In November 2014, two significant M&A transactions were announced on the same day representing the biggest “merger Monday” of 2014 (Actavis agreeing to acquire Allergan for approximately $67 billion and Halliburton agreeing to acquire Baker Hughes for approximately $35 billion). Over the course of 2014, we have seen an increase in the willingness of acquirers to pursue or threaten hostile transactions and November was no exception. In the case of Baker Hughes, Halliburton threatened to commence a proxy fight after an impasse over price had been reached in negotiations and the Actavis/Allergan transaction was partly the byproduct of the hostile bid for Allergen by Valeant and activist hedge fund, Pershing Square, commenced in April of this year. The increase in hostile activity has been driven by increased board and management confidence, the rise in the equity markets and a general trend of acquirers being rewarded (as reflected in their stock prices) for pursuing transformational M&A transactions. Other companies that have been engaged in or subject to unsolicited or hostile transactions in 2014 (not all of which were completed) include the following:
- GFI Group. On July 30, 2014, GFI Group (NYSE: GFIG) agreed to be acquired by CME Group Inc. (NASDAQ: CME) in an all-stock transaction valued at approximately $4.55 per GFI share. On September 9, 2014, BGC Partners, Inc., holding 13.5% of GFI, initiated an all-cash tender offer to acquire the remaining portion of GFI for $5.25 per GFI share. On December 3, 2014, the CME Group increased the price per share of its offer to $5.25 in stock and cash. BGC’s all-cash tender offer is set to expire on January 6, 2015.
- Auxilium Pharmaceuticals. On June 26, 2014, Auxilium Pharmaceuticals, Inc. (NASDAQ: AUXL) and QLT Inc. (NASDAQ: QLTI) (TSX: QLT) announced the merger of Auxilium and QLT, whereby Auxilium shareholders would receive 3.1359 shares of QLT for each Auxilium share and would own approximately 76% of the combined entity at closing. During the pendency of the merger, on September 16, 2014, Endo International plc (NASDAQ: ENDP) delivered an unsolicited non-binding proposal to acquire all of the outstanding shares of Auxilium for a combination of cash and stock valued at approximately $2.2 billion, or $28.10 per Auxilium share. Auxilium’s board subsequently adopted a 1-year stockholder rights plan and set out to review all aspects of Endo’s proposal. On October 9, 2014, Auxilium announced the termination of its merger with QLT and the signing of a superior proposal transaction with Endo, whereby Endo would acquire all of the outstanding shares of Auxilium for a combination of cash and stock valued at approximately $2.6 billion, or $33.25 per Auxilium share. The transaction is expected to close in the first half of 2015.
- Gentiva Health Services. On May 15, 2014, Kindred Healthcare, Inc. (NYSE: KND) made a public unsolicited bid to acquire Gentiva Health Services, Inc. (NASDAQ: GTIV) for a combination of cash and stock valued at approximately $533 million, or approximately $14.00 per share (which offer was subsequently increased in an unsolicited tender offer to $14.50 per share on June 17, 2014). In response, Gentiva rejected Kindred’s proposal and adopted a stockholder rights plan. In July 2014, Kindred commenced a partial tender offer to acquire 14.9% of Gentiva’s outstanding shares for $16.00 per share in cash. In response, Gentiva rejected the partial tender offer and announced receipt of an alternative proposal (from an undisclosed party) to acquire the company for $17.25 per share in cash. Subsequently, on July 21, 2014, Kindred offered to acquire Gentiva for $17.25 per share provided that Kindred would be allowed to conduct due diligence. On October 9, 2014, Gentiva agreed to have all of its shares acquired by Kindred for an increased offer price of $19.50 per share in cash and stock. The transaction is expected to close in the first quarter of 2015.
- Time Warner. On January 13, 2014, Charter Communications, Inc. (NASDAQ: CHTR) submitted an unsolicited letter to Time Warner Cable (NYSE: TWC) proposing that the companies engage in discussions to combine the companies for cash and stock consideration of approximately $130 per share. In February 2014, Charter nominated a full slate of directors for election to the Time Warner board at Time Warner’s 2014 annual meeting. Time Warner rejected Charter’s offer and on February 13, 2014, agreed to an all-stock transaction with Comcast (NASDAQ: CMCSA) whereby Time Warner shareholders would receive approximately $158.82 per share. On April 28, 2014, Charter withdrew its opposition to the Time Warner merger with Comcast as part of a three-part deal under which Charter will acquire existing Time Warner cable subscribers in certain markets. The transaction is expected to close in early 2015.