It started out slowly, but 2005 turned out to be a year when merger and acquisition activity nationwide topped $1 trillion amid an economy flush with cash.
Los Angeles was no stranger to the action, especially as dealmaking picked up toward the end of the year.
Unocal Corp., one of the region’s oldest companies, was swallowed up by ChevronTexaco Corp. after a takeover battle with a Chinese national oil company that played into fears about the Asian nation’s growing economic power. Later in the year, DreamWorks SKG, at one time hyped as the studio of the future, was acquired in December by Viacom Inc.’s Paramount Pictures.
As might be expected, new media and real estate took center stage. Old media stalwarts such as E.W. Scripps Co. swept up Web-based businesses, while video game giant Electronic Arts Inc. consumed an even younger company, Jamdat Mobile Inc., a developer of cell phone games.
In real estate, a unit of General Electric Co. acquired Arden Reality Inc. and its prized Southern California properties. Several other portfolios and trophy buildings also changed hands.
Here’s a rundown of the top 20 top deals of the year.
1) ChevronTexaco buys Unocal.
The deal came only after an intense bidding war with the Chinese-government-run oil company CNOCC. The battle took on political overtones when several Republican members of Congress threatened to block the Chinese effort out of national security concerns. In the end, CNOCC elected not to sweeten its bid and the board of El Segundo-based Unocal settled for Chevron’s $18 billion offer. Unocal provides the reserve-strapped ChevronTexaco what it needs most: new sources of natural gas and crude.
2) General Electric buys Arden Realty.
The deal for the L.A.-based real estate investment trust, announced in mid-December, involves $3.2 billion in cash, plus the assumption of $1.6 billion of debt. As part of the deal, Chicago-based Trizec Properties Inc. gets a 13-property Southern California portfolio that GE will spin off. The properties, mostly in West L.A. and San Diego, include the mixed-use Howard Hughes Center. The sale was a triumph for Arden Chairman Richard S. Ziman, who founded the real estate investment trust in 1991, took it public in 1996 and sold near the top of the market.
3) Paramount Pictures buys DreamWorks.
The bid by Paramount, a unit of Viacom Inc., came out of nowhere DreamWorks had been negotiating on and off with NBC Universal for months. Paramount plans to help pay for the $1.6 billion deal by selling off DreamWorks’ live-action film library, which includes “Gladiator” and “American Beauty,” while still retaining worldwide distribution rights to the collection’s 59 titles. The deal includes an ongoing production partnership with two of DreamWorks’ three founders, Steven Spielberg and David Geffen, but also marks the end of their dream to establish another major Hollywood studio.
4) Hollywood Park sold.
The storied race track was purchased by Northern California-based Bay Meadows Land Co. for $230 million. Bay Meadows, owned by San Mateo fund manager Stockbridge Capital Partners LLC, plans to continue offering live racing at the Inglewood track for at least three years while it lobbies state officials to allow slot machines and other additional gaming operations at the track, where a card club already leases space. Churchill Downs Inc. had been looking to sell Hollywood Park for some time.
5) News Corp. buys MySpace.
The interest some would say desperation of online media buying into new media was illustrated in July with Rupert Murdoch-controlled News Corp. spending $580 million on Los Angeles-based Intermix Media Inc., best known for its MySpace Web site. The site has exploded in popularity since its start three years ago and now draws some 24 million unique visitors. News Corp. want to use the site, the nation’s fifth most-viewed Internet domain, to drive traffic to News Corp’s Fox TV sites.
6) UnitedHealth Group Inc. buys PacifiCare.
The nation’s No. 2 U.S. health insurer gained a foothold in California’s lucrative healthcare market with its $9 billion purchase of the Cypress-based company, one of the few remaining for-profit managed care providers headquartered in the state. Minnetonka, Minn.-based UnitedHealth had to assure state regulators that PacifiCare member premiums would not be siphoned off to pay for the deal. The company also will be required to make $250 million in investments and charitable contributions to improve health care in underserved communities throughout the state.
7) E.W. Scripps Co. buys Shopzilla.
Another old media play. The Los Angeles-based online comparison-shopping site compiles and organizes 30 million products from more than 55,000 stores. The $525 million deal enables Cincinnati-based Scripps to build relationships with the search engine’s pay-per-click merchant advertisers at a time when newspaper companies are struggling with falling circulation.
8) Houlihan Lokey Howard & Zukin bought.
As part of the $500 million cash-and-stock deal, the Los Angeles-based investment banking firm will join the U.S. operations of Orix Corp. The deal gives Houlihan the financial strength to expand in Asia while providing Orix with an investment bank it can introduce to some of its 500,000 domestic customers. Houlihan’s partners retain a 30 percent stake in the new company. The combined operations of Houlihan and Orix will result in a company with $2.5 billion in assets.
