Monday’s Mega Merger Mania: Three Multi Billion Deals Just Happened
Investors woke up to three different M&A deals that are priced in the billions of dollars. Here is a summary of what you need to know.
AT&T To Acquire Time Warner
AT&T (NYSE: T) confirmed last week’s media speculation that it plans on acquiring the media giant and parent company of HBO, Time Warner (NYSE: TWX). AT&T offered to acquire Time Warner in a transaction that values its shares at $107.50 a piece.
AT&T believes that the combination of the two entities will create offer customers access to premium content across all their devices and new choices for mobile and streaming services. The company further believes that owning the content directly will also result in new advertising options that will help offset the cost of new content creation.
AT&T also believes the deal will result in an annual run rate cost synergy of $1 billion within three years of the deal closing. The synergies will primarily be driven by corporate and procurement expenditures. Moreover, the combined entity could generate revenue streams that neither company would be able to generate as a standalone entity.
Rockwell Collins Buys B/E Aerospace
Rockwell Collins (NYSE: COL), a producer and supporter of communications and aviation electronics for both commercial and military clients, said it plans on acquiring B/E Aerospace (NASDAQ: BEAV), a manufacturer of cabin interior products for commercial and business jets.
As part of the agreement, Rockwell Collins will offer B/E Aerospace shareholders $34.10 per share in cash and $27.90 in shares of its own stock. B/E Aerospace shareholders will also become 20 percent owners of the combined entity.
Rockwell Collins noted that the acquisition will significantly boost its scale and diversifies its product portfolio, customer mix and global presences. Moreover, the deal is also expected to be double-digit accretive to its earnings per share in the first full fiscal year and generate cost synergies of approximately $160 million.
Hilton Eyes Chinese Market
Hilton Worldwide (NYSE: HLT) announced that China-based HNA Group has acquired an approximate 25 percent stake in the hotel chain.
HNA Group bought the stake from Blackstone Group and values the transaction at $26.25 per share, or $6.5 billion.
The new partnership offers Hilton a strategic partner that could help unlock value in the fast-growing Chinese travel and tourism market. In fact, China is the largest outbound travel and tourism market in the whole world.
Blackstone will remain a minority owner of Hilton and maintain a presence on the Board of Directors and HNA Group will also appoint two directors to the board.