April ends, May flowers and M&A is constant.

April ends, May flowers and M&A is constant.

You may wonder “Does this concern me?”
Even if you aren’t in the M&A space according to you, but by the virtue of being in a specific industry that is involved in M&A you’re a part of it. Welcome 🙂
Scroll down to have a look at the M&A activity in your domain, in the previous week.

The graph below shows No. of Deals v/s Industries

Industrial 

  1. Gardner Denver is near a deal to a merger with a division of Ingersoll-Rand
    This would create the World’s Second Largest Industrial Pumps and Compressors, Manufacturer
    The deal would involve a mixture of cash and stock of the latter shareholders (Own slightly more than half the new company)
    IR’s climate segment included heating, ventilation, and air and temperature-controlled transport businesses will not be a part of the deal
    The merger is under a Reverse Morris Trust, this is favorable for both as the new IR would be a stand-alone, pure-play HVAC company with leading market positions, which would generate substantial multiple expansion, while GDI could unlock significant value in IR’s compressor business.

IR shareholders would receive 50.1% of the shares in the combined company, valued at around $5.8B.
The combined company would generate $6.6B in revenue this year on a pro-forma basis.

  1. Rexford Industrial Realty funds the acquisitions of two industrial sites, comprised of six buildings with cash on hand and draws on its line of credit. These two market transactions contribute over 698,000 square feet of high-quality industrial property striking a balance of in-place cash flow together with value-add repositioning and rental rate growth opportunity.

Oil and Gas
E&P

  1. Anadarko’s board of directors vote Occidental Petroleum’s $38B cash and stock bid superior to the one with Chevron
    Negotiations kick off, $1B break-up fee is on the line
    The Acquisition would add nearly a quarter million acres to Occidental’s holdings in the Permian Shale Basin while doubling its global oil and gas production to $1.4M barrels of oil

Anadarko’s Board has said that the OXY proposal “Reflects significant improvements with respect to indicating value, terms and conditions and closing certainty as compared to any previous proposal Occidental made to Anadarko”.
SEC says it obtained an asset freeze in connection with suspected insider trading in Anadarko Petroleum leading up to the company’s takeover offer from Chevron.
Suspicious purchases between Feb 8th and April 1st by unknown buyers of Anadarko shares, who could have made $2.5M in illicit profits.
SEC says a combined 1,650 call options were purchases across four transactions during the period, each purchase accounted for a large portion of such call purchases on each day.

Occidental Petroleum apparently flew to Omaha, where Warren Buffett stays; there is a rumor that suggests that bringing Buffett into this deal and help with the cash portion of its offer” for Anadarko Petroleum. Buffett’s Berkshire Hathaway owns Northern Natural Gas, the largest U.S. interstate natural gas pipeline system, and analysts at Tudor Pickering Holt have said OXY could seek to sell APC’s stake in pipeline affiliate Western Midstream Partners as part of $10B-$15B of asset sales that would follow its proposed acquisition.

On the 30th Berkshire committed $10B to help finance the deal.
John Linehan says they are struggling to understand the deal rationale, as execution risks are high and financial leverages for Occidental increases. Approval of current OXY offer would require shareholder votes from both OXY and APC holders, while the CVX offer would require support from APC holders only because OXY would issue more than 20% of its existing number of shares in the deal, and major stock exchanges require shareholder votes on such transactions.

Occidental Petroleum after-hours following a Bloomberg report that Carl Icahn has built a small position in the company, apparently the latest twist in OXY’s $37B takeover bid for Anadarko Petroleum that now includes a pricey financing deal with Warren Buffett. Icahn has not yet decided whether to push for any changes at the company, but he would like to see OXY’s offer for Anadarko go to a shareholder vote if it is accepted, according to the report. Separately, Piper Jaffray analyst Blake Fernandez thinks Chevron) is in an “enviable position” as it relates to a potential deal for APC. If the APC board takes the OXY bid and CVX, it demonstrates discipline and the company exits with a $1B breakup fee; on the other hand, most shareholders feel the APC portfolio fits nicely with CVX, and the accretion math still works if the cash component of the company’s bid is increased, Fernandez believes.

