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Deals in the Headlines.

O&G BACKIN IN VOGUE

Observers of the oil and gas sector are expecting activity to heat up, even if it is not welcome, due to improved crude prices.

Ulster Petroleums Ltd. was pursued by Hunt Oil Co. of Dallas in a hostile $512 million all-cash bid but managed to find salvation in a $600 million cash-and-share bid by fellow-Calgarian Anderson Exploration Ltd. Anderson matched Hunt's $11 per share offer and added 0.09655 share to get Ulster's approval. Succor is not without a price though -- Ulster agreed to pay a $30 million breakup fee.

FirstEnergy Capital Corp. and Griffiths McBurney & Partners advised Ulster.

Petrobank Energy and Resources Ltd. also made a hostile bid but for Ranger Oil Ltd., both of Calgary. Petrobank's offer of cash or shares worked out to $2.50 in cash and two common shares for each Ranger share, valuing Ranger at $945 million. Ranger is still looking for its white knight.

THE NORTEL 'CORNER'

BCE Inc.'s spin-off of most of its Nortel Networks Corp. interest is expected to spur Nortel onto the acquisition trail. Not that the Brampton-based firm has been idle since its share price jumped onto the high-tech skyrocket last year.

Nortel's latest acquisition by share exchange targeted the Toronto software firm of Architel Systems Corp. Each Architel share will be exchanged for 0.21 Nortel share with the total value amounting to US$395 million. The software would become part of the product line that provides for automatic servicing by phone and Internet network operators.

UPDATES: SOME HICCUPS

A number of noteworthy transactions, including the two largest announcements of 1999, have recently run into difficulties. Could there be a hint of mega-deal backlash or shareholder disillusionment in the air?

The Canadian National Railway Co. and Burlington Northern Santa Fe Corp. merger has hit a roadblock. The U.S. Surface Transportation Board has instituted an unprecedented moratorium on more railway mergers for a fifteen month period. The stumbling block could push completion of this merger into the year 2002. Both railways are searching for ways around the delay. The STB's concern that further railway consolidations could drop the number of major railways down to two from the current six has sent it back to the drawing board to rewrite the regulations on such consolidations.

The Alcan deal has been downgraded from three world-class partners to two due to the European Commission's competition concerns. Alcan Aluminium Ltd. and Pechiney SA could not face being sundered from their respective jewels -- in terms of European aluminum plants. Alcan owns a half interest in a German rolling mill and Pechiney owns a French rolling mill. Pechiney has backed out of the deal leaving Alcan in a US$4.1 billion merger with Alusuisse Lonza Group Ltd. The all-stock transaction has been downsized to a US$4.1 billion merger between Alcan and Algroup. The offer must be made by the end of June.

Shareholders have caused a glitch in Corel Corp.'s stock purchase of Inprise Corp., formerly Borland International Inc. Inprise shareholders put up a ballyhoo about the Corel shares being overvalued and forced Inprise to arrange for a second valuation. Inprise would not be liable for the US$29.5 million breakup fee if the shareholders reject the plan. This cannot be a comfort to Corel which has said it will run out of cash in July if the transaction is not completed.

Groupe Vid[acute{e}]otron lt[acute{e}]e's friendly merger with Rogers Communications Inc. has gotten mired in the courts. Quebecor Inc. and the Caisse de d[acute{e}]p[hat{o}]et et placement du Qu[acute{e}]bec cobbled together a last minute competing bid for Vid[acute{e}]otron and obtained a court injunction to halt the first bid. Vid[acute{e}]otron shareholders with voting control still support Rogers' bid but will have to wait until June to have their say -- that is when final hearings on the merits of the injunction were scheduled.
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Publication:Mergers & Acquisitions in Canada
Geographic Code:1CANA
Date:May 1, 2000
Words:668
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