Latest Reports

June 11, 2024 | Industrials | North America | Active

Stericycle / Waste Management : Deal Insight

On 3-Jun-24, Waste Management (“WM”) announced it has agreed to acquire medical waste company Stericycle at an enterprise value of approximately $7.2bn, which includes $1.4bn of debt. WM is offering $62.00 per Stericycle share, representing a 38.5% premium to the target’s undisturbed price on 23-May-24, when Bloomberg first reported that the company was exploring a sale. The deal has been approved by both boards and conditions to closing include Stericycle shareholder approval (50%; a WM vote is not required) and regulatory approvals, including HSR. The merger agreement does not specify any foreign antitrust or investment clearance conditions. However, since Stericycle generates over $400m from international operations, some foreign regulatory filings are possible. Clauses on reasonable best efforts require the companies to take “any and all steps” necessary to gain regulatory approvals and to “lift or rescind any injunction or restraining order” that would otherwise prohibit the transaction from closing. However, a burdensome clause restricts offering any remedies that would either (i) “adversely impact projected EBITDA for the first year after closing” by more than $25m, annually, or (ii) require the companies to provide prior notice, unless the requirement is immaterial. At the written request of WM, Stericycle is required to agree to take any action “that would constitute a burdensome condition” as long as such action is “conditioned upon the occurrence of the closing.” The termination fee is $175m, and the RTF is $262.5mn. The deal is not subject to a financing condition and WM intends to use a combination of bank debt and senior notes to fund the acquisition. An HSR notification will be made within ...


June 11, 2024 | Energy | North America | Active

Marathon Oil / ConocoPhillips : Deal Insight

Continuing the wave of energy consolidation, on 29-May-24, ConocoPhillips, the largest independent oil producer in the US, agreed to acquire smaller rival Marathon Oil in an all-stock deal valued at $22.5bn, including debt. The merger ratio of 0.2550 ConocoPhillips shares for each Marathon share values the target at $30.33 per share, a 14.7% premium over the previous day’s closing. During the life of the transaction, Marathon will continue to pay its regular quarterly dividends, not exceeding $0.11 per share. ConocoPhillips will also maintain its quarterly cash dividends, including its variable return of cash. The companies have agreed to coordinate their quarterly dividend schedule to ensure that Marathon shareholders neither receive double dividends nor miss any dividend in any quarter. The deal is subject to approval from Marathon shareholders (50%), but a ConocoPhillips vote is not needed. The deal is also subject to regulatory approvals, including HSR, which is expected to be notified within 10 business days (by 11-Jun-24). A standard burdensome clause restricts the companies from making any divestments that would “reasonably be expected to have… a material adverse effect on the business, financial condition or operations of parent [ConocoPhillips] taken as a whole.” The merger agreement also contains ...


May 31, 2024 | Energy | North America | Active

Avangrid / Iberdrola : Deal Insight

On 17-May-24, Spanish renewable energy company Iberdrola and its US-listed and incorporated portfolio company, Avangrid, announced an agreement whereby Iberdrola will take Avangrid private by purchasing the remaining issued and outstanding shares that it does not already own. Iberdrola is offering $35.75 per share for the outstanding 18.4% publicly-listed stake, representing a 11.4% premium to Avangrid’s undisturbed share price on 6-Mar-24, before Iberdrola’s unsolicited proposal was made public; on 7-Mar-24, Iberdrola proposed $34.25 per share. Avangrid plans to continue paying its quarterly cash dividends, of up to $0.44 per share, through deal completion, and a pro-rata dividend will also be paid for any partial quarter, prior to settlement. Avangrid’s board has accepted the offer based on a unanimous recommendation from a special committee that evaluated strategic alternatives and conducted negotiations. The minority buyout is subject to Avangrid shareholder approval and regulatory clearances from the Federal Energy Regulatory Commission (FERC), the Maine Public Utilities Commission, and the New York Public Service Commission. Notifications for these are expected to be made within 30 business days, by 2-Jul-24. The target vote requires majority of minority votes, and the merger agreement contains customary clauses on representations, warranties, and covenants with specific MAC carve-outs for war and pandemic. Avangrid is subject to non-solicitation clauses with customary fiduciary-out exemptions ...


