Latest Reports

April 18, 2024 | Health Care | North America | Active

Shockwave / Johnson & Johnson : Deal Insight

On 5-Apr-24, US pharmaceutical and medical device giant Johnson & Johnson (J&J) entered into a definitive agreement to acquire Shockwave Medical for $13.1bn, or $335 per share. This cash offer represents a 17% premium over Shockwave’s closing price on 25-Mar-24, prior to media reports on a potential deal. Shockwave cannot distribute dividends without prior written consent from J&J, with specific exceptions. The acquisition has been approved by the boards of both companies and, following completion, Shockwave will operate as a business unit within J&J MedTech’s cardiovascular portfolio. J&J plans to finance the transaction using a combination of its available cash and borrowing. The takeover requires approval from Shockwave shareholders (50%), but a J&J shareholder vote is not required. The merger agreement contains customary clauses on representations, warranties, covenants, and MAC, and Shockwave is bound by a non-solicitation clause with customary fiduciary-out exemptions. The deal is subject to regulatory approvals, including HSR and undisclosed foreign regulatory approvals. Clauses on reasonable best efforts read customary, while there is a burdensome condition that restricts divestments or remedies that would “reasonably be expected to (i) be material to the business, assets or financial condition of the company and its subsidiaries, taken as a whole, or (ii) be materially detrimental to the benefits parent and its affiliates expect as a result of the merger.” The termination fee is $448m, and there is no RTF. The preliminary proxy and regulatory filings are both expected to be filed within 10 business days, by 18-Apr-24. The companies expect the deal to close by mid-2024, against a long-stop date of 4-Jan-25, which can be extended until 7-Jul-25 if regulatory approvals remain pending. Deal Rationale Santa Clara, California-based Shockwave specialises in providing a minimally invasive, catheter-based treatment known as innovative intravascular lithotripsy, or IVL, which targets ...


April 16, 2024 | Energy | North America | Active

ChampionX / SLB : Deal Insight

Leading oilfield services company Schlumberger (“SLB”) announced that it has agreed to acquire chemistry solutions provider ChampionX in an all-stock transaction that values ChampionX at $7.8bn. The terms of their agreement, announced on 2-Apr-24, and unanimously approved by the target’s board, stipulate that ChampionX shareholders will receive 0.735 shares of SLB common stock for each ChampionX share. The offer consideration values each ChampionX share at $40.59, implying 14.7% one-day takeover premium, and through the merger ratio, ChampionX shareholders owning nearly 9% of SLB upon closing. ChampionX will continue to pay its customary dividends, not in excess of $0.095 per quarter, and SLB will also maintain is current dividend policy. Concurrent with the M&A announcement, SLB announced $7bn in shareholder payouts over the next two years, targeting returning $3bn in 2024 (previously $2.5bn) and $4bn next year. The deal is subject to ChampionX shareholder approval; a SLB shareholder vote is not required. Conditions include HSR approval, and a filing is expected within 15 business days (by 23-Apr-24). A burdensome clause notably restricts SLB from divesting target assets that represent 8% of ChampionX’s 2023 revenues, and these cannot be any chemical technologies businesses of ChampionX. The sole caveat pertains to shared assets, generally defined as broad contracts and agreements that cover both ChampionX’s chemical technologies business and its other operations. For the purposes of offering remedies, ChampionX must use reasonable best efforts to separate its shared assets into separate arrangements, and then only offer remedies concerning its non-chemical technologies businesses. The companies have not yet concluded whether the deal requires CFIUS approval, but a filing will be made with the committee if SLB determines in its “sole and absolute discretion” that such an approval is required under the Defense Production Act of 1950 (DPA). Should SLB determine that it needs CFIUS clearance, it will inform ChampionX and, within 10 business days, the companies will jointly file a draft notice. The merger agreement does not impose any obligations on SLB to propose remedies to secure CFIUS clearance. Otherwise, the merger agreement includes customary clauses covering representations, warranties, covenants, and MAC, with specific carve-outs related to war and pandemics. ChampionX has agreed to a non-solicitation clause...


