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August 22, 2008 1:27 PM

Friday Deal Mania in Pharmaceutical, Reinsurance, Steel Industries

Posted by Zach Lowe

Long weekends in August? Not for five firms involved in three separate $1 billion-plus deals announced today.

SEVERSTAL / PBS COALS

Let's start in the always active steel industry, where, two days after ArcelorMittal sured up access to raw materials in South America, rival Severstal bought a U.S. coal producer for $1.3 billion.

The Am Law Daily has written several stories in the past few months about the worldwide rush among steel companies for iron ore, coking coal, and other raw materials that go into making steal. The price for such raw materials has nearly doubled in some markets as China and India continue to show an endless appetite for steel.

Severstal, Russia's biggest steelmaker, targeted Pennsylvania-based PBS Coals, which produces more than 4 million metric tons of coking coal per year, Bloomberg reported.

The deal is Severstal's fourth steel-related acquisition in the U.S. this year, according to past Am Law Daily reports. Severstal has now spent about $4 billion on steel plants in West Virginia, Pennsylvania, Ohio, and Maryland, in part to take advantage of the weak dollar, according to Bloomberg.(Skadden, Arps, Slate, Meagher & Flom has repped Severstal in several of those transactions.)

Both companies in today's announced deal have turned to Canadian firms for advice.

Severstal has tapped a Torys team led by partners Michael Akkawi in Toronto and Joris Hogan in New York.

PBS is represented by a team from Borden Ladner Gervais.

AON / BENFIELD

In the reinsurance world, Chicago's Aon Corp., the world's largest insurance broker, bought London-based Benfield Group, a reinsurer, for $1.6 billion.

A team from Clifford Chance is representing Aon on the transaction. The firm did not immediately respond to requests for comment and the names of the lawyers handling this.

Debevoise & Plimpton partners Jeremy Hill, Andrew Sommer, and Richard Ward are advising Benfield on the deal.

Aon has been circling Benfield since 2006, when the broker expanded its London operation by hiring about 20 Benfield employees--a move that triggered a brief litigation battle, Bloomberg reports. The deal makes sense for both sides, Bloomberg says. Aon will increase its presence in the catastrophe-related reinsurance market in the U.S., Asia, and Latin America, while Benfield, which has been struggling with a decline in income, gets a much-needed boost.

KING PHARMACEUTIALS / ALPHARMA

Finally, some intrigue in the pharmaceutical world, where Tennessee-based King Pharmaceuticals, a leading maker of painkillers, saw target Alpharma Inc. reject its $1.38 billion bid, according to the Associated Press. King says it's prepared to take the bid directly to shareholders.

Alpharma, based in Bridgewater, N.J., is a tempting target for acquisition-hungry companies because it appears to be on the verge of a profits windfall thanks to its Flector pain relief patch, which analysts expect to catch on, Bloomberg says.

Alpharma is likely looking for a higher bid, and could draw interest from other pharma biggies, analysts say.

Dewey & LeBoeuf is representing King, the firm says. Partners Mort Pierce, Chang-do Gong, Ivan Presant, and Bob Myers are leading the team.

 

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