May 31, 2024 | Energy | North America | Ended
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 | Ended
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 | Ended
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 | Ended
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 | Ended
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 | Ended
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 | Ended
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 ...