April 11, 2024 | Financials | Europe | Active

Virgin Money / Nationwide Building Society : Deal Insight

Two weeks after publicly announcing a preliminary agreement, on 21-Mar-24, Nationwide Building Society (“Nationwide”), the UK's third-largest mortgage provider, signed a firm agreement to acquire Virgin Money UK (“Virgin Money”), a full-service digital bank. The offer of 220p per share in cash, which includes a 2p per share dividend to be paid “shortly prior to completion”, values Virgin Money at £2.9bn. It equates to a 38.3% takeover premium over Virgin Money’s undisturbed price on 6-Mar-24, before the companies disclosed a potential deal. Nationwide intends to finance the acquisition with its existing cash resources, and its financial advisor, UBS, has confirmed funding availability. The deal is structured as a UK court-sanctioned scheme of arrangement and requires approvals from Virgin Money shareholders at an EGM (75% of votes) and a Court Meeting (75% of shares). Target directors unanimously recommend that shareholders vote in favour, and directors holding 0.2% have offered irrevocable undertakings to vote in favour. Further, Sir Richard Branson-controlled private entities, Virgin Group and Vieco Investments, have offered irrevocable undertakings regarding 14.6% of Virgin Money shares. In total, irrevocables have been received for 14.7%. The deal is not conditional on any resolutions from Nationwide members, but it requires approvals from the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA), and the Competition and Markets Authority (CMA). The companies expect the scheme document to be published by 30-Apr-24 and for effectiveness to take place during 4Q’24; the long stop date is 31-Jan-25. Ahead of publishing the scheme document, Virgin Money will approach a High Court judge, on 19-Apr-24, to determine if all Virgin Money shareholders, including Virgin Group and Vieco Investments, can vote together as a single class at the court meeting. The target believes that all Virgin Money shareholders should vote as a single class, but due to its arrangements with Virgin Enterprises and Virgin Red (discussed below), it could be argued that the Branson-led entities should ...


April 09, 2024 | Technology | North America | Active

Nuvei / Advent International : Deal Insight

On 1-Apr-24, Canadian payments technology firm Nuvei agreed to be taken over by Advent International through a leveraged buyout, valuing Nuvei’s enterprise at $6.3bn. The private equity firm is offering $34 per share for Nuvei’s subordinate voting (NVEI US, NVEI CN) and multiple voting (unlisted) shares, representing a 56.3% takeover premium over the target’s undisturbed price on 15-Mar-24, the day before media reports emerged about a potential transaction. Through completion, Nuvei can pay regular quarterly cash dividends in amounts capped at $0.10. The transaction is supported by holders of 100% of multiple voting shares – Chairman and CEO, Philip Fayer (36.6% of the unlisted shares, which carry 10 votes per share), private equity firm Novacap (40.2%), and Canadian pension fund Caisse de Depot et Placement du Quebec (“CDPQ”, 23.2%) – and 0.3% of subordinate voting shares. Collectively, these parties own 92% of the total votes. Each of Philip Fayer, Novacap, and CDPQ have agreed to rollover 95%, 65%, and 75% of their shares while receiving $560m for the remaining stake agreed to be sold. Upon closing, the rollover shareholders will hold 24%, 18%, and 12%, respectively, of the new private company. The deal will be implemented under a statutory plan of arrangement under the Canada Business Corporations Act and is subject to several shareholder votes: (i) two-thirds of votes cast by the holders of multiple voting shares and subordinate voting shares voting together as a single class, (ii) a simple majority of the votes cast by holders of multiple voting shares, (iii) a simple majority of the votes cast by holders of subordinate voting shares, and, if required, (iv) a simple majority of the votes cast by holders of multiple voting shares excluding those held by rollover shareholders and (v) a simple majority of the votes cast by holders of subordinate voting shares excluding those held by the rollover shareholders. A shareholder circular, in Form 13E-3, is expected to be filed “as promptly as reasonably practicable”. While the three main shareholders hold all of the multiple voting shares, we believe that the focus will be directed towards votes ‘iii’ and ‘v’ above – those from holders of subordinate voting shares. The management information circular filed on 3-Apr-23 confirmed that none of the multiple voting shareholders hold subordinate voting shares. The deal is subject to multiple regulatory approvals, including from antitrust authorities in the US, Canada, Brazil, China, the Common Market for Eastern and Southern Africa (COMESA), and the ...


