3 Deals to Watch: Crude, Coal and Diet Pills

NEW YORK ( TheStreet) - ConocoPhillips ( COP) Wednesday said it sold $2 billion worth of pipeline assets in two separate deals, which are a continuation of up to $20 billion in divestitures expected by 2012.

ConocoPhillips said it will be selling its 16.55% stake in Colonial Pipeline to Canadian pension fund Caisse de Dépôt et Placement du Québec for $850 million. The Houston -based company will also be selling its ownership of Seaway Crude Pipeline to Enbridge ( ENB) for up to $1.15 billion. In a separate statement, Enbridge said it would use the purchase to reverse the direction of crude oil flows on the Seaway pipeline and transport oil from the delivery point of West Texas Intermediate in Cushing, Oklahoma to the Gulf Coast.

"These two sales of non-core pipeline assets are important components of our $15-20 billion divestiture program for the years 2010-2012," said Al Hirshberg, a senior vice president at ConocoPhillips in a statement announcing the deal.

With the deals, ConocoPhillips has accomplished roughly $10.5 billion in divestitures since 2010. In 2009, ConocoPhillips first announced a program to divest $10 billion of non-core oil assets like refineries and pipelines by 2011. With Wednesday's pipeline sales, it looks like the company's hit its target and added up to another $10 billion in sales expected by the end of 2012.

To get to its target's, ConocoPhillips has done two major deals. In 2010 it sold a stake in Syncrude Canada to state-owned Chinese oil firm Sinopec ( SNP) for $4.65 billion. It also sold its entire 20% stake in Russian oil giant Lukoil ( LUKOY) for $3.4 billion in February.

ConocoPhillips shares fell nearly 1% to $71.34 in early trading. Its shares have risen nearly 6% year-to-date but are off earlier post crisis highs above $80 a share reached in April.

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The company also announced in July that it would split into two companies, one focused on oil exploration and production and another on refining. It also announced a plan to IPO its refineries business, which would create one of the largest independent oil refiners in the world. About the split of its businesses, ConocoPhillips chief executive Jim Mulva said, "We do think the pure plays are better understood in the marketplace, and it is going to put a lot more focus on our management and our leadership to accomplish their objective," in an analyst call announcing the deal.

Currently, ConocoPhillips produces nearly 1.7 million barrels of oil equivalent a day and holds additional eight billion barrels of additional oil i reserves. In total, ConocoPhillips's combined businesses have nearly 30,000 employees, $155 billion in assets and $247 billion in revenues, as of the quarter ended in September.

The split plan followed a January announcement that Marathon Oil ( MRO) would spin its exploration and refining businesses. In July, Marathon then sold shares of its pipeline business called Marathon Petroleum ( MPC) in an IPO. Since the July spin, both of Marathon's companies have fallen over 12%.

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Thomas H. Lee Partners has joined the hunger for GlaxoSmithKline's ( GSK) consumer health business that contains diet pill Alli, adding to bidding interest by other private equity funds Blackstone Group ( BX) and Prestige Bands ( PBG) and Bain Capital, according to reports from Bloomberg.

The private equity interest is targeted at all of Glaxo's consumer health products up for sale, which have been previously valued at up to $3.3 billion, but have fallen to $1.6 billion value, according to Bloomberg reports. The unit had sales of roughly $800 million and accounted for 10% of Glaxo's consumer products sales.

In April, Glaxo said it wanted to sell its diets pills business Alli, along with Lactacyd and sleeping aid Nytol so that the company could focus on faster growing brands.

Unlike private equity bidders, French drug making giant Sanofi Aventis ( SNY) doesn't have an interest in Glaxo's Alli diet pill, but would buy pieces of the consumer brands up for sale, Bloomberg reports. With thrice daily use prior to meals, the Alli pill is designed to block intestines from absorbing the fats in foods, but may cause liver injuries, prompting the U.S. Food and Drug Administration to mandate new warning labels.

Peabody Coal ( BTU) Wednesday said it's taken a controlling 90% stake in Australian coal giant Marcarthur Coal for $5 billion.

Previously, the takeover was expected to cost $4.9 billion and had been slated as a joint takeover with India's ArcelorMittal ( MT) taking a 50% stake in the bid. In October, after the 50-50 partner bid for Macarthur seemed to be all but complete, ArcelorMittal dropped from the partnership, leaving Peabody on the hook for the entire acquisition.

Peabody shares have risen to $39.60 a share since its become the sole bidder for Macarthur, but its stock is down nearly 40% year-to-date.

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When it walked away from the bid, ArcelorMittal said in a statement that it, "considers that the capital commitment that would be required to retain its Macarthur interest and grow it materially further, exceeds what is appropriate to allocate to a business that ArcelorMittal does not fully control and consolidate."

The walk-away by ArcelorMittal, the world's largest steelmaker, and the completion of the multi-billion Macarthur purchase by Peabody signals that U.S. coal makers will continue to double down on the coal business in spite of falling commodity prices and increased environmental concerns. In June, Alpha Natural Resources ( ANR) bought Massey Energy for $7.1 billion.

-- Written by Antoine Gara in New York.

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