Local mergers and acquisitions were down for the third year in a row as buyers and lenders stayed cautious in a tough economy.
Large deals were particularly quiet with just one deal surpassing the billion dollar mark in 2008.
Local companies were involved in 222 deals for the 12 months through February, according to market tracker FactSet MergerStat LLC. That’s down from 265 a year ago and from 292 two years ago.
The count includes two types of deals: buys by OC companies or units based here and acquisitions of OC businesses or units by other companies.
The Business Journal list doesn’t include deals that didn’t have values disclosed. Those with prices don’t include cashed out options or cash payments in their calculations.
In all, the deals accounted for just shy of $9 billion, down from $10 billion a year earlier and from $14.3 billion two years ago.
Sales in the county totaled about $7 billion, with 113 deals being done.
Foreign buyers represented 23 of the local sales as more favorable exchange rates with key trading partners, especially in the beginning of the year, led the way for attractive deals for them.
Not all local investors were sitting on the sidelines, as buyers for smaller deals, especially for distressed companies, saw opportunity.
“We saw attractive deals from companies that were struggling,” said Chris Britt, a managing partner with Newport Beach-based private equity investor Marwit Capital LLC.
Britt said Marwit was better positioned to capitalize on these opportunities because it doesn’t rely on a hefty amount of outside financing to get a deal done. Bigger buyers, particularly private equity firms that in the past did highly leveraged buys, had trouble finding easy, available credit.
Companies in healthcare and technology, which are faring better than others in this recession, were some of the more popular targets in 2008.
But for other sectors, the merger and acquisition scene was a bleak one.
“Without interested buyers the market suffers,” said Greg Presson, a senior managing director for Los Angeles-based B. Riley & Co., which brokers private equity deals and has a Newport Beach office.
Sellers frustrated by lower bids for their companies also have been reluctant to take part, he added.
There was just one local sale to surpass the billion-dollar mark,Illinois-based Abbott Laboratories’ $1.4 billion purchase of Santa Ana-based Advanced Medical Optics Inc.
Advanced Medical, which makes eye surgery products and contact lens solutions, was renamed Abbott Medical Optics Inc.
The county’s other top sales also were in the healthcare field.
Newport Beach-based TriZetto Group Inc., a maker of software for the healthcare industry, sold for $947 million to London’s Apax Partners Worldwide.
Lake Forest-based Apria Healthcare Group Inc., a home healthcare provider, was sold to New York’s Blackstone Group LP for $922 million.
And Irvine’s CoreValve Inc., which makes heart valves that don’t require major surgery to be inserted, was sold to Minneapolis-based Medtronic Inc. for $700 million.
Other notable deals included Aliso Viejo-based drug maker Valeant Pharmaceuticals International, which sold its European subsidiaries to Sweden’s Meda AB for $356 million, and Sunstone Hotel Investors Inc.’s Hyatt Regency Century Plaza, which went for $366 million to Next Century Associates.
Local Buyers
Buys from local companies totaled $1.8 billion, with the top two deals making up a little more than $1 billion of that.
The total surpassed last year’s mark of $1.5 billion as some local investors saw opportunity to expand.
Beckman Coulter Inc. in Fullerton, a maker of instruments and supplies for medical laboratories and researchers, led the buys with its $792 million purchase of a unit of Tokyo’s Olympus Corp., which makes diagnostic equipment.
Beckman’s deal easily outsized the second largest buy, which came from Aliso Viejo-based Valeant Pharmaceuticals International and its purchase of Dow Pharmaceutical Industries Inc. for $277 million.
Marwit was one of the more active investors in the county.
It had a half dozen buys, which in some cases involved purchasing struggling companies for bargains.
“Last year was more active for us than usual,” said Britt. “We were able to take advantage of other retailers’ difficulties.”
Its biggest gain came with three purchases that added to its Orange-based retailer Boot Barn Inc., totaling $30 million. In the second half of last year it expanded the western-themed retailer from about 32 stores to 84, according to Britt.
It also added to its Newport Beach-based Traffic Control & Safety Corp., a maker of signs for controlling car traffic, with its purchase of Flashco Inc. in Bakersfield for an undisclosed amount.
Increased spending by governments for Traffic Control’s products has boosted the business, Britt said.
Marwit, which looks to buy companies with sales of $20 million to $150 million, has always focused on companies it feels can hold up well in a recession, such as healthcare and government-contracted work, he added.
Britt said that Marwit isn’t done buying yet.