April 08, 2024 | Materials | Europe | Active

DS Smith / Mondi : Deal Insight

On 26-Mar-24, International Paper (IP US) proposed to acquire its British rival, DS Smith, with the aim of competing with an earlier proposal from Mondi. IP has proposed exchanging 0.1285 of its shares for each DS Smith share, initially resulting in an offer value of 415p per share, implying a 47.7% premium to DS Smith’s closing price on 7-Feb-24, which was the target’s last undisturbed date. Under the proposed terms, DS Smith shareholders would own 33.8% of the combined group, with IP shareholders holding the remaining 66.2%. IP, headquartered in Tennessee, indicated that discussions with DS Smith are ongoing, but emphasised the standard caveat that “there can be no certainty that any offer will ultimately be made.” Under UK takeover law, a put-up-or-shut-up (“PUSU”) date has been established for 23-Apr-24, by which IP must either submit a formal offer or declare its intention not to do so. DS Smith’s board has confirmed that it “acknowledges the strategic merits and potential for value creation through a combination with International Paper”, while also noting that discussions with Mondi are continuing. DS Smith had confirmed media speculation regarding discussions with Mondi on 8-Feb-24, after which UK-based Mondi stated that “it is in the early stages of considering a possible all-share combination.” With Mondi facing a PUSU deadline of 7-Mar-24 (subsequently extended twice, to 4-Apr-24, and now, to 23-Apr-24), Mondi and DS Smith jointly disclosed that they had reached an “agreement in principle” on the key financial terms of a potential all-share offer. Under this agreement, Mondi shareholders would hold 54% of the combined entity, while DS Smith shareholders would retain the remaining 46%. Although the DS Smith / Mondi merger ...


March 22, 2024 | Energy | Europe | Active

Encavis / KKR-led Consortium : Deal Insight

Power and energy producer Encavis has agreed to be acquired by US private equity firm KKR in a €2.8bn voluntary public takeover under German law. Viessmann (private), a German, family-owned heating and refrigeration manufacturing company, will join KKR as a “significant minority” co-investor. KKR is offering €17.50 per share, representing a 54.2% takeover premium to Encavis’s undisturbed price on 5-Mar-24, before the company announced it was in discussions with KKR. Encavis’ management and supervisory boards have approved the transaction and intend to recommend shareholders to accept the offer, pending their review of the offer document. Their support will be conveyed through a joint reasoned statement, expected to be published after the offer document is dispatched. There is a 54.285% minimum acceptance condition, a threshold established to ensure that at least 50% is secured after factoring in potential conversions by convertible bondholders. Encavis anticipates that only a few convertible holders will exercise their conversion rights since the adjusted conversion price is worth over €18.00, surpassing the €17.50 offer consideration. KKR has separately secured binding agreements from multiple Encavis shareholders who collectively hold nearly 31% of Encavis. These have been named as Abacon Capital and several unidentified existing shareholders, and they have expressly offered to support the offer and are expected to remain as “indirect long-term investors” in Encavis. According to the M&A release, of the 31% of support, approximately 13% will be rolled over, while the remaining 18% will be sold to KKR. Otherwise, completion is subject to foreign investment clearances and antitrust approvals. The announcement did not ...


