Analyst: IMS 'ideal' for LBO; CF, Terra showdown ahead; Ticketmaster buyout review delayed

By Cristal Cody

Tupelo, Miss., Nov. 6 - IMS Health Inc., which plans to be taken private for $5.2 billion in cash and debt in the largest leveraged buyout deal of the year, may be the perfect stock for a LBO, one analyst said Friday.

Meanwhile on Friday, CF Industries Holdings, Inc. rejected Agrium Inc.'s revised and final takeover offer, but the three-way fight that includes Terra Industries Inc. still has another showdown ahead.

In other situations, one analyst Prospect News spoke to on Friday was unfazed by British regulators' plan to extend the review of Live Nation Inc.'s acquisition of Ticketmaster Entertainment, Inc. into next year.

On Wall Street, equities finished Friday 3% higher for the week.

The Dow Jones Industrial Average rose 17.46 points, or 0.17%, to close at 10,023.42.

The Standard & Poor's 500 index inched up 2.67, or 0.25%, to 1,069.30, and the Nasdaq Composite index added 7.12 points, or 0.34%, to 2,112.44.

Positive market signs for LBO

IMS shares added 14 cents, or 0.68%, to $20.87 on Friday, a day after private equity firm TPG Capital and the Canada Pension Plan's investment board offered $22.00 a share in cash for the Norwalk, Conn.-based pharmaceutical and health care market data company.

The discount in IMS shares could be attributed to funding concerns "and fear that the bidders are overpaying given the higher-than-expected offer price," Krisztian Szentessy, an analyst with Pali Capital Inc., said in a research note released Friday.

Still, the company's stock may be the best one to undertake a LBO this year, Szentessy said.

"We believe that RX is a special stock and probably the ideal stock for the first $1 billion-plus LBO deal for a long time," Szentessy said. "RX's cash flows are as safe as they can get, even among stocks with exposure to the health care sector, as RX has a dominant position in a several billion dollar niche market. In our view, there are enough positive signs in the current credit markets to make a PE deal credible even at this size."

The transaction must be approved by IMS investors and likely will require antitrust clearances by U.S. and European regulators, Szentessy said.

The companies expect the offer to close by the end of the first quarter of 2010.

No competing bidders are expected since IMS "appears to have been shopped with several PE bidders participating, including Blackstone and KKR," Szentessy said. "On this basis, we assign a low probability to a counter bid."

Fertilizer deal action grows roots

Agrium, a Calgary, Alta.-based agricultural company, on Thursday increased its bid to $92.99 a share in cash and stock, an increase of $5.00 in cash, for shares of CF in its "best and final offer."

Under the terms, Agrium would pay CF investors $45.00 a share in cash and one share of Agrium per CF share. Agrium's exchange offer is open through Nov. 18.

"Agrium's latest revised offer is very far from compelling," Stephen R. Wilson, chairman, president and chief executive officer of CF, a Deerfield, Ill.-based nitrogen and phosphate fertilizer producer and distributor, said Friday in a statement. "We have a long history of generating value for our stockholders, and we will continue to execute our long-term strategy, including the company's offer to acquire Terra Industries."

However, Terra, a Sioux City, Iowa-based nitrogen producer, has rejected CF's latest revised bid of $32.00 a share in cash and 0.1034 of a share of CF per Terra share.

Terra also urges shareholders to reject CF's three nominees to the company's board at the upcoming Nov. 20 shareholders meeting.

Edlain Rodriguez, an analyst with Broadpoint Amtech, Inc., told Prospect News earlier this week that the fight for control between the three fertilizer companies should wind down soon.

"Over the next couple of weeks, we should know how this is going to work out," he said.

CF shares slipped 85 cents, or 1.06%, to $79.05 on Friday.

Terra shares closed up 10 cents, or 0.28%, at $36.10.

Agrium's stock rose 30 cents, or 0.60%, to $50.11.

Ticketmaster buyout sent into overtime

Los Angeles-based concert promoter Live Nation now will not learn for another eight weeks what British regulators' decision will be on its stock buyout of West Hollywood, Calif.-based Ticketmaster.

On Thursday, the British Competition Commission said that it extended the original Nov. 24 deadline for its final report to Jan. 19.

The merger was first referred to the commission on June 10 by London's Office of Fair Trading.

The commission said in its Oct. 8 provisional findings that the merger would lessen competition for ticket retail sales.

Live Nation produces more than 22,000 concerts in 33 countries a year, while Ticketmaster is the leading entertainment ticketing and marketing company.

The commission said Thursday in a statement that it "has received a substantial number of responses to its provisional findings, which include new evidence that it must consider. Furthermore, the range of possible remedies is complex, and the group wishes to explore all the possible remedies with both the parties to the merger and third parties."

A Live Nation representative told Prospect News on Friday that the company "is not commenting on that issue."

Ticketmaster representatives did not have an immediate comment when reached Friday.

One analyst Prospect News spoke with on Friday said the review extension is "pretty standard."

The commission "just wanted to take some more time to ask some questions," the analyst said. "I would not view the extension as negative."

The deal also is expected to be challenged by U.S. regulators.

Under the terms of the all-stock merger, Ticketmaster shareholders would receive 1.384 shares of Live Nation for each share of Ticketmaster.

Shares of Ticketmaster lost 12 cents, or 1.18%, to close Friday at $10.07, while Live Nation's stock fell 13 cents, or 1.83%, to $6.99.

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

IMS Health Inc. NYSE: RX

Live Nation, Inc. NYSE: LYV

Terra Industries Inc. NYSE: TRA

Ticketmaster Entertainment, Inc. Nasdaq: TKTM

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