Latest Reports

August 04, 2016 | Consumer Discretionary | Europe | Ended

SABMiller / AB InBev : Scheme Vote Considerations

AB InBev’s 26-Jul-16 revised and final offer, combined with SABMiller’s recommendation, has essentially eliminated any possibility of a higher bid. So the question is, what can break this deal? Funds received their bump (albeit light) and now hope the deal closes at 4,500p. With all pre-conditions and major antitrust approvals cleared, and with the AB InBev vote outcome unlikely in question, there are two deal-breaking hurdles: 1) the emergence of additional dissenting shareholders, upset about the takeover premium and treatment of minorities; and, 2) the voting strategies and actions of the event driven and risk arbitrage funds (collectively, “arbs”). In this research report, we assess these risks.


July 26, 2016 | Technology | Europe | Ended

ARM Holdings / SoftBank Group : Committed Buyer, Swift Timeline to Completion

SoftBank’s founder and CEO, Masayoshi Son, last week announced his latest largescale, long-term gamble - to acquire ARM Holdings for £24bn. Unless another suitor quickly rounds up lawyers and bankers and presents an acceptable competing offer, his takeover will likely close as planned in 3Q’16. Few synergies exist between ARM and SoftBank’s businesses, and Son’s latest “crazy idea” can be seen as “visionary, risky, or both”. SoftBank shares have declined 10.6% since the 18-Jul-16 announcement, as investors question SoftBank’s ability to realise synergies. They also believe SoftBank is overpaying, are impatient that merger benefits may take years - or decades - to accomplish, and worry about pro forma leverage. Many SoftBank investors hope that Son walks away from this bet and instead uses the cash to pay down debt or to fund its Sprint (S US) investment. However, with a Cooperation Agreement executed and a firm Scheme of Arrangement signed under UK rules, SoftBank cannot walk away and is committed to closing the deal by 17-Nov-16.


June 02, 2016 | Industrials | Europe | Ended

Kuka / Midea : German Protectionism and CFIUS Scrutiny

Midea’s strategic rationale for acquiring Kuka is questionable. As a household appliance manufacturer, Midea has little experience in robots, let alone in many of the other seven industry sectors in which Kuka operates. Arguably, it makes even less sense for Midea to pursue an unsolicited takeover proposal for Kuka with a 59.6% share premium, at 17x EBITDA, for what may only be a minority stake in Kuka. If Kuka’s Management and Supervisory Boards (collectively, “Board”) do not recommend the offer, the transaction will likely fail to attain US regulatory approvals. If the transaction is recommended, Kuka shareholders may argue against any actions by management to unnecessarily divest assets or contracts to appease regulators - for the sole benefit of a non controlling shareholder - and Kuka itself risks ending up in a shareholder stalemate situation (as was the case in late 2011 with SGL Carbon (SGL GY)), given the company’s shareholder structure and Voith’s (private) 25.1% blocking stake. Increasing its stake to above 30% will likely give Midea a seat on Kuka’s Supervisory Board but, if it holds less than 50%, Midea will not be allowed to make any strategic decisions for the German company. Midea’s business profile suggests that synergies between the two companies are limited and there is little need for Midea to increase its stake. Instead, similar and much cheaper collaboration could be achieved by signing new joint ventures and partnership agreements. Regulators in the US will heavily scrutinise the deal as it presents perceived threats to US national security. Most notably, CFIUS will likely have issues with a Chinese company having an influence on Kuka’s contracts with Northrup Grumman (NOC US) to manufacture and maintain fighter jets for the US Air Force. Although Kuka’s ...


April 28, 2016 | Health Care | Europe | Ended

Meda / Mylan : VEB, the Dutch Enterprise Chamber, and Deal Collars

With its focus on over-the-counter (OTC) products and a strong presence in emerging markets and Europe, Meda is an ideal strategic partner for Mylan. Although the deal was initially met with scepticism from Mylan shareholders, most have recognised that the 92% premium is less relevant than the actual multiples that Mylan is paying, which are in-line with or lower than precedent specialty pharmaceutical deals. The price is simply what was needed to get Meda’s largest shareholder, the Olssen family (20.7%), to agree to a deal and, even at this level, cash flows are so robust that leverage at the combined company will not be constrained and Mylan can fulfil its aim of returning capital to its shareholders. In this research report, we analyse the key risks to the deal and potential outcomes.


March 30, 2016 | Financials | Europe | Ended

London Stock Exchange / Deutsche Boerse : Other Suitors, the UK Referendum and Antitrust Risks

Investors seem fixated on understanding when, and to what extent, Intercontinental Exchange (ICE US) will disrupt the agreed LSE/Deutsche Borse ‘merger of equals’ by counterbidding for LSE. While hoping for upside through a competitive situation, event driven funds and LSE investors should not forget the multiple significant risks that any acquirer will face in a sector that is notorious for failed transactions.


February 18, 2016 | Industrials | Europe | Ended

Syngenta / ChemChina : CFIUS Analysis, Monsanto

This event driven research report explores Monsanto’s issues and need to acquire Syngenta, and whether Monsanto can structure and implement a feasible counterbid. We introduce the Manalo Merger Database, our proprietary resource of European M&A deals, looking at relevant precedent deals for Syngenta/ChemChina in the context of risk arbitrage trading.



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