March 15, 2024 | Industrials | Asia | Active

Alumina / Alcoa : Deal Insight

Following the announcement on 26-Feb-24 that disclosed the initiation of a transaction process and an exclusivity deed, US aluminium manufacturer Alcoa agreed to acquire its Australian joint venture partner, Alumina, in an all-stock scheme of arrangement on 12-Mar-24. Pursuant to a scheme implementation deed (SID), the agreed 0.02854 merger ratio equates to AUD 1.15 per share, a 13.1% takeover premium to Alumina’s undisturbed share price. The SID permits Alcoa to declare ordinary dividends of up to $0.10 per share per quarter (note that Alumina is not permitted to pay a dividend, and has not paid one since 2022). Alumina’s board recommends that its shareholders vote in favour of the deal in the absence of any superior proposal, and also subject to a fairness opinion from an independent expert. The exchange ratio will result in Alumina shareholders owning 31.6% of the combined company, while Alcoa shareholders will own the remaining 68.4%. Additionally, two new mutually agreed-upon Australian directors from the Alumina board will join Alcoa’s board upon scheme effectiveness. Regulatory conditions to closing include those from Australia’s Federal Investment Review Board (FIRB), the Australian Competition and Consumer Commission (ACCC), and the Brazilian Administrative Council for Economic Defence (CADE). Additionally, the deal is subject to confirmation of an Australian Tax Office (ATO) class ruling for scrip-for-scrip rollover relief. Approval from both sets of shareholders is also required – 50% of shareholders and 75% of votes at Alumina, and 50% majority at Alcoa; Allan Gray, which holds 19.9% of Alumina, has agreed to conditionally sell its stake to Alcoa to support the scheme. The SID encompasses customary deal protections, including no-shop, no-talk, and no-due diligence provisions, along with a matching right for Alcoa if a competing proposal emerges. The termination fee is set at $22m, with an RTF of $50m. Alcoa shares offered to Alumina holders will be issued in the form of CHESS depository interests (CDIs), representing a unit of beneficial ownership in Alcoa shares. This structure enables Alumina shareholders to trade Alcoa shares via CDIs on the Australian Stock Exchange (ASX). Therefore, to facilitate this, Alcoa will ...


March 08, 2024 | Industrials | Asia | Active

CSR / Compagnie de Saint Gobain : Deal Insight

French construction materials company Saint-Gobain announced on 26-Feb-24 that it has entered into a scheme implementation deed (SID) to acquire Australian rival, CSR, in a deal valued at AUD 4.5bn. Saint-Gobain will pay AUD 9.00 per share, representing a 32.9% takeover premium over CSR’s undisturbed price on 20-Feb-24, the day before Bloomberg reported on initial takeover talks. The companies subsequently confirmed on 22-Feb-24 that an indicative proposal was tabled. If the scheme is delayed beyond 26-Jun-24, an AUD 0.02 per month ticking fee will take effect. CSR is permitted to pay a fully-franked dividend of up to AUD 0.25, but this will be deducted from the offer consideration. Saint-Gobain’s board unanimously approves the scheme and CSR’s board has unanimously recommended that its shareholders vote in favour of the transaction, subject to a fairness opinion. Each CSR director intends to vote in favour of the deal. The SID imposes customary exclusivity obligations on CSR, including no-shop, no-talk, and no-due diligence provisions, but with customary fiduciary exceptions, notification requirements, and a matching right. The deal is subject to CSR shareholder approval (75%) and approval from Australia’s Foreign Investment Review Board (FIRB). Regulatory notifications were anticipated to be made by 6-Mar-24. Clauses on reasonable best efforts require Saint-Gobain to agree to any conditions imposed by a government agency as long as such conditions do not have a material impact on the expected value “to be obtained by Saint-Gobain from the transaction as a whole or conduct or on the operation of the CSR Group’s business after implementation of the scheme.” A MAC is defined to encompass a reduction of CSR’s consolidated net assets by more than AUD 180m and a recurring EBITDA decline by more than AUD 65m, with both metrics measured against “what it would reasonably have been expected to have been.” CSR generated AUD 414.6m in EBITDA for its fiscal year ending 31-Mar-23, and consensus is for the company to report its 2024 fiscal year EBITDA, ending 31-Mar-24, at AUD 402.9m, per Bloomberg. The indicative timeline estimates that the scheme booklet will be submitted to the Australian Securities and Investment Commission (ASIC) in ...


