip models, will help Cadence reduce operating costs as growth slackens in the chip industry with prices falling.
However, Tuesday, Mentor said its board rejected the offer for several reasons, including insufficient price and regulatory hurdles. Following the rejection, analysts at DA Davidson said they maintain their "Neutral" rating on Mentor, while raising the target price to $17.50 from $16.50.
Blackstone to buy Apria Healthcare
Thursday, Apria Healthcare Group Inc. (AHG), the biggest U.S. provider of home-medical equipment, agreed to be acquired by an affiliate of Blackstone Group (BX) for about $1.6 billion, including assumed debt. The transaction is expected to close in the second half of 2008.
The announcement sent Apria shares up over 26% in morning trading. The stock closed the regular trade on Thursday at $20, up from the previous close of $15.82. BG finished the regular trade at $18.40, higher by $0.38 from Wednesday's close.
The stock suffered in recent times on concerns that reduction in U.S. government health-insurance programs would hurt profit. The company generated 35% of its sales last year from Medicare and Medicaid programs.
Apria shareholders will receive $21.00 per share in cash, which marks a premium of about 33% over the closing share price on June 18, the last trading day prior to the announcement. The price also represents a premium of approximately 29% over Apria's $16.22 average closing share price for the 30 trading days ended June 18.
In a client note, Darren Lehrich, an analyst with Deutsche Bank AG in New York, said the announcement shows that financial sponsors are willing to bear the cash-flow risk associated with future Medicare cuts, reported Bloomberg. "Financial sponsors continue to see the long-term value in health-care services,'' added Lehrich, who boosted his rating on both companies to "Hold."
Arthur Henderson, an analyst at Jefferies Group Inc. said Blackstone might see an opportunity to boost profit by cutting expenses. Noting that Apria has struggled from a business perspective, the analyst said, "there's lot of room for Blackstone to go in there and take corrective action."
Meanwhile, Standard & Poor's Ratings Services placed its ratings on Apria on negative watch. S&P said it expects the transaction to leave the company in a more highly leveraged position upon closing. Apria's corporate credit rating may be lowered from its current 'BB+' level.
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