September 26, 2024 | Technology | North America | Ended
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 | Ended
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 ...
August 14, 2024 | Financials | Europe | Ended
Hargreaves Lansdown / CVC-led Consortium : Deal Insight
A group of investors, including CVC Capital, Nordic Capital and Abu Dhabi’s sovereign wealth fund (through wholly-owned subsidiary, Platinum Ivy), agreed on 9-Aug-24 to take private UK investment platform Hargreaves Lansdown (“Hargreaves”) for £5.4bn. The sponsors are offering Hargreaves shareholders 1,110p cash per share, plus a 30p dividend representing the company’s 2024 fiscal year (ended 30-Jun-24), expected to be paid on 1-Nov-24. Discussions with the consortium were disclosed on 22-May-24, so the offer price reflects a 22.2% takeover premium to 21-May-24. If Hargreaves shareholders do not approve the full-year dividend before the merger’s effective date, the target board intends to declare the dividend as an interim dividend instead. The transaction is structured as a UK scheme of arrangement and also includes an alternative offer that allows shareholders to elect to receive rollover loan notes issued by Bidco. The loan notes will be converted into rollover ordinary shares of Topco, a private limited company formed specifically for the offer, and under the terms of the alternative offer, Hargreaves shares will be eligible to receive the full-year dividend. Hargreaves’ board recommends the scheme led by directors holding ...
July 22, 2024 | Consumer Discretionary | Europe | Ended
Britvic / Carlsberg : Deal Insight
After being rejected twice, on 8-Jul-24, Danish brewer Carlsberg finally reached an agreement with Britvic to acquire the UK-based soft drink maker for £3.3bn. Carlsberg is offering 1,315p per Britvic share, which includes a 25p special dividend to be paid upon closing. This consideration represents a 35.6% premium to Britvic’s undisturbed price on 19-Jun-24, before media speculation about a potential deal. On 21-Jun-24, the companies confirmed the possibility of an offer. The consideration will be adjusted for any distribution apart from the special dividend, and Britvic directors holding 0.2% have given irrevocable commitments and intend to unanimously recommend that shareholders approve the deal. The transaction is structured as a UK scheme of arrangement and, accordingly, requires Britvic shareholder approval at a Court Meeting (75% in value) and at an EGM (75% of votes cast). The scheme document is expected to be published within 28 days from announcement, by 5-Aug-24, and conditions to closing include CMA and ...
July 15, 2024 | Energy | Europe | Ended
Neoen / Brookfield : Deal Insight
On 30-May-24, Canadian investment management firm Brookfield, in collaboration with its Brookfield Renewable arm (BEP-U CN) and Singapore’s Temasek Holdings, announced that it had entered into exclusive negotiations with major shareholders of French renewable producer, Neoen. Brookfield plans to acquire 53.32% of Neoen from several key stakeholders, including Impala (an investment holding company owned by French entrepreneur Jacques Veyrat, holding 42.14%), the Fonds Stratégique de Participations (“FSP”, an alliance of seven major French insurance companies: BNP Paribas Cardiff, CNP Assurances, Crédit Agricole Assurances, Groupama, BPCE Assurances, Société Générale Assurances, and Surave, holding 6.92%), Cartusia and Xavier Barbaro (Neoen’s chairman and CEO; Cartusia is his investment vehicle, holding 1.22%), Céleste Management (holding 2.48%), and Mosca Animation Participations et Conseil (holding 0.55%). The stakes will be purchased for €39.85 per share, representing a 26.9% one-day premium. Following the block acquisition, Brookfield will pursue a mandatory cash tender offer to acquire the minority shares at the same price. Of note, Neoen’s 2023 dividend of €0.15 per share was paid to target shareholders on 11-Jun-24. At the time of the May 2024 announcement, the companies confirmed that ...
June 11, 2024 | Industrials | North America | Ended
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 | Ended
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 ...