The number of high-value mergers and acquisitions in Arkansas — those believed to be worth $9 million or more — dropped in 2013 to 73 compared with 80 in 2012. But the number of really high-value deals — those worth $100 million or more — jumped from 14 in 2012 to 26 in 2013.
One of the highest-profile deals in the state last year was the $780 million purchase, announced in January 2013, by AT&T of Allied Wireless Communications Corp. of Little Rock. Allied Wireless comprised assets Verizon had to divest after its 2009 purchase of Alltel Corp. of Little Rock.
Allied Wireless, a subsidiary of Atlantic Tele-Network Inc. of Beverly, Mass., operated a retail wireless business under the Alltel name with 585,000 customers in rural areas of six states: Georgia, North Carolina, South Carolina, Illinois, Ohio and Idaho.
The Federal Communications Commission approved the deal in September.
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The financial services sector in Arkansas was certainly among the most active in 2013.
The $320.1 million cash-stock purchase by Home BancShares of Conway of Liberty Bancshares of Jonesboro was the biggest, as in most valuable, in-state bank deal in Arkansas history, so big that Gov. Mike Beebe was on hand at the official announcement on June 25.
Johnny Allison, chairman of Home BancShares, called the deal the most significant transaction of his career and noted that the combination of the two organizations would create a banking franchise with 1,500 employees and scores of locations, including in Florida and Alabama.
“That’s a long way from selling my first mobile home at 13,” Allison quipped of his first business success in Jonesboro, where he grew up and met Wallace Fowler, chairman and CEO of Liberty, 50 years ago.
Media company deals were among the biggest on the list, at Nos. 2, 3 and 5.
The Tribune Co. of Chicago bought Local TV Holdings LLC of Newport, Ky., for $2.73 billion, picking up 19 TV stations, including CBS affiliate KFSM-TV in Fort Smith.
The Gannett Co. of McLean, Va. — owner of KTHV-TV in Little Rock and the Baxter Bulletin in Mountain Home — acquired Belo Corp. of Dallas in a deal valued at $2.2 billion and giving Gannett a total of 43 stations.
Sinclair Broadcast Group of Hunt Valley, Md., bid $985 million for eight television stations, including KATV-TV of Little Rock, from Allbritton Communications Co. of Arlington, Va.
The biggest deal, at $7.2 billion, was the purchase by Koch Industries of Molex Inc. Molex, a global electronic components company, has two facilities in Maumelle.
Although deal-making appeared to be robust in Arkansas in 2013, the value of mergers and acquisitions worldwide was down 6 percent compared with 2012, “the slowest annual period of global deal making since 2009,” according to Thomson Reuters. The value of deals worldwide totaled $2.4 trillion during 2013.
Nationwide, M&A activity in the United States rose 11.3 percent in 2013 compared with 2012, Thomson Reuters said. Announced M&A activity in the U.S. totaled $1.04 trillion. Several high-value deals were responsible for the increase, including Verizon’s $130.1 billion acquisition of Vodafone Group’s 45 percent stake in Verizon Wireless.
Marshall McKissack, who leads the M&A practice at Stephens Inc. in Little Rock, said Stephens had a strong 2013.
“We advised on about $14 billion in transaction value in 2013, which was up about 70 percent from 2012,” he said. “Overall it was a pretty strong 2013 for us.”
However, McKissack said, the M&A market was actually flat or down in 2013, if some outsize transactions were stripped from the picture. He cited specifically Dell founder Michael Dell’s $25 billion deal to take his company private and the $28 billion purchase of H.J. Heinz Co. by Warren Buffett’s Berkshire Hathaway and 3G Capital.
Among the sectors driving M&A activity, McKissack said, were transportation, financial services and telecom — “really across the board. For us, I think, it’s somewhat in line with the overall market.”
“We were fortunate enough to advise on several large transactions, which always helps, but most of our activity was driven on the sell side in 2013,” he said.
“For a good company, which we like to align ourselves with, it’s still a great market. Valuations were robust in 2013. We were able to take advantage of it for our clients.”
Some deals are notable for not happening or for prompting opposition.
One of those is the $2.2 billion bid for Cooper Tire & Rubber Co., whose Texarkana plant employs about 1,600 people. Apollo Tyres Ltd. of India announced in June its plan to buy Cooper Tire, but in December, Cooper called off the sale. Cooper, headquartered in Findlay, Ohio, has maintained that financing is now unavailable and that Apollo violated the terms of the sale agreement.
Another involves USA Truck of Van Buren, which in September rejected a buyout offer valued then at about $242 million from Knight Transportation of Phoenix.
McKissack said 2014 is “shaping up to be a good year” for mergers and acquisitions, noting that financing remains relatively available and relatively cheap.
In addition, he said, there is a pent-up demand for transactions given last year’s slow start with activity starting to pick up only in the second half of the year.
“All the ingredients for a great M&A market still exist,” McKissack said.