November 27, 2024 | Financials | Europe | Active
Banco BPM / UniCredit : Deal Insight
On 25-Nov-24, UniCredit announced a €10.1bn all-share voluntary public exchange offer to acquire rival Italian lender Banco BPM (Banca Popolare di Milano), proposing 0.175 UniCredit shares per BPM share. The offer consideration values BPM at €6.657 per share, reflecting a modest 0.5% premium to its prior closing price, but a 14.8% premium based on its 6-Nov-24 price before BPM bid €1.6bn for asset manager Anima Holding (ANIM IM). A two-thirds minimum acceptance condition has been set, but UniCredit reserves the right to partially waive this condition as long as it secures at least 50% + 1 share. The offer is definitive, but unsolicited, and UniCredit expects to complete the offer by June 2025. BPM’s board has rejected the offer, and in a 26-Nov-24 release affirmed that the offer does not reflect “in any way the underlying profitability and the additional potential for value creation for Banco BPM shareholders.” Per UniCredit’s public exchange offer notice, the merger ratio will be adjusted for any dividends distributed by either company: “if, prior to the payment date… the Issuer and/or the Offeror pay(s) a dividend to its/their shareholders,… the Consideration shall be adjusted to take into account the deduction of the dividend distributed from the BPM Reference Price and/or the UniCredit Reference Price used in its determination.” The offer requires UniCredit shareholder approval and several regulatory clearances; a UniCredit shareholder meeting has been scheduled for 10-Apr-25, following a 24-Nov-24 board resolution. UniCredit will file notifications with the ECB and the Bank of Italy to secure authorisation for acquiring direct control of BPM and indirect stakes in the target’s subsidiaries, Banca Akros, Banca Aletti, and others. Regulatory approvals are also needed from Italy’s insurance industry regulator, IVASS, and from the Central Bank of Ireland, alongside Consob’s approval of the offer document. Before submitting the offer document to Consob, UniCredit will file applications with antitrust regulators, the Prime Minister’s office, under the Framework on Foreign Subsidies Distorting the Internal Market (FSR), FINMA, and other relevant authorities. The deal also hinges on obtaining unnamed antitrust approvals. We note that BPM’s network of branches only ...
November 21, 2024 | Industrials | North America | Active
Berry Global / Amcor : Deal Insight
On 19-Nov-24, consumer and healthcare packaging giant Amcor announced an agreement to acquire US rival Berry Global (“Berry”) in an all-share transaction valued at $8.4bn. Under the terms of the merger, Berry shareholders will receive 7.25 Amcor shares for each Berry share. At the time of the announcement the offer consideration valued the target at $73.59 per share, representing a 9.8% premium to the previous day’s closing price. Upon completion, Berry shareholders will own 37% of the combined entity, while the remaining 63% will be held by Amcor shareholders. The boards of both companies have unanimously approved the transaction and Amcor CEO Peter Konieczny will lead the combined entity; Berry’s chairman will be appointed as deputy chairman of Amcor, and Berry will nominate four directors to an expanded 11-member Amcor board. The deal is conditional on approval by both companies’ shareholders (50% approval) and regulatory clearances. Preliminary proxy statements are expected to be filed within 60 days of the merger agreement (by 18-Jan-25), with an HSR filing scheduled by 6-Jan-25. The merger agreement includes customary provisions on representations, warranties, covenants, and MAC, with specific carve-outs for events such as war and pandemics. Both companies are bound by non-solicitation clauses, which include fiduciary-out exemptions, and have agreed to “reasonable best efforts” clauses requiring them to take all necessary steps to secure approvals. Furthermore, the agreement requires the parties to defend against legal challenges, though remedies are limited by a burdensome clause restricting divestments to businesses generating net sales of no more than $550m during the 12-month period ending 30-Jun-24. The transaction is expected to close in mid-2025, and, for now, we assume 30-Jun-25 settlement. The long-stop date is 19-Nov-25, with a potential ...
