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Slideshow: Add-Ons Boost PE-Backed M&A. Here’s The Top 5 Deals, Including Kinder Morgan–CORRECTED

Market volatility may have slowed down M&A, but there still are some bright spots.

So far in 2011 there have been 503 U.S. announced mergers that are private equity backed. These deals are valued at$77.5 billion, which compares to the 632 deals for all of 2010 that totaled $69.34 billion, Dealogic says. Transaction values, according to the data, are up 12%.

However, these totals don’t include the mammoth Kinder Morgan deal. Kinder Morgan agreed to buy El Paso Corp. for about $38 billion, including debt, earlier this month. CORRECTED: The Carlyle Group, and Goldman Sachs Inc.’s buyout arm, Highstar Capital, along with Riverstone Holdings, bought Kinder Morgan in 2007. Kinder Morgan went public earlier this year but the PE firms still hold stakes.

Technically, the Kinder Morgan’s deal for El Paso is an add-on (where the portfolio company is the acquirer and not the PE firm itself), so it’s not included in Dealogic’s data.

But if it were, then the Kinder Morgan-El Paso deal would be the largest M&A transaction involving a PE firm this year, Dealogic says. The transaction is also the largest since TXU was sold for $32 billion to a consortium led by KKR and TPG in 2007, Dealogic says.

In fact, financial sponsor M&A data gets much brighter if we include add-ons. Total U.S. announced deals, including add-ons, jumps to 840 transactions so far this year, valued at $131.4 billion. This compares to 786 deals totaling $83.9 billion for the same time period in 2010, Dealogic says.

Here’s a slideshow of the top 5 add-on transactions this year.

(Photo by cristovao/Shutterstock)


[slide title=”No. 5 Sungard Higher Education sold to Datatel (H&F)”]

In August, Sungard Data Systems said it would sell its Higher Education Business for $1.78 billion to Hellman & Friedman. Hellman plans to merge the unit with portfolio company Datatel.

Sungard itself is owned by a slew of PE firms. In 2005, seven financial sponsors–including Silver Lake Partners, Bain Capital, Blackstone Group, Goldman Sachs Capital Partners, KKR, Providence Equity Partners and TPG–bought the software company for about $11 billion.

[slide title=”No. 4 CaridianBCT and Terumo”]

Earlier this year, Terumo bought CaridianBCT, a medical device maker, for about $2.6 billion. Caridian is owned by Gambro, which, in turn, is controlled by Investor AB and EQT IV, a PE funds manager.

Terumo is a Japanese medical equipment maker. Terumo closed the CaridianBCT buy in April.

[slide title=”No. 3 Hertz’s Bid for Dollar Thrifty”]

Earlier this year, Hertz revived plans to buy Dollar Thrifty after its prior offer, of $51 share, was rejected by company shareholders in fall of 2010. Hertz, in May, offered to buy Dollar Thrifty for $72 a share, or about $2.24 billion. Hertz’s bid trumped another offer from Avis.

Avis, in September, dropped its $1.56 offer to buy Dollar Thrifty, opening the door for Hertz to complete its plans. However, Dollar Thrifty, this month, said it failed to get any offers that met anitrust concern after Hertz failed to meet a deadline.

Hertz is owned by a team of PE firms. In late 2005, Clayton, Dubilier & Rice, the Carlyle Group and Bank of America Merrill Lynch (then Merrill Lynch Global PE) acquired Hertz in late 2005 for roughly $15 billion. Hertz went public in November 2006, raising $1.32 billion.

[slide title=”No. 2: Blackstone Sells Graham”]

In June, the Reynolds Group trumped a bid from Silgan Holdings to buy Graham Packaging, which is owned by the Blackstone Group (Reynolds, in turn, is owned by the Rank Group). Reynolds bid $25 a share, or about $4.5 billion, including debt.

Silgan Holdings, in April, had offered to buy Graham Packaging for about $1.3 billion in cash and stock. Including debt, the transaction was valued at about $4.1 billion.

York, Pa.-based Graham makes plastic containers that are used for various products including sports drinks, nutritional supplements and beer. The company is a very long hold for Blackstone, which acquired the Graham in 1998 in a $997 million deal (Blackstone reportedly invested $208.3 million equity). Typically PE firms own portfolio companies for 5 to 7 years but Blackstone has held onto Graham for roughly 13 years.

[slide title=”No. 1: Kinder Morgan”]

Earlier this month, Kinder Morgan agreed to buy El Paso Corp. for about $38 billion, including debt ($21.1 billion without debt).

Kinder Morgan’s owners include the Carlyle Group, Goldman Sachs and Highstar Capital. The deal is expected to close in early 2012.

In a side note, Goldman, which holds about 20% of Kinder Morgan, is being sued for acting as an advisor to El Paso. Goldman allegedly pushed El Paso directors to accept a price that is below its full value, according to Bloomberg News.