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M&A: Top family businesses M&A deals 2010

By Marc & Katie

01 $11 billion Reliance Infratel's merger with GTL Infrastructure

Reliance Infratel, a subsidiary of the Ambani family-controlled Reliance Communications, will merge its tower assets with GTL Infrastructure, part of Global group, in an $11 billion deal.The new company intends to profit from future prospects in India's high-growth telecom infrastructure sector. Crucially for Reliance Communications chief Anil Ambani, cash from the deal will also be used to substantially reduce his company's net debt, which is in the region of $7 billion.

How much the deal has been influenced by his brother Mukesh's entrance into the telecommunications industry as a result of the scrapping of non-competition agreements between their respective conglomerates is open to debate. Mukesh, head of Reliance Industries, purchased a substantial stake in Infotel Broadband Services in June (see number 8 on the list).

02 $7.6 billion Heineken NV's acquisition of Femsa Cerveza

In a bid to access the lucrative beer markets in Latin America, family-controlled Heineken acquired Mexico-based brewer Femsa in January. The deal not only increases the Dutch-based company's profile in Latin America, but also consolidates its position as the world's second-largest brewer by revenue. The all-share transaction also sees Femsa gain a 20% shareholding in the Heineken Group and the right to appoint two non-executive directors to the supervisory board. 

As a result of the deal ownership of Heineken by L'Arche Green NV, the Heineken family holding company, falls from 58% to 50%. Commenting on the deal, non-family CEO Jean-Francois van Boxmeer (pictured) said: "This is a compelling and significant development for Heineken. Through this deal we become a much stronger, more competitive player in Latin America, one of the world's most profitable and fastest growing beer markets."

03 $6.9 billion Merck KGaA's  acquisition of Millipore Corp

On the back of a year of growth in 2009, family-owned pharma group Merck announced in March it planned to buy US-based life sciences business Millipore in a bid for expansion into the US. The deal, valued at $6.9 billion, is expected to create €2.1 billion in revenues for the pharmaceutical and chemical company, now in its 12th-generation of family ownership. Germany-based Merck is using cash to finance a sizable portion of the deal, as well as agreeing to take on the net debt of Millipore. 

With roots dating back to 1668, Merck is the oldest chemical and pharmaceutical company in the world. The founding family owns around 70% of the €7.7 billion business through its holding company E Merck KG and, through a family board, defines the basic strategy of the Merck companies.

04 $2.5 billion Banco Santander's acquisition of its remaining share in Santander Mexico

In a bid to access one of the world's key growth regions, family-controlled Banco Santander purchased the remaining 24.9% of Santander Mexico it did not already own in June. Spain's largest bank will buy the share from Bank of America for $2.5 billion, valuing the whole unit at $10 billion.

Commenting on the deal, family chairman Emilio Botin said: "Mexico is one of the group's key markets, with high potential due to the low level of use of banking services in the country and the sound, efficient and competitive business model of the Mexican subsidiary." Santander is the third largest financial group in Mexico and Spain's largest bank with revenues of €29.4 billion in 2009. The Botin family has managed Banco Santander since 1857, but until Emilio took over in 1986 it was a small, regional bank.

05 $1.92 billion Shaw Communications' acquisition of Canwest Global Communications Corp's broadcasting assets

Shaw Communications' acquisition of Canwest Global Communications broadcasting arm came only after much negotiation with Canwest's shareholders. 

Shaw initially made its $1.9 billion offer for bankrupt Canwest in May, but the deal was opposed by shareholders, including the founding Asper family, on the grounds that they would receive nothing from the takeover as the money would be used to repay debts. After two days of negotiations between the two parties, a deal was reached that included a $10.6 million payout to the shareholders as part of the acquisition.

Canada-based Shaw Communications is currently headed by third-generation Jim Shaw, who has expanded the family cable business into a media giant with 2009 revenues of $3.4 billion.

06 $1.63 billion Hinduja Group's acquisition of KBL epb

When the Hinduja family announced in May it was to purchase Belgium-based banking group KBC's European private banking subsidiary for $1.63 billion, it ended months of speculation. 

The Hinduja Group, a diversified conglomerate headquartered in Europe although it was founded in India, has prior interests in banking through its Hinduja Bank Switzerland and Induslnd Bank in India, which has a balance sheet of $8 billion. The family said it plans to grow KBL epb internationally, giving it greater access to the growing markets in the Middle East, India and Asia. Srichand P Hinduja, chairman of the Hinduja Group, said the family was "very pleased" to welcome KBL epb into the business. 
The Hinduja Group was founded in 1914 by Parmanand Deepchand Hinduja and is now controlled by four second-generation brothers. KBL epb is one of Europe's largest onshore private banking groups with assets under management of €47 billion.