November 07, 2024 | Technology | North America | Active
Altair / Siemens : Deal Insight
On 31-Oct-24, German engineering giant Siemens entered into a definitive agreement to acquire Altair Engineering for $10.6bn. Under the terms of the deal, Altair shareholders will receive $113 per share in cash, representing a premium of 18.7% over Altair’s undisturbed price on 21-Oct-24, before media reports revealed that Altair was exploring a sale. Siemens plans to fund the deal with its existing resources and strong balance sheet. The acquisition is subject to Altair shareholder approval (50% of votes) and antitrust clearances, including HSR and unspecified foreign investment approvals, as well as a 60-day ITAR notice to be filed with the DDTC. Siemens has secured a voting agreement with James R. Scapa, Altair’s CEO, and his affiliated entities and trusts, which collectively hold 53.6% of Altair’s shares. A preliminary proxy is expected to be filed within 35 days (by 4-Dec-24), and an HSR notification will be made within 10 business days (by 14-Nov-24). Altair is subject to non-solicitation restrictions, with a customary fiduciary out exception. The merger agreement, dated 30-Oct-24, contains customary clauses on representations, warranties, and covenants, including a MAC with specific exceptions for war and pandemics. The parties have agreed to “take, or cause to be taken, all actions (including defending any proceeding) and do, or cause to be done, all things necessary, proper, or advisable” to obtain regulatory approvals, with the caveat that any remedy does not result in a “burdensome condition,” which has not been defined in the merger agreement but exists in a non-public Company Disclosure Schedule. The companies expect the deal to close in 2H’25, against a long-stop date of ...
October 15, 2024 | Industrials | North America | Active
Arcadium / Rio Tinto : Deal Insight
On 9-Oct-24, Anglo-Australian miner Rio Tinto (“Rio”) entered into a definitive agreement to acquire Jersey-incorporated lithium producer Arcadium Lithium (“Arcadium”) for $6.7bn. Rio is offering $5.85 per Arcadium share, representing a 90% premium to the target’s undisturbed price on 4-Oct-24, before Reuters reported on takeover discussions. On 7-Oct-24, Rio confirmed the media report, stating that it had approached Arcadium regarding a potential acquisition, though it did not disclose any specific terms at the time. The deal has been unanimously approved by both companies’ boards and is structured as a Jersey scheme of arrangement, subject to approval by target shareholders (75% of votes cast at the scheme meeting), the Royal Court of Jersey, and regulatory approvals, including CFIUS and SAMR. Certain regulatory approvals are also needed from antitrust authorities in the UK, the US, China, Australia, Canada, Japan and South Korea, and foreign investment clearances are required from the UK, the US, Australia, Canada, Italy and Ireland. The scheme document will be filed within 20 business days, by 6-Nov-24. The transaction agreement includes customary clauses on representations, warranties, covenants, and a MAC, with carve-outs for events like war and pandemics. Arcadium is bound by a ‘non-solicitation’ clause, with fiduciary out exemptions. The termination fee is set at $200m, and there is no RTF. Clauses on “reasonable best efforts” are mostly standard, with both parties committing to “take all actions and do all things necessary,” including “litigating, defending, or otherwise contesting any lawsuits.” However, a burdensome clause prevents the companies from agreeing to “any restriction that would reasonably be expected to have a material adverse impact on [Rio Tinto] or the benefits or synergies that Rio Tinto expects to realise.” Expected completion of mid-2025 is against a long-stop date of 9-Oct-25, which can be extended twice by three months if ...
October 08, 2024 | Industrials | Europe | Active
Covestro / ADNOC : Deal Inisght
After more than a year of talks, German plastics and chemicals manufacturer Covestro has accepted a €14.7bn offer from Abu Dhabi National Oil Company (ADNOC), marking one of the largest foreign acquisitions by the Gulf state. On 1-Oct-24, ADNOC confirmed the agreed consideration of €62.00 per Covestro share, reflecting a 53.8% premium over the target’s undisturbed price on 19-Jun-23 and, more relevantly, a 22.9% premium over its share price on 10-Jun-24, the day before more recent articles surfaced suggesting that Covestro was close to granting ADNOC in-depth due diligence. Structured as a voluntary takeover offer, the transaction is supported by Covestro’s supervisory and management boards, pending a review of the offer document, and they intend to recommend it to shareholders. Covestro will not propose a dividend until the offer is completed or until regulatory approvals are secured. The minimum acceptance condition is set at 50% plus one share, and the offer is subject to various regulatory approvals, including antitrust, foreign investment, and EU foreign subsidy clearances. Key antitrust reviews will span the EU, US and China. The offer document is expected to be filed with German regulator BaFin by the end of October 2024 and published by mid-November 2024, which will allow ADNOC to initiate the acceptance period. Although the duration of the acceptance period has not been confirmed, it is expected to last ...
