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CRAIN’S BIGGEST DEALS OF 2018
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Despite high valuations, deals remained strong in 2018 By Dustin Walsh | dwalsh@crain.com
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n 2018, the big deals got bigger — often driven by strategic buyers flush with corporate cash. Strategic buyers — companies that acquire another company for growth, technology or markets — drove up prices and at times outbid financial buyers — private equity, hedge funds and the like — in the majority of Michigan deals. Of the top 50 Biggest Deals in 2018, which start on Page 10, only a handful were led by financial buyers.
That’s evident in the deal values compared to last year. The top 50 deals in 2018 represented an overall deal value of nearly $27.5 billion, compared with just short of $13 billion for the top 50 in 2017. “What we’re seeing is a lot of consolidation in industries,” said David Larsen, partner at law firm Bodman PLC in Detroit. “Strategic buyers pay the highest price, and those deals are more about fit. Which is interesting for the region because names get preserved, employees get preserved more than with PE.” Larsen represented the Cotton family in the $2.5 billion deal to sell its Meridian Health Plan to New York’s WellCare Management Group Inc. That deal closed last September and Meridian, its name and employees are expected to remain under
WellCare. Meridian is a major employer in downtown Detroit and ranks fourth on Crain’s Private 200 list of largest privately held companies in metro Detroit with revenue of $3.8 billion in 2017. The company has become a major fixture in downtown Detroit since purchasing One Campus Martius with Dan Gilbert’s Bedrock LLC in 2015 for an estimated $140 million to $150 million. The majority of the other billion dollar-plus deals joined Meridian in local assets being sold to national or international companies. Those deals include: Tenneco Inc.’s $5.4 billion acquisition of Southfield-based Federal-Mogul LLC; Atos SE’s $3.67 billion acquisition of Troy-based Syntel Inc.; Cisco’s $2.35 billion acquisition of Ann Arbor-based Duo
Security Inc.; and the $1.08 billion acquisition of Benton Harbor-based Whirlpool’s compressor business by Nidec Corp. Valuations, however, for the automotive industry — a sector that has historically dominated Crain’s Biggest Deals list — have been on the decline, said Sean Silver, senior vice president of global commercial banking at Bank of America Merrill Lynch in Detroit. “An exception (to high valuations) would be traditional automotive, where the view is that multiples generally declined,” Silver said. “In some instances, this resulted in mismatches between seller expectations and what buyers were willing to pay, although there were certainly successful automotive transactions last year.” SEE DEALS, PAGE 21
Biggest deals of the past 10 years Year
Deal
Value
2018
Tenneco Inc. acquired Federal-Mogul LLC
$5.4 billion
2017
American Axle acquired Metaldyne Performance Group (MPG)
$3.3 billion
2016
Fortis Inc. acquired ITC Holdings Corp
$11.3 billion
2015
Dow Chemical Co. and DuPont Co. merged as equals
$65.6 billion
2014
ZF Friedrichshafen AG acquired TRW Automotive Holdings Corp.
2013
Perrigo Co. and Elan Corp. PLC combined under a new corporate entity based in Dublin, Ireland
2012
General Motors Co. purchased International auto finance operations of Ally Financial
2011
Delphi Automotive reacquired equity stake from General Motors Co.
2010
Toronto-Dominion Bank bought Chrysler Financial Corp.
2009
General Motors Co. (U.S. Government, UAW VEBA healthcare trust, Canadian government) acquired assets of former General Motors Corp. $46.8 billion
2008
Tata Motors Ltd. acquired Jaguar Ltd. and Land Rover Ltd. untils of Ford Motor Co.
Source: Crain’s Detroit Business Book of Lists
$12.4 billion $8.6 billion
$3.8 billion $6.3 billion $6.3 billion
$2.3 billion