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Notable Mergers and Acquisitions of the Day 9/8: (GE) (FMC) (GCA)/(MGAM) (RAX)/(CTL)
September, 12th 2014

General Electric (NYSE: GE) has signed a definitive agreement to sell its Appliances business to Electrolux for $3.3 billion. As part of the transaction, GE has entered into a long-term agreement with Electrolux to continue use of the GE Appliances brand. The transaction has been approved by the boards of directors of GE and Electrolux and remains subject to customary closing conditions and regulatory approvals, and is targeted to close in 2015.
“This transaction is consistent with our strategy to be the world’s best infrastructure and technology company,” said GE Chairman and CEO Jeff Immelt. “We are creating a new type of industrial company, one with a balanced, competitively positioned portfolio of infrastructure businesses with strong advantages in technology, growth markets, driving customer outcomes, and a culture of simplification.”

GE has taken significant steps in 2014 to reshape and focus its portfolio. In June, GE’s offer for Alstom’s Power and Grid businesses was accepted by the Alstom board and recommended by the French government. Power & Water is one of GE’s higher growth and margin industrial segments and is core to the future of GE. In August, GE completed the IPO of its North American Retail Finance business, Synchrony Financial, the first step in a planned, staged exit from that business.

The 2014 portfolio activity continues the Company’s longer-term redeployment of capital from non-core assets like media, plastics and insurance to higher-growth, higher-margin businesses in Oil & Gas, Power, Aviation and Healthcare. These moves support the Company’s portfolio strategy to achieve 75% of earnings from its Industrial business by 2016, and along with today’s announcement, highlight GE’s focus on core infrastructure businesses supported by a valuable specialty finance business.

“GE Appliances is a great business and we are proud of the role it has played in GE’s history,” Immelt continued. “Electrolux is the right global business for our customers, consumers and employees. We have greatly strengthened this franchise in the past few years. GE Appliances’ people, valuable home appliances brand, products, distribution, and service capabilities make it a perfect fit with Electrolux and its goal of accelerating growth in the U.S. Like GE Appliances, Electrolux has a nearly 100-year history in home appliances and they share the same principles of quality, innovation and customer value as GE. They are committed to supporting the growth of GE Appliances and value the GE Appliances team and its capabilities.”

“GE Appliances is a well-run operation with strong capabilities in key areas such as R&D, engineering, supply chain and customer service,” said Keith McLoughlin, President and CEO of Electrolux. “We look forward to joining forces with their team of talented and competent people.”

The transaction values GE Appliances at 8.0 times the last 12 months of earnings before interest, taxes, depreciation, and amortization. The sale will generate an approximate after-tax gain of $0.05-$0.07 per share at closing.

Goldman Sachs provided financial advice to GE, and Sidley Austin LLP was GE’s legal advisor.

* Global Cash Access Holdings (NYSE: GCA) and Multimedia Games Holding Company, Inc. ("Multimedia Games") (Nasdaq: MGAM) announced that they have entered into a merger agreement whereby GCA has agreed to acquire all the outstanding common stock of Multimedia Games for $36.50 per share, for an aggregate purchase price of approximately $1.2 billion in cash. The transaction has been unanimously approved by the boards of directors of the two companies.

"The acquisition of Multimedia Games represents a gaming-relevant transformational opportunity to combine two companies with rich gaming heritages and uniquely positions GCA as an important strategic partner to gaming operators by offering them deeper and more integrated solutions across their entire gaming floor," remarked Ram V. Chary, President and Chief Executive Officer of GCA. "This acquisition further strengthens and broadens GCA's portfolio of solutions, which has been embraced by our customer base," added Mr. Chary.

Patrick J. Ramsey, Chief Executive Officer of Multimedia Games, noted, "We are excited about the opportunity this combination provides to leverage Multimedia Games' creative and innovative game development capabilities with GCA's expansive customer base to provide best-in-class, integrated solutions to the gaming community, and deliver increased value and scale to our respective customers and employees."

Transaction Highlights

Pursuant to the merger agreement, GCA will acquire all of the outstanding stock of Multimedia Games for $36.50 per share in cash, representing a 31% premium to the closing stock price as of Friday, September 5, 2014, for an aggregate purchase price of approximately $1.2 billion. The proposed acquisition will be financed with debt and cash on hand for which GCA has secured committed debt financing. The proposed acquisition is subject to customary closing conditions, including receipt of MGAM shareholder approval and antitrust and gaming regulatory approvals, and is currently expected to be completed in early 2015.

The merger is expected to achieve approximately $30 million of synergies as a combined entity; and, on a pro forma basis, is estimated to generate about $800 million in revenues and approximately $217 million in Adjusted EBITDA based on the last twelve months results as of June 30, 2014. The transaction is expected to be immediately accretive to GCA stockholders as of the closing date of the acquisition.

Ram V. Chary will continue to serve as President and Chief Executive Officer of GCA. The combined company's headquarters will remain in Las Vegas, NV and its game development operations will be based in Austin, TX.

Advisory Partners

The advisory partners for Global Cash Access included: BofA Merrill Lynch as its exclusive advisor on financial matters; and Pillsbury Winthrop Shaw Pittman and DLA Piper as advisors on legal matters. The advisory partners for Multimedia Games included: Wells Fargo Securities as its exclusive advisor on financial matters; and Latham & Watkins as advisor on legal matters.

BofA Merrill Lynch and Deutsche Bank have agreed to provide committed debt financing to Global Cash Access for the proposed acquisition.

* FMC Corporation (NYSE: FMC) signed a definitive agreement to acquire Cheminova A/S, a wholly owned subsidiary of Auriga Industries A/S, for $1.8 billion.

Cheminova is a multinational crop protection company based in Denmark. FMC will fund the all-cash acquisition through a mixture of debt and existing cash reserves. The transaction is expected to close in early 2015 and will be accretive to adjusted earnings in the first full year following the acquisition.

"We are very excited about the opportunity to combine Cheminova with our own Agricultural Solutions business," said Pierre Brondeau, FMC Corporation president, CEO and chairman. "Cheminova is a company that we have long considered to be an attractive potential partner. It follows a similar strategic approach to FMC in applying technology to deliver solutions to its customers, and has a highly complementary product portfolio and geographic footprint. This transaction will broaden our Agricultural Solutions portfolio and significantly strengthen our market access in key agricultural end markets.

"Cheminova's direct market access in Europe, combined with its strong position in Latin America, will help bring greater balance to our business. Its technology will allow us to expand our position in existing crop segments and provide accelerated access to additional crops, such as cereals. It will also strengthen our offerings to existing customers, especially in sugarcane, soybeans and cotton."

Goldman Sachs acted as financial advisor and Wachtell, Lipton, Rosen & Katz acted as legal counsel to FMC in connection with the acquisition. Citigroup provided additional financial advice and committed debt facilities.

* Rackspace Hosting (NYSE: RAX) is active Monday following news Sunday that the company might be a takeover target of CenturyLink (NYSE: CTL).

Last month, Rackspace said it was conducting an internal review of strategic operations, though speculation that the company might sell itself has been going on for a number of years.

Bloomberg noted yesterday that the move would bolster CenturyLink's Internet and cloud services, positioning the company to better compete with the likes of Microsoft (Nasdaq: MSFT), (Nasdaq: AMZN), and Google (Nasdaq: GOOG), amongst others.

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