Sponsored by George Fox University
Home Back Issues April 2007 Mergers and acquisitions again dominate the BIG DEAL$ of 2006

Mergers and acquisitions again dominate the BIG DEAL$ of 2006

| Print |  Email
Archives - April 2007
Sunday, April 01, 2007

The winning strategy

Mergers and acquisitions once again dominate the year’s deals.

By Brent Bullock

i_pdf


Download The 2006 BIG DEAL$ List


Researched by Perkins Coie LLP

Mergers and acquisitions once again dominated the deal landscape in Oregon, with 104 making the 2006 Big Deals list. Though that was a slight fall-off from the 108 in 2005, and deals worth more than $50 million also experienced a small drop, 2006 saw the continued strategic expansion of Oregon companies.

PacifiCorp was the biggest deal for the second time in seven years. Its $10.9 billion sale in 1999 to Scottish Power, then the second-largest utility in the United Kingdom, marked the first foreign acquisition of a U.S. utility and set a record for the largest transaction in Oregon history. But the once highly strategic combination became less of a good fit as time passed. Seeing the prospect of nearly doubling its size in one fell swoop, Mid-American Energy Holdings, a subsidiary of the Warren Buffet-led Berkshire Hathaway, seized on Scottish Power’s desire to sell by purchasing the bulk of PacifiCorp for $9.4 billion.

While no other deal approached the size of the PacifiCorp sale, 2006 still had its share of significant transactions. These included a number of strategic acquisitions in the manufacturing sector. The largest was specialty metals manufacturer Precision Castparts’ $540 million acquisition of Special Metals, a leading manufacturer of high-performance, nickel-based alloys and super alloys. The transaction enhanced Precision Castparts’ internal supply of raw materials and helped diversify its sales profile. Its acquisition of Shur-Lok, a leading manufacturer of highly engineered critical aerospace fasteners, for $113 million not only expanded Precision Castparts’ product line for commercial aircraft customers, but also increased its reach into other markets and applications. Greenbrier Companies also made multiple acquisitions, the  largest of which exceeded $227 million.

BigDeals2006Graph1.gif True to the diversity of the Oregon economy, no single industry dominated the list. Medford-based Lithia Motors continued to be the pacesetter, as it added to its auto-dealership empire; it acquired eight dealerships in 2006, for a total of more than 40 acquisitions since 2003. Outdoor apparel and footwear giant Columbia Sportswear continued to use acquisitions to expand its product lines and brands, adding Seattle-based outdoor apparel company Pacific Trail and outdoor footwear manufacturer Montrail to previous acquisitions of Mountain Hardware and the Sorel footwear brand.

Telecommunications and Internet service-provider Integra Telecom used its $247 million acquisition of Electric Lightwave and its 2,200-route-mile fiber optic network to become one of the largest and most cash profitable competitive local exchange carriers in the West. Umpqua Holdings, recognized as one of Oregon’s most innovative financial services companies, continued to grow with its $252 million acquisition of Western Sierra Bancorp, further expanding its operations in the Northern California market.

Another trend likely to continue is the increasing influence of private equity and hedge-fund investment. The recent flood of cash into those areas has increased competition to find good deals, helping to drive up prices as well as the number of deals getting done.

Some of this money has found its way to Oregon, and private-equity investors are likely to play a more substantial role in local merger and acquisition activity over the next few years. The UK private-equity firm Lion Capital’s acquisition of Salem-based Kettle Foods, and ESCO’s sale of its integrated manufacturing group to California-based Platinum Equity were just two examples of what the future may hold.
BigDeals2006Graph2.gif While the market for initial public offerings has seen improvement nationally, Oregon struck out for the second year in a row. There is little question Sarbanes-Oxley and other changes to the legal landscape have taken their toll. These and other factors probably  influenced decision-makers at what many had considered three of Oregon’s most likely IPO candidates, Clarity Visual Systems, Qsent and Unicru, to step off the treadmill and sell in 2006.

But the lack of an IPO alternative has not doused the spirits of venture capitalists, angels and other private investors who continue to put capital to work in Oregon. As this year’s Big Deals list shows, these investments were made in a diverse range of software, hardware, semiconductor, fuel cell and other businesses with strong management teams and significant market opportunities — companies likely to be the fuel for future merger and acquisition activity and potentially the return of an IPO market in Oregon.


Brent Bullock is a partner in the Portland office of Perkins Coie LLP, the research partner for Big Deals of the Year, where he is co-chair of the firm’s Corporate Governance and Transactions Group.


Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

More Articles

Proceed with caution

June 2014
Thursday, May 29, 2014
0614leadersBY COURTNEY SHERWOOD

Business and civic leaders weigh the risks and rewards of going green.


Read more...

The business of running a food cart

News
Thursday, June 05, 2014
OBM1BY HANNAH WALLACE | OB BLOGGER

What does it take to launch and run one of these mobile food businesses?  


Read more...

Why I became an Oregon angel investor

Guest Blog
Monday, July 14, 2014
AngelInvestBY TERRY "STARBUCKER" ST. MARIE

I really didn’t know that much about angel investing, but I did know a lot about the entrepreneurial spirit.


Read more...

Powerlist: Credit Unions

June 2014
Thursday, May 29, 2014
BY KIM MOORE

A conversation about credit unions with the CEOs of Advantis Credit Union and OSU Federal Credit Union, followed by June's Powerlist.


Read more...

OB Video: Oregon MESA

News
Thursday, June 26, 2014

ThumbOregon Business hosts an informal roundtable discussion about the Oregon MESA (Mathematics, Engineering, Science Achievement) program.


Read more...

Charged ride

June 2014
Thursday, May 29, 2014
0614launchBY JESSICA RIDGWAY

Brad Baker, CEO and co-founder of Works Electric, is a good husband. His wife, an OHSU employee, sought a more efficient way to commute up Marquam “Pill” Hill, so she asked Baker to build a transportation solution.


Read more...

100 Best Green Companies Keynote Speech

News
Friday, May 30, 2014

green2014-069Watch the 2014 100 Best Green Companies keynote speech by Eric Friedenwald-Fishman.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS