Our previous Canadian Mergers & Acquisitions roundups can be found here. Our previous global M&A roundups can be found here.

Target: Orbital ATK, Inc. (NYSE:OA)

• Industry: Aerospace and Defense
• Acquirer: Northrop Grumman Corporation
• Target: Orbital ATK, Inc.
• Size: $9.3 billion
• Consideration: 100% Cash
• Source of Funds: Cash, Debt
• Sell Side Advisor: Citi
• Buy Side Advisor: PWP
• Legal Advisors: Cravath, Swaine & Moore LLP, Hogan Lovells US LLP
• Expected Close: H1 2018

Northrop Grumman entered a definitive agreement to acquire Orbital ATK for an implied Enterprise Value of $9.3 billion. The deal includes a $7.9 billion consideration, $1.4 billion in net debt, and $20 million in options.

The deal will offer cash consideration of $134.50 per Orbital ATK share at an implied EV/EBITDA of 15.3x and an implied PE multiple of 20.8x.

Northrop is a major U.S. weapons maker, having recently won a deal to build the next U.S. stealth bomber. They plan to integrate Orbital ATK as a new, fourth business sector to complement its portfolio in the growing aerospace and defense market. The acquisition would round out Northrop’s position as a major Pentagon contractor by adding rocket propulsion, missile defense, and satellite expertise.

On a pro forma 2017 basis, guidance estimates sales in the range of $29.5 to $30 billion. The deal is expected to be accretive to EPS and FCF per share in the first year, with $150 million in pre-tax cost savings by 2020. Northrop plans to use the strong combined cash flow generation to invest in their priorities – Cap Ex and R&D.

Target: The Colonial Mutual Life Assurance Society Limited and ASB Group (Life) Ltd.

• Industry: Financial Institutions
• Acquirer: AIA International Limited
• Target: The Colonial Mutual Life Assurance Society Limited and ASB Group (Life) Ltd.
• Size: AUD $3.8 billion
• Consideration: 100% Cash
• Source of Funds: Cash, Debt
• Sell Side Advisors: Not Disclosed
• Buy Side Advisor: Evercore
• Legal Advisors: Ashurst Hong Kong, Bell Gully, Debevoise & Plimpton LLP
• Expected Close: 2018

AIA International signed an agreement to acquire The Colonial Mutual Life Assurance Society Limited (CMLAS) and ASB Group (Life) Ltd. for AUD $3.8 billion on September 21, 2017.

The deal values CMLAS and ABS Group at an implied P/E multiple of 16.9x and will be financed using a combination of cash on hand and external debt financing.

The deal includes a 20-year partnership with AIA for the provision of life insurance products to customers in Australia and New Zealand. Previous owner, The Commonwealth Bank of Australia, will continue to each income from the distribution of life and health insurance products under the new partnership.

Following the transaction, AIA will become the #1 life insurer in Australia and New Zealand with over 30 million individual policies and 16 million group scheme members. Customers will benefit from AIA’s high quality products, innovations, global scale and specialization advantages.

To better understand our M&A write-ups, please refer to the following:

Mergers & Acquisitions
Cash or Stock Consideration for M&A
Accretion/Dilution Part I: EPS, Earnings Yield & All-Stock Transactions
Accretion/Dilution Part II: Math and Breakeven Premiums
Accretion/Dilution Part III: Using Debt for Acquisitions
Accretion/Dilution Part IV: Synergies & Sources of Funds