May 28, 2024 | Technology | Europe | Active

Darktrace / Thoma Bravo : Deal Insight

On 26-Apr-24, British cybersecurity firm Darktrace agreed to be taken private by US financial sponsor Thoma Bravo for $5.3bn. Under the terms of the buyout, Darktrace shareholders will receive $7.75 cash per share. This was equivalent to 620p per share at the time of the announcement (now 606p), then representing a one-day premium of 20.0%. Shareholders will have the option to receive the offer consideration in either US dollars or Sterling, with the latter being based on the latest practicable FX fixing date prior to the payment date. Darktrace currently does not pay any dividends. Thoma Bravo will fund the acquisition through a combination of both debt and equity, including an interim first lien term facility for $1.7bn and a second lien term facility for $460m. The transaction is structured as a UK scheme of arrangement and requires approval from Darktrace shareholders at a Court Meeting (75% in value of scheme shares voted) and an EGM (75% of votes cast). The scheme document was published on 23-May-24 and the shareholder meeting is scheduled to be held on 18-Jun-24. Darktrace directors (0.9%) consider the terms of the offer as fair and intend to unanimously recommend the scheme; the Directors and senior Darktrace employees collectively holding 3.4% of the target have signed irrevocable undertakings to support the scheme, even if a higher, competing offer is made. Additionally, the scheme has the support of US private equity firms KKR and Summit Partners, who collectively own 11.3% of the target, so Thoma Bravo already has 14.7% of support. Apart from shareholder approvals, the deal is subject to antitrust approvals from relevant authorities in Australia (ACCC), Austria (Federal Competition Authority), South Africa (Competition Commission), the UK (CMA), and the US (FTC / DoJ), as well as several foreign investment clearances (Australia, France, Italy, the Netherlands, Sweden, and the UK). Thoma Bravo has reserved the right to waive any of the regulatory conditions, but the shareholder vote is not waivable. Per the Cooperation Agreement, regulatory notifications were ...


May 16, 2024 | Technology | North America | Active

HashiCorp / IBM : Deal Insight

In a strategic move aimed at bolstering its cloud solutions offerings, IBM announced on 24-Apr-24 that it had entered into a definitive agreement to acquire HashiCorp, a leading provider of infrastructure management solutions. The tech giant is offering $35 cash per share, representing a 42.6% premium over HashiCorp’s undisturbed price on 22-Apr-24, before media reports hinted at the possibility of a deal. The transaction has been approved by both companies’ boards, and conditions to closing include HashiCorp shareholder approval (50% vote), while an IBM shareholder vote is not required. HashiCorp’s largest shareholders, who collectively own nearly 43% of the company, have entered into a voting agreement to support the deal and to reject any alternative transactions. Notably, a majority of minority vote is not needed. The deal is also subject to HSR approval and antitrust clearances from foreign jurisdictions, including the EU, as well as clearances under foreign investment laws. The merger agreement includes customary clauses on covenants, representations, warranties and a MAC, with carve-outs for war and pandemic. HashiCorp is also subject to a non-solicitation clause with customary fiduciary out exceptions. IBM intends to finance the acquisition using cash on hand. The preliminary merger proxy is expected to be filed “as promptly as reasonably practicable.” The companies expect the acquisition to close by the end of 2024. We currently assume 31-Dec-24 settlement, against a long-stop date of 24-Apr-25, extendible to 24-Oct-25. The termination fee is $264.2m, and there is no RTF. Deal Rationale IBM says the acquisition of San Francisco-based HashiCorp will allow it to cater to clients grappling with the exponential expansion of the cloud. HashiCorp’s products provide automated infrastructure lifecycle management (ILM) and security lifecycle management (SLM), which IBM believes are ...


May 14, 2024 | Financials | Europe | Active

Banco de Sabadell / BBVA : Deal Insight

On 30-Apr-24, Banco Bilbao Vizcaya Argentaria (BBVA) confirmed ongoing discussions with the board of its smaller domestic rival, Banco de Sabadell, regarding a potential merger, and further disclosed the appointment of advisers. The following day, BBVA presented an indicative proposal to Sabadell’s board, suggesting an exchange ratio of 1 BBVA share for every 4.83 Sabadell shares; the ratio – equivalent to 1 SAB SM = 0.2070 BBVA SM – implied a 30% premium to Sabadell’s undisturbed price on 29-Apr-24. The offer consideration will be adjusted for any dividends, and upon completion, it is envisioned that Sabadell shareholders would own 16% of the combined entity, with BBVA shareholders retaining the remaining 84%. However, on 7-May-24, Sabadell rejected BBVA’s proposal, citing undervaluation. BBVA promptly shifted to a hostile approach, and upon receiving board approval on 8-May-24, it announced plans to launch a takeover offer directly to Sabadell shareholders on 9-May-24, at the previously outlined terms. BBVA intends to file with Spain’s financial industry regulator, the Spanish National Securities Market Commission (CNMV), within the first half of the maximum one-month period, indicating a filing later this month. To satisfy certain laws concerning the regulation, supervision and solvency of credit institutions, the CNMV can only approve ...


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 ...



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