Harrah's, Caremark: Merger Mania Heats Up

Monday, 18 Dec 2006 | 10:03 AM ET

The private equity surge continues. About $60 billion in mergers and acquisitions deals just in the U.S. have been announced this morning. Apollo Management alone is involved in two of the four deals. The only buyout not involving a PE firm was an aggressive bid by Express Scripts for Caremark Rx – which was already entertaining a bid from CVS. CNBC’s Melissa Lee reported the story on “Squawk on the Street.”

Express Scripts topped rival CVS’s bid for Caremark, offering $26 billion for the pharmaceuticals benefits manager. That’s a 15% premium over the CVS offer – which had no premium priced in. Given Express Scripts’ small size relative to Caremark, the deal is being considered a leveraged buyout.

Private equity firms Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts and Texas Pacific Groupwill take privateBiomet for about $11 billion – a 4.8% premium to Friday’s close. Biomet makes hip- and knee-replacement parts.

Apollo Management will buy Realogy for $30 a share, or about $6.65 billion in cash. That’s an 18% premium over Friday’s close. Realogy was one of the four businesses that Cendant split into back in August. Cendant is now named Avis Budget Group. After the Hertz IPO last month, Lee says it’s likely speculation will grow as to what will happen with CAR.

Finally, Apollo has also agreed with Texas Pacific Group to buy Harrah’s Entertainment for $16.7 billion.

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