  1. Roan Resources says it has received multiple unsolicited indications of interest to buy the company as well as in-basin consolidation opportunities. Roan says it has formed a board committee to evaluate a potential sale or merger while remaining committed to creating maximum value on a stand-alone basis.
    Joseph Mills says the consolidation could be value enhancing on many levels.
  2. BASF and Russian owned investment firm LetterOne says they completed the merger of their respective Wintershall and Dea Upstream oil and gas subsidiaries and will aim for a stock market listing of the New Company in H2 2020.
    The enlarged company, called Wintershall Dea, will be the world’s largest privately-held energy company until stock market floatation. Wintershall Dea could be valued at €15B-€20B if it secures a valuation in line with peers.
    The enlarged company is on track to increase production to 750K-800K boe/day within four years, based on its existing portfolio.

Energy

  1. Generac holdings announce the acquisition of Pika Energy, Inc., a manufacturer of innovative battery storage technologies that capture and store solar or grid power for homeowners and businesses.
    The acquisition closed on April 26, 2019.
    Terms of the deal were not disclosed.
  2. American Battery Metals entered into a non-binding letter of intent to acquire a 90% interest in E.U. Energy and its 100%-owned Viken project in Sweden. ABM has to issue 20M shares for 90% stake, and E.U. Energy has the right to nominate one member to the board.
    Micheal Mulberry, President & CEO of American Battery Metals said “This transaction represents a significant milestone for ABM as the Viken is one of the largest, development-stage, vanadium projects globally with the potential for substantial by-product metal production,”
  3. GoldON Resources announced an intent to acquire an initial 60% interest and a subsequent 100% interest in Great Bear Resources’ West Madsen gold property in Ontario.
    GoldON has to invest at least $1.2M in exploration on the property through a 3-year period; pay Great Bear $0.145M and issue 0.875M GoldON shares to Great Bear. 

Engineering Materials

  1. Parker Hannifin is acquiring LORDS Corporation for $3.675B, the former doesn’t expect the deal to impact its dividend payout target averaging approximately 30-35% of net income over a five-year period while maintaining its record of annual dividend increases.
    LORD statistics: Sales approx: $1.1B; 3,100 member team, 17 manufacturing, and 15 R&D facilities globally. LORD is a provider of advanced adhesives, coating, and specialty materials as well as vibration and motion control technologies.
  2. Trinseo agrees to acquire latex production facilities and related infrastructure at Rheinmunster, Germany, from Dow Chemical; the transaction will accelerate growth through expanded adhesives and construction application portfolio.
    The deal consideration of ~€40M is in the form of assumed pension liabilities for 114 transferred employees and is expected to complete in H2 2019. The company says that overall Q1 results were affected by macroeconomic dynamics in China as well as weakness in certain key markets such as automotive and tires.Net sales were down 15% due to the pass-through of the lower raw material cost that was partially offset by higher sales volumes across all segments except Synthetic Rubber.

Adjusted EBITDA of $102M was $93M lower than the prior year, mainly due to lower margins in the Feedstocks, Performance Plastics and Latex Binder’s segments. Free cash flow stood at $128M. For 2019, forecasts adjusted EPS of $6.00 to $7.27, with adjusted EBITDA in the range of $500M – $560M