9) Time Warner Inc. buys local Adelphia operations.
The complex purchase is part of a $17.7 billion deal for the assets of Adelphia Communications Corp., now in bankruptcy protection, as well as the local operations of cable giant Comcast Corp. The deal, approved by city officials but awaiting court approval, will make Time Warner the largest cable provider in Los Angeles, giving it 11 out of the city’s 14 cable franchises. But it’s also raised concerns that the New York-based media giant will have near monopoly control over the city’s cable system.
10) Maguire Properties Inc. buys more downtown property.
The largest owner of Class-A office property in downtown L.A. added to its position by acquiring a 10-property portfolio for $1.5 billion from Commonwealth Partners LLC, a Los Angeles real estate investment firm. Maguire, a real estate investment trust also based in Los Angeles, filed plans in June to build a 24-story, 400-hotel room and 184-condo complex at 755 Figueroa St.
11) Electronic Arts Inc. buys Jamdat Mobile Inc.
The $680 million purchase of L.A.-based Jamdat signals the high expectations for video games that are played on cell phones. Jamdat has spent the past 18 months acquiring smaller game developers to become the biggest mobile games publisher; it owns the popular Tetris, Bejeweled and Jamdat Bowling titles. Jamdat was the largest purchase ever for Redwood City-based video game giant Electronic Arts.
12. Federated buys May Department Stores.
Neither department store giant is based here, but the $11 billion deal has huge retail and real estate implications for Southern California. Cincinnati-based Federated Department Stores is the parent of Macy’s and Bloomingdale’s, while St. Louis-based May is the parent of Robinsons-May. Federated will close 68 locations as part of the deal, including 20 Los Angeles-area Robinsons-May and Macy’s stores. That will leave it with 730 stores nationwide, with many being converted to the Macy’s nameplate.
13) Aon Center sold.
Chicago-based Transwestern Investment Co. sold L.A.’s second tallest tower to New York-based investment firm Broadway Real Estate Partners LLC for $190 million. It was another bet by institutional real estate investors that downtown’s real estate prospects are on the upswing, even as questions are being raised about how long the broader real estate market can sustain itself.
14) Century Plaza sold.
San Clemente-based Sunstone Hotel Investors Inc. bought the landmark Century City property for $293 million in August from Phoenix-based Pivotal Century Plaza Hotel LLC. The 728-room hotel underwent a $70 million makeover four years ago, but Sunstone plans to spend another $22.5 million to turn the Century Plaza into a Hyatt Regency.
15) Maguire Properties forms joint venture.
As part of the $1.2 billion deal, Maguire and Australian real estate owner Macquarie Office Trust will own six buildings, mostly in Southern California, with a combined asset value of $1.2 billion. Among the properties is downtown’s One California Plaza. The deal lowers the Los Angeles real estate investment trust’s debt-to-earnings ratio, which had made it one of the highest leveraged firms on Wall Street.
16) America Online buys Weblogs Inc.
Hardly the biggest deal of the year in dollars, but the $25 million purchase points to the revenue potential of blogs. Santa Monica-based Weblogs, a network of Web sites providing commentary on topics ranging from scuba diving to gadgets, is seen as an increasingly attractive venue for targeted advertising and another way for the Time Warner Inc. unit to draw more Internet traffic.
17) Experian buys PriceGrabber.com.
The $485 million purchase by the credit checking business of British retail and financial services group GUS PLC is the most recent shopper pricing site to be bought by a larger company seeking entrance into the expanding sector.
18) American Pharmaceutical Partners Inc. buys sibling.
The $4.1 billion purchase of Santa Monica-based American BioScience Inc. enables the principal shareholder in both companies, Los Angeles billionaire Dr. Patrick Soon-Shiong, to regain operational control of the two entities he founded in the mid-1990s. The combined biotech company, maker of the new cancer drug Abraxane, will be renamed Abraxis BioScience and be based in the Los Angeles area.
19) ValueClick Inc. buys Fastclick Inc.
Westlake Village-based ValueClick, the 12th-ranked online advertising network, moved to the top spot with the $214 million all-stock purchase of Santa Barbara-based Fastclick Inc., which had been the No. 3 network and recently went public itself. The companies group Web sites and offer space on them as a package to advertisers.
20) MTV Networks buys NeoPets Inc.
The Viacom Inc. unit gains a universe of virtual critters and the attention of their young consumer owners with the $160 million purchase of Glendale-based NeoPets.com. More than 25 million NeoPets members have created and cared for “pets” that inhabit mythical lands in the online entertainment network.