September 26, 2024 | Technology | North America | Active
Smartsheet / Blackstone-Vista : Deal Insight
Smartsheet, a maker of workplace collaboration software, has agreed to be acquired by a financial sponsor consortium of Blackstone, Vista Equity Partners, and the Abu Dhabi Investment Authority for $56.50 per share, valuing the company at $8.4bn. Per their latest Form 13D filings, Vista and ADIA hold 4.65% and 0.42% of Smartsheet, respectively. The consideration reflects an 8.5% premium over the target’s previous day price and a 24.6% premium over its undisturbed price from 17-Jul-24, before rumours of a deal emerged. Six weeks after Smartsheet released its 1Q’24 earnings, which beat analyst expectations and caused its shares to jump +17.2% in a single day, Reuters reported on 18-Jul-24 that Smartsheet had hired Qatalyst Partners to evaluate buyout proposals after drawing interest from private equity firms. Subsequently, on 5-Sep-24, Reuters reported that Blackstone and Vista were in talks with the company. Speculation intensified last week, with reports of “advanced talks” to take Smartsheet private in a deal valued close to $8bn. The buyout requires Smartsheet shareholder (50%) and regulatory approvals, including from HSR and from unspecified foreign regulators. Smartsheet’s board supports the deal, and Vista has signed a support agreement to vote its 4.65% in favour of the deal. The merger agreement includes a 45-day “go-shop”, expiring on 8-Nov-24, and the possibility of an alternative bidder cannot be ruled out; analysts told Reuters in a 24-Sep-24 article that strategic buyers, such as Google, Salesforce, Zoom, and Cisco, could express interest to potentially incorporate the company into their respective enterprise solutions offerings. Blackstone used a go-shop in its 2023 acquisition of Rover Group (29.4% premium, one-month window) but the sponsor did not offer one for its 2023 acquisition of Cvent Holding in (29% premium). The merger agreement includes standard provisions on representations, warranties, and covenants, as well as a MAC clause, which contains specific carve-outs for events like war and pandemics. The agreement also outlines a standard “reasonable best efforts” clause, where the parties commit to taking all necessary actions to facilitate the closing of the transaction “as promptly as practicable.” This includes ...
September 20, 2024 | Consumer Discretionary | North America | Ended
Capri / Tapestry : Thoughts on the Trial
Last week, we attended the federal court hearing for Capri / Tapestry, where the FTC is seeking a preliminary injunction (“PI”) to halt the deal until an FTC in-house administrative hearing rules on the merger’s merits. The federal hearing, presided over by Judge Jennifer L. Rochon at the US District Court for the Southern District of New York, began on 9-Sep-24, and concluded on 17-Sep-24, with closing arguments scheduled for 30-Sep-24. Based on past FTC PI cases, rulings typically occur two to three weeks after closing arguments, so this points to a decision in mid-to-late October 2024. The administrative hearing, originally scheduled for 25-Sep-24, has been postponed to 28-Oct-24 to allow the federal case to proceed. If the judge grants a PI, it could effectively end the deal, as the FTC’s in-house trial and a subsequent appeal could take months or years. If preliminary relief is granted, technically, the merger will not immediately fall through since the merger agreement extends until 10-Feb-25 and both parties are obliged to use “reasonable best efforts” to defend it. However, the uncertain timing of the administrative trial would likely push the companies to ...
September 10, 2024 | Telecom | North America | Active
Frontier Communications / Verizon Communications : Deal Insight
On 5-Sep-24, Verizon agreed to acquire communications provider Frontier, for $38.50 per share in cash, in a move aimed at bolstering Verizon’s competitive position and expanding its fibre-optic network nationwide.
The offer values Frontier’s enterprise at $20bn and represents a 37.3% premium over Frontier’s closing price from the previous day. The boards of both Verizon and Frontier have unanimously approved the transaction, expected to close within 18 months, pending approval from Frontier shareholders (50%) – though no Verizon vote is required – and regulatory clearances, including under HSR, from the Federal Communications Commission (FCC), “Team Telecom”, various state public utility commissions (“PUCs”, with only California named), and local franchise authorities. Preliminary proxy is expected to be filed within 20 business days, by 2-Oct-24.