Financial Services & Investments

  1. Allianz to buy Legal & General’s home insurance business is thought to be close, but could still fall through; from a source close to the bidder.
    The move would expand the German insurer’s foothold in the UK market. Allianz previously formed a joint venture in 2017 for a presence in Britain. L&G is valued at £250M-£350M.
  2. CNO Financial Group acquires Web Benefits Design, an online benefits administration firm, to accelerate the growth of its worksite businesses, which has been expanding at a double-digit rate for the last four quarters.
    The funding is from holding company cash and expects it to add to earnings in 2020.
    May pay additional earn-out if certain financial targets are achieved.
  3. Genworth Financials and China Oceanwide Holdings Group agree to a 10th waiver and agreement of each party’s right to terminate the previously announced merger pact.
    Closing, however, remains subject to receipt of regulatory approval in China for currency conversion and transfer of funds.
  4. HomeStreet says it didn’t know about Dwight Capital’s interest in its Fannie Mae DUS multifamily origination and servicing business until it saw the letter Dwight Capital publicly released recently.
    The board will review the Dwight Capital letter and “respond as appropriate”. Fannie Mae is a profitable and important part of the commercial real estate lending business for HomeStreet.
    Dwight Capital said it wants to start a limited and confirmatory due diligence before making a formal offer.
  5. Broadridge Financial Solutions acquire Rockall, provider of securities-based lending and collateral management solutions for wealth management firms and commercial banks.
    The acquisition expands Broadridge’s core front-to-back office wealth capabilities. Rockall enables more than $3T worth of collateral daily for some of the world’s top banks.
  6. MidSouth Bancorp advances to $12.70 after agreeing to be acquired by Hancock Whitney in a stock swap that values MidSouth shares are $12.75 each.
    Each share of MidSouth will convert to the right to receive 0.2952 shares of Hancock Whitney stock. Hancock sees the deal adding to its EPS starting in Q1 2020; adding 13 cents to EPS when fully phased in. TVB dilution, however, less than 80 basis points.
  7. Arthur J. Gallagher has acquired Australian insurance broker AgriRisk Services Pty Limited for an undisclosed term.
    “AgriRisk Services is a strong cultural fit with Gallagher and the team significantly expands our farm and agribusiness capabilities across Australia,” said J. Patrick Gallagher, Jr., Chairman, President, and CEO.
  8. Mastercard agrees to acquire Transactis, a platform that helps companies improve their customers’ bill payment experience while reducing inefficiencies associated with paper bills and checks. The acquisition of Transactis supports Mastercard’s efforts to accelerate the growth of Mastercard Bill Pay Exchange. Transactis distributes its technology through a broad network of bank and non-bank partners and provides access to digital service that can be used by small business, such as schools and property owners, who often don’t support online bill paying. Terms weren’t disclosed; the transaction is expected to close in Q2.

Science

  1. Meridian Bioscience has agreed to acquire Quebec City-based GenePOC, a developer of molecular diagnostic instruments and assays, for $50M in upfront cash plus up to $70M based on the achievement of certain development and sales milestones.
    GenePOC generated less than $1M in revenue in 2018. Its molecular diagnostics platform is called revogene which is capable of multiplexing as well as sample-to-result testing for single tests.
    Meridian says the transaction will add $4M – 5M in operating expenses this year and $9M – 10M next year. It expects a positive contribution to sales and EBITDA in 2021.

Communication

  1. With an investigation of a potential $26B merger between Sprint and T-mobile dragging on at the Justice Dept. And FCC, DOJ antitrust chief Makan Delrahim is unsure and hence the delay
    Delrahim is expecting more data to come from the companies, at the FCC its on day 147 of an informal 180-day review timeline.
    Raymond James cut Sprint to Market Perform on lower prospects of the deal going forward. The probability of approval is at 55% vs 80% previously.
    US Attorney General William Barr has recused himself from the decision on whether to approve this deal, due to a potential conflict of interests- leaving Delahim with the DOJ’s final word on the matter. Barr was on the board at Time Warner before its acquisition by AT&T and own stock. The merger would have broad competitive effects on AT&T and rival Verizon.
    A financial disclosure signed Dec 24th notes Barr had AT&T vested options valued at $250K-$500K and dividends valued at $500K-$1M.
    The deadline is set on July 29th, with a regulatory decision expected within the next two months. Day 148 of 180 went well.
  2. Comcast has closed on