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The 5 Biggest M&A Deals of the First Quarter


Global M&A activity slowed from January through February, but the situation was much improved in the US.

Globally, it was a slow first quarter for mergers and acquisitions, with the value of M&A activity in the quarter falling 10.3% to $405.9 billion year-on-year.

Much of the drop can be attributed to Europe, which continues to face economic woes. The US, however, is one of the two regions in the world (the other being the Middle East) that experienced an uptick in M&A activity in the first three months of 2013.

Thanks to the Federal Reserve-enabled low interest rates and the strength of the Dow (INDEXDJX:.DJI) and the S&P 500 (INDEXSP:.INX), deal-making, which historically corresponds strongly with stock prices, has risen in value to $167 billion stateside during the first quarter of 2013 from $125 billion a year ago, according to a report prepared by Mergermarket.

JPMorgan (NYSE:JPM) led the way in terms of deal volume in the quarter. The bank was an advisor on 28 US M&A deals, with Goldman Sachs (NYSE:GS), Lazard (NYSE:LAZ), Morgan Stanley (NYSE:MS), and Bank of America (NYSE:BAC) rounding out the top five.

Here's a list of the 10 biggest M&A deals from January through March:

1. Berkshire Hathaway and 3G Capital Partners is buying HJ Heinz for $27.3 billion.

Announced on February 14, Berkshire Hathaway (NYSE:BRK.B) and 3G Capital said that they would share 50-50 ownership of one of the most recognizable food companies in the world. According to Warren Buffett, Heinz (NYSE:HNZ) has been a takeover target for many years, although it was the Brazilian company 3G Capital who approached Buffett with the notion of taking Heinz private.

Berkshire Hathaway and 3G Capital will pay $72.50 per share, which represents a 20% premium to Heinz's closing price the day prior to the deal's announcement. The stock is now trading around $72.22.

2. Michael Dell is taking Dell private for $21.8 billion.

With PC sales slumping globally, Dell (NASDAQ:DELL), along with competitors like Hewlett-Packard (NYSE:HPQ), has seen its stock price fall precipitously since the height of the dot-com boom. Thus, its directors accepted the $13.65-per-share takeover bid by founder Michael Dell and investment firm Silver Lake Partners.

Some Dell shareholders, including Southeastern Asset Management and Carl Icahn, were unhappy with the offer, arguing that the deal undervalued the PC maker. Icahn even submitted a competing takeover proposal to Dell's board, which valued Dell at more than $13.65 per share.

However, Dell has confirmed that it will be moving forward with its plans to go private with Michael Dell and Silver Lake.

"While we continue to recommend the current Silver Lake/Michael Dell transaction, and to work toward completion of that transaction, we will also work with Blackstone (NYSE:BX) and Icahn to seek to develop a definitive alternative proposal that provides an even more compelling value proposition for Dell's shareholders. Our goal was, and remains, to ensure that whatever transaction is consummated is the best possible outcome for Dell's shareholders," said the Dell board in a March letter to shareholders.

3. Comcast buys out GE's share in NBCUniversal for $16.7 billion.

Two years after Comcast (NASDAQ:CMCSA) first acquired a 51% stake in NBCUniversal, the Philadelphia cable TV operator announced on February 12 that it would spend $16.7 billion to buy out General Electric's (NYSE:GE) remaining 49% share of the entertainment company.

Comcast actually had a plan to purchase GE's 49% stake gradually by 2018, but company executives decided that it made sense to complete the deal now given the relatively cheap price of NBCUniversal, whose TV division has been struggling with poor ratings in recent years.

"Comcast got it at a steal, a phenomenal price," Matthew Harrigan, an analyst at Wunderlich Securities, told Bloomberg. "NBCU is worth north of $40 billion if you turned around the movie studio and got the broadcast network to work."

For GE, divesting NBCUniversal was part of a plan to concentrate on the conglomerate's industrial businesses. GE also said the sale gives the company the ability to return more cash to shareholders.

4. American Airlines and US Airways are merging in a deal valued at $4.9 billion.

After the merger of the bankrupt AMR Corp. (PINK:AAMRQ) and US Airways (NYSE:LCC), the new combined entity, which will be called American Airlines, will become the largest carrier in the world, surpassing United Continental (NYSE:UAL).

Under the terms of the all-stock deal, American Airline's creditors will own 72% of the combined airline, while US Airways shareholders hold the remaining 18%. US Airways CEO Doug Parker will serve as the combined company's CEO while AMR CEO Tom Horton will become the non-executive board chairman.

The airline will have 6,700 daily flights and generate some $40 billion in annual revenue. The combined company is estimated to have a market capitalization nearing $11 billion. The merger is expected to close by the fall.

5. Kinder Morgan buys Copano Energy for $3.9 billion.

Betting big on natural gas, Kinder Morgan Energy (NYSE:KMP) announced its $3.9 billion plan to acquire Copano Energy (NASDAQ:CPNO) on January 30. Kinder Morgan will take over Copano's 6,900 miles of pipelines in states like Texas and Wyoming and its nine processing plants.

The acquisition values the Houston-based Copano at $40.91 per share, which represented a 24% premium to the company's closing price before news of the deal came out. Including debt, the merger is worth about $5 billion.

For Kinder Morgan's financial advisor Citigroup, and Copano's advisors Barclays (NYSE:BCS) and Jefferies (NYSE:JEF), Mergermarkets estimates the deal value to be some $4.3 billion.

Twitter: @sterlingwong
No positions in stocks mentioned.
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