ALM Properties, Inc.
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Royal Bank of Canada, the country's biggest bank, has grown its consumer lending business with the acquisition of Ally Credit Canada Ltd., an upstart that mocked big banks in its marketing campaigns.
The deal, which closed February 1, almost doubles the size of RBC's commercial auto lending business. Ally Credit Canada was a unit of Ally Financial Inc., the former General Motors Acceptance Corporation (GMAC). Ally Credit Canada—which itself was previously known as GMAC Canada—provided financing to almost 600 car dealerships. Shortly after the deal closed, RBC told consumers that it would shut down Ally Credit Canada's high-interest savings accounts at the end of April. RBC acquired Ally Credit Canada for a $1.4 billion investment net of excess capital. Including the excess capital and after certain closing adjustments, the total consideration paid was $3.7 billion. The deal was approved by Canada's Competition Bureau on February 8. The bureau said the acquisition was unlikely to affect competition because RBC's market share in Ally's specialty areas would remain modest. The deal was RBC's largest takeover, surpassing a $2.16 billion purchase of Centura Banks Inc. in 2001.
Parent company Ally Financial said in May 2012 that it wanted to sell its international operations to speed up repayment of $5.9 billion in preferred stock owned by the U.S. Department of the Treasury. The stock was part of the $17.2 billion that the U.S. government poured into GMAC, the former auto lending arm of General Motors Corporation.
According to Canadian media reports last fall, RBC competitor TD Bank Group had also shown interest in Ally Credit Canada. RBC announced the Ally deal 20 minutes before TD Bank revealed that it would buy the U.S. credit card portfolio of Minneapolis-based Target Corp. Both deals followed last year's takeover by Bank of Nova Scotia of the Canadian operations of ING Groep NV for $3.1 billion.
For acquiror Royal Bank of Canada (Toronto)
Osler, Hoskin & Harcourt:
Corporate: Douglas Marshall, Kelly Moffat, Kashif Zaman, and associates Amelia Miao and John Valley. Tax: Patrick Marley and associate Susan Wooles. Financial services: Stephen Clark. Competition: Shuli Rodal and associate Matthew Anderson. Employment and labor: Jason Hanson. Pension and benefits: Doug Rienzo. (They are in Toronto.) Osler regularly represents RBC on strategic M&A matters.
For target Ally Credit Canada Ltd. (Toronto)
Corporate: Jim Hong and associates Daniel Doubilet, Huw Evans, Mohammed Muraj, and Anthony Tam. Tax: John Tobin and associates Saira Bhojani and Nicole Hastings. Competition: Jay Holsten. Employment: Mitch Frazer. Regulatory: Blair Keefe. (All are in Toronto.) The firm previously represented Ally Credit Canada on its Canadian securitization and structured funding programs, and has also represented ResMor Trust Company (the entity through which Ally Financial previously accepted deposits in Canada) in the sale of its Canadian mortgage business.
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A consortium that includes South Korea's biggest steelmaker is buying a $1.1 billion stake in Montreal-based ArcelorMittal Mines Canada Inc., which analysts say is the latest sign of international enthusiasm for Canada's resource sector.
Parent company ArcelorMittal said on January 2 that South Korea's Posco, Taiwan's China Steel Corp., and a group of financial investors will take a 15 percent stake in its Canadian subsidiary's Labrador Trough iron ore mining and infrastructures assets in Quebec. ArcelorMittal, founded by Indian magnate Lakshmi Mittal, is the largest steelmaker in the world.
This is the second time that Posco has bought into a Canadian mining firm. Posco spent $181 million in 2011 for a 20 percent stake in Fortune Minerals Ltd.'s Mount Klappan coal project in British Columbia. The latest deal would increase Posco's access to iron ore, its essential commodity.
Canada has recently clamped down on foreign acquisitions but the minority-stake investment is not likely to make waves.
The first installment of the deal, which was completed on March 15, involved an 11 percent stake in the Labrador Trough for $810 million. The second part of the investment, which will increase the consortium's interest to 15 percent, was expected to close in the second quarter of 2013.
For acquiring consortium led by POSCO (Seoul)
Kim & Chang:
Corporate: Jason Lee. (He is in Seoul.)
Osler, Hoskin & Harcourt:
Corporate: Shahir Guindi and associate Chima Ubani. Tax: Mark Brender and associate Nadia Rusak. Competition/Foreign investment: Michelle Lally. (They are in Montreal.)
For ArcelorMittal (Luxembourg) and ?ArcelorMittal Mines Canada Inc. (Montreal)
Shearman & Sterling:
M&A: George Casey, George Karafotias, and associate Rory O'Halloran. Corporate: associates Cecilia Ferreira and David Plattner. (Casey and O'Halloran are in New York; Karafotias, Ferreira, and Plattner are in London.)
Norton Rose Canada:
M&A and mining: Robert Eberschlag, Jeremy Grushcow, Janet Howard, Kevin McPhee, Eric Reither, Dawn Whittaker, and associates Hoori Chitilian, Sara Josselyn, and Trevor Zeyl. Tax: Barry Segal. Investment Canada: Kevin Ackhurst and Denis Gascon. (All are in Toronto except for Gascon, who is in Montreal.) Norton Rose has acted for ArcelorMittal on a number of Canadian deals.