March 05, 2024 | Financials | North America | Active

Discover Financial Services / Capital One Financial : Deal Insight

On 19-Feb-24, Capital One Financial, the US consumer bank backed by Warren Buffett’s Berkshire Hathaway, confirmed a definitive merger agreement to acquire Discover Financial Services, a smaller rival and credit card issuer. The acquisition aims to create a global payments giant. Terms of the agreement call for Capital One to offer 1.0192 of its shares for each Discover share, valuing Discover at $35.3bn, and the all-share consideration represents a 26.6% takeover premium. Upon closing, Discover shareholders will hold 40% of the combined entity, with Capital One shareholders owning the 60% majority. The merger agreement allows Discover to pay regular quarterly dividends up to $0.70 per share, while Capital One is entitled to pay up to $0.60 per share. Completion is contingent on approvals from both sets of shareholders, as well as regulatory approvals from the Federal Reserve, the Office of the Comptroller of the Currency (OCC), Financial Industry Regulatory Authority (FINRA) and state banking authorities. The merger agreement contains customary clauses including reasonable best efforts that requires both companies to “defend and appeal any action or proceeding by a governmental entity (other than a bank regulatory agency)”. In our view, this is a potential risk since if Fed or OCC rejects the merger, the companies would not be obligated to appeal. The “requisite regulatory approvals” definition covers “all regulatory authorisations, consents, orders and approvals (i) from the Federal Reserve Board and the OCC.” A burdensome condition restricts the companies from offering any remedy “that would reasonably be expected to have a material adverse effect on the surviving entity and its subsidiaries, taken as a whole, after giving effect to the mergers.” The termination fee and RTF are set at $1.4bn each. On timing, Capital One’s CEO, Richard Fairbank, said on the M&A call that regulatory filings are expected ...


February 28, 2024 | Technology | Asia | Active

Altium / Renesas : Deal Insight

On 15-Feb-24, Japanese chipmaker Renesas Electronics (“Renesas”) announced a firm agreement to acquire Australian electronic design automation (EDA) company Altium for AUD 9.1bn, or AUD 68.50 cash per share. The offer consideration represents a 33.6% one-day takeover premium, and the boards of both companies unanimously approved the deal. Through effectiveness, Altium is permitted to pay an interim dividend for its half-year ending 31-Dec-23. The dividend amount remains at the discretion of the board, but it is capped “up to an amount agreed” between the merger parties; on 26-Feb-24, Altium confirmed that it raised and will pay an AUD 0.30 dividend for its fiscal 1H’24, and this will trade ex- on 4-Mar-24, with a record date of 5-Mar-24. The M&A announcement confirms that Altium’s interim dividend “will not be deducted from the scheme consideration” but that any additional distributions beyond this will be subject to a corresponding deduction. Structured as an Australian scheme of arrangement, the deal is subject to competition clearances from the US, Germany, and Turkey, as well as clearances from the Australian Foreign Investment Review Board (FIRB), CFIUS, and the German Ministry for FDI. Furthermore, approval from Altium shareholders is needed: 50% of shareholders present and voting (headcount test) and 75% of votes cast. Most notably, neither SAMR antitrust nor Renesas shareholder approval are required. Altium’s board unanimously recommends its shareholders approve the scheme, contingent upon an independent expert concluding that the deal is in the best interest of the shareholders. All directors of Altium, holding 10.4%, intend to vote in favour of the deal. Following the acquisition, Altium will continue to be led by its current CEO, Aram Mirkazemi, and will operate as a wholly-owned subsidiary of Renesas. The scheme implementation agreement includes customary provisions such as “no shop,” “no talk,” and “no due diligence” clauses, alongside customary fiduciary-out exceptions, as well as matching rights to Renesas. This is interesting, particularly since Autodesk (ADSK US) proposed to acquire the company in 2021. The MAC is defined to encompass any event that is “reasonably likely” to result in Altium’s underlying EBITDA declining by at least 25% compared to what it reported for FY’23 (Reported EBITDA for 2023 was $96.0m, hence $72.0m). According to the SIA, Renesas is solely responsible for securing FIRB approval and must ...



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