The merger agreement includes customary provisions on representations, warranties, covenants, and MAC clauses, with specific carve-outs for events like war and pandemics.
Frontier is bound by a “no-shop” clause, albeit with fiduciaryout exceptions. Verizon retains the right to propose revised terms during a match-right period. Both companies are
required to use “reasonable best efforts” to secure regulatory approvals, which may involve offering structural or behavioural remedies, except where doing so would trigger a burdensome condition – defined as any remedy that could reasonably be expected to have a material adverse effect on either Frontier or Verizon’s business. The termination fee is $320m and RTF is $590m. On timing, FCC and PUC applications are expected ...
August 19, 2024 | Consumer Discretionary | North America | Active
Kellanova / Mars : Deal Insight
Privately-held snacking giant Mars announced on 14-Aug-24 that it has entered into an agreement to acquire Kellanova, the savoury snack maker behind Pringles and Cheez-It crackers, for $35.9bn, in what is the largest M&A deal globally this year. Under the agreement, Mars is offering Kellanova shareholders $83.50 per share in cash, representing a 32.6% premium to the target’s undisturbed price on 2-Aug-24, the day before media reports surfaced concerning a merger. This is also a 46.5% premium to Kellanova’s share price on 2-May-24, when Reuters disclosed that activist investor TOMS Capital Investment Management had taken a ‘significant’ position in the company. The agreement, which is unanimously approved by Kellanova’s board, is subject to target shareholder approval and regulatory clearances, namely HSR, which is expected to be filed by 27-Aug-24. The WK Kellogg Foundation Trust and the Gund Family, who together hold 20.7% of Kellanova, have agreed to vote in favour of the transaction. The merger agreement requires both companies to use their reasonable best efforts to secure regulatory approvals, including offering divestments, if necessary. However, Mars is not required to divest any of its own businesses or brands and any divested Kellanova assets must not have generated more than $750m in 2023. The merger parties have committed to defending and contesting any legal action that seeks to block the merger. Kellanova, formerly known as The Kellogg Co., spun off its North American cereal unit, WK Kellogg (KLG US), in 2023, leaving Kellanova as the legacy business. Consequently, Kellanova / Mars also requires a tax opinion to confirm that the transaction does not impact the tax treatment of WK Kellogg’s separation. However, the opinion is not a condition to closing if it is not received for reasons unrelated to a material change in law or facts. Otherwise, the merger agreement includes standard representations, warranties, and covenants, including a Material Adverse Change clause with carve-outs for pandemics and wars. Kellanova is also subject to ...
August 15, 2024 | Technology | Asia | Active
Fuji Soft / KKR : Deal Insight
On 8-Aug-24, KKR announced a tender offer to acquire all outstanding shares of Japanese system developer Fuji Soft at JPY 8,800 per share, valuing the company at JPY 600bn ($4.1bn). The offer represents a 27.7% premium over Fuji Soft’s undisturbed price of JPY 6,890 on 6-Aug-24, the day before Nikkei reported on a potential deal. The financial sponsor expects to launch the offer in mid-September 2024, after it receives approvals from Japanese and Vietnamese antitrust regulators, as well as foreign investment clearances from Japan and possibly Belgium. The merger parties have disclosed that all relevant notifications in Japan were submitted on 2-Aug-24, and that preparations are underway to notify appropriate authorities in Vietnam. Fuji Soft’s board recommends the offer and will convene a special committee to re-assess its position once the offer is launched, before making a final recommendation. To help it meet the required minimum acceptance threshold, KKR has entered into agreements with 3D Investment Partners (“3DIP”), a Singapore-based value investment fund (holding 23.46%), and hedge fund Farallon Capital (9.22%), who have both agreed to accept the offer. Combined, these funds control a 32.68% stake in the target. Additionally, the company’s second largest shareholder, NFC Corp (9.58%), and its fifth largest shareholder, Hiroshi Nozawa (5.58%), are considering tendering their shares, according to the M&A announcement. The acceptance period will extend for 30 business days, rather than the statutory 20 days, and the minimum acceptance threshold is set at 66.64%, slightly adjusted lower from ...