07 $1.36 billion Cablevision's acquisition of Bresnan Communications

Cablevision Systems Corporation, the family-controlled media, entertainment and sports company, announced in June that it will acquire Bresnan Communications from Providence Equity Partners. The deal will see US-based Cablevision expand nationally and also pick up 300,000 of Bresnan's subscribers. In order to finance the deal, Cablevision said it would take on $1 billion in non-recourse debt with the company providing a further $400 million. 

Second-generation Cablevision president and CEO James Dolan (pictured) said: "We believe the acquisition of Bresnan is an excellent opportunity to leverage Cablevision's strong management team and build shareholder value. The Bresnan team has built an impressive cable business that performs well financially and we look forward to working to enhance those systems further." Cablevision had a strong operating performance in 2009, when it increased revenues to $7.8 billion.

08 $1 billion Reliance Industries' acquisition of Infotel Broadband Services

Following the scrapping of non-competition agreements with his brother Anil in May, Reliance Industries head Mukesh Ambani wasted no time in entering the communications industry with a $1 billion acquisition of 95% of Infotel Broadband Services.

Infotel won the bidding for national broadband access to the new 4G networks and will become a subsidiary of RI, which has revenues of $44.6 billion and contributes 14.5 % of India's total exports.

RI has businesses in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production, so the move into communications represents a diversification for the India-based conglomerate.

Despite being two of the most successful businessmen India has ever produced, Mukesh and Anil Ambani are better know for their feuds than for their business acumen. The brothers signed non-competition agreements in 2006 after their deceased father's Reliance empire was split into two separate entities, Reliance Industries and Reliance ADA Group, in 2005. Anil took control of the communications businesses, meaning Mukesh was prevented from entering the industry until this year.

09 $600 Million Essar Group's acquisition of Trinity Coal

Essar Minerals, a subsidiary of the family-controlled conglomerate Essar Group, announced in March it planned to acquire US-based Trinity Coal for $600 million. The acquisition is part of the India-based conglomerate's plan to secure raw materials for its steel and power operations worldwide and will give it access to a further 200 million tonnes of coal in the US.

The deal is also part of a larger expansion strategy by Essar Energy, which saw the company raise $1.8 billion in May through its IPO on the London Stock Exchange. The revenue generated from the listing will be used to fund future expansion, as vice chairman and second-generation family member Prashant Ruia explained: "Now is the right time to open the business up to global capital, to fuel our future growth ambitions and to address India's significant energy deficit."

Undisclosed deals

01 Estee Lauder's acquisition of Smashbox Beauty Cosmetics Inc
Undisclosed amount

The Estee Lauder Companies Inc, the luxury cosmetics group controlled by the Lauder family, announced in May it plans to acquire Smashbox Beauty Cosmetics Inc, a privately-held cosmetics company owned by descendents of make-up legend Max Factor. 

Financial terms of the agreement were not disclosed, however Estee Lauder said it expected the deal to add to earnings by 2011. It also hopes the Smashbox brand will appeal to new and younger customers and plans to expand the brand both in its native US and internationally.

Smashbox was founded in 1996 by Dean and Davis Factor, great-grandsons of Max Factor, and has grown to become a specialty cosmetics brand.

Estee Lauder was founded in 1946 when Joseph Lauder and his wife Estee began producing cosmetics in New York. Under their son Leonard the business grew into an international concern, which today has revenues of $7.3 billion.

02 VW's acquisition of Italdesign
Undisclosed amount

Volkswagen AG, the family-controlled car manufacturer, announced in May it will take a 90.1% stake in the family-owned design and development company Italdesign Giugiaro. Financial terms of the deal were not disclosed, however VW said it would acquire the share from Italdesign's current family owners, the Giugiaro family, through its Lamborghini brand. The founding family will retain the remaining shares. 

Italdesign is the company behind some of VW's best-selling brands, including the Golf, Passat and the Audi 80. Founded in 1968 by Giorgetto Giugiaro and Aldo Mantovani, Italy-based Italdesign today has revenues of €100 million and several second-generation family members working alongside the founders.This is a less high-profile acquisition for Germany-based VW after last year saw the company announce a controversial takeover of Porsche, which is controlled by a rival branch of the family that controls VW.

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