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With demand for uranium all but nil, Moscow-based JSC Atomredmetzoloto (ARMZ) announced on January 14 a $1.3 billion deal to buy all the shares of Vancouver-based Uranium One Inc. that it didn't own, and take the company private. ARMZ is the mining arm of Russia's nuclear regulator, Rosatom, which also builds nuclear reactors.
State-owned ARMZ had hoped to use its 51.4 percent stake in Uranium One to attract investors and expand globally. But after the 2011 disaster at the Fukushima-?Daiichi nuclear power plant disaster in Japan, analysts said that ARMZ could just as easily grow as a private company without a public Canadian subsidiary. Uranium One shareholders approved the deal on March 7; it was expected to close in the second quarter.
According to Canadian media reports, ARMZ was advised to take Uranium One private after another deal went sideways. In late 2010 Uranium One wanted to buy Mantra Resource Pty. Ltd., a new Australian mining company that has a project in Tanzania. The Canadian company was short on cash, so it convinced ARMZ to buy the project on its behalf for more than $1 billion, and agreed to buy Mantra from ARMZ later on, for the same price. But Mantra's value dropped after the Fukushima meltdown, and Uranium One's minority shareholders refused to pay such a high price.
For acquiror JSC Atomredmetzoloto (Moscow)
M&A: Amanda Linett and associates Alethea Au, Evan Marcus, and Christopher Yung. Tax: John Lorito and associate Katy Pitch. Pensions: Andrea Boctor. Employment: Lorna Cuthbert and associate Kelly O'Ferrall. Regulatory: Susan Hutton. (All are in Toronto except for Hutton, who is in Ottawa.)
For target Uranium One Inc. (Vancouver)
Executive vice president, general counsel, and secretary John Sibley, vice president and legal counsel Jane Luck, and legal counsel Bozidar Crnatovic.
Corporate/M&A: Jonathan Lampe, Neill May, and associates Geoff Cowper-Smith, Rob Kallio, and Jeremy Weisz. Tax: Alan Bowman. Litigation: Tom Friedland and associate Peter Kolla. (All are in Toronto.) Goodmans has been involved in strategic matters related to Uranium One since 2010, when ARMZ acquired its majority interest in the Canadian company.
For special committee of Uranium One board of directors
Cassels Brock & Blackwell:
M&A, securities, and mining: Jeffrey Roy, counsel Paul Stein, and associates Afzal Hasan, Pollyanna Lord, and Carolyn Stroz. (They are in Toronto.) The firm previously represented a Uranium One special committee in connection with a transaction completed with ARMZ in 2010.
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Pittsburgh-based electrical products distributor Wesco International Inc. completed its $1.4 billion acquisition of rival EECOL Electric Corp. on December 14, a deal that gives it about 60 locations in western Canada. Calgary-based EECOL was Canada's largest independent electrical equipment distributor, with annual revenue of about $900 million.
Wesco—which was formed in 1922 by Westinghouse Electric Company to sell and distribute its products—said that the EECOL acquisition will add about $1 per share to its earnings in the first full year of operation. Wesco sells wiring devices, fuses, and terminals, and gets about 15 percent of its revenue from Canada.
For acquiror Wesco International Inc. (Pittsburgh)
Vice president–legal affairs Diane Lazzaris, senior counsel Michael Kuder, and counsel Mitchell Paterline.
Corporate: Frank Archibald, Bruce Chapple, Douglas Pedlow, Kevin Plowman, Don Waters, and associates Marie Beamer, Julia Loney, Yoni Patel, and Maria Sagan. Competition: Casey Halladay and associate Devin Anderson. Real estate: Stacey Handley, associate counsel David Ross, and associates Novy Cheema and Fred Gjoka. Tax: Todd Miller. Pension: Mark Rowbotham. Environment: counsel Henry Krupa. Employment: Lyndsay Wasser. (All are in Toronto except for Plowman, Loney, and Cheema, who are in Calgary, and Pedlow, Handley and Ross, who are in Vancouver.)
Banking and finance: Brett Barragate and associates Caitlin Kozan and Kevin Samuels. (Barragate is in New York; Kozan and Samuels are in Cleveland.) The firm advised Wesco on a revolving loan related to the deal.
Finance: Charles Harris III. (He is in Pittsburgh.) The firm advised Wesco on the revolving loan.
For lender Credit Suisse
Fasken Martineau DuMoulin:
Banking and finance: Felix Gutierrez, Jon Holmstrom, David Johnson, and associates Alexandre Gagnon and Louise Kennedy. Competition: Huy Do. Real estate: Andrea Centa. Tax: Christopher Steeves. (All are in Toronto except for Gutierrez and Gagnon, who are in Montreal.)
Skadden, Arps, Slate, Meagher & Flom:
Banking: Sal Guerrera, counsel Rene Ghadimi, and associate Kyle Hatton. (Guerrera and Hatton are in New York; Ghadimi is in Chicago.)
For target EECOL Electric Corp. (Calgary)
Competition: Omar Walil and associate Rory McGillis. (They are in Toronto.)
Warren Tettensor Amantea:
Robert Benson, Matthew Kachur, Donald Kelly Q.C., and associates Rahim Merchant and Wai-Yue Tse. (They are in Calgary.) Kelly has since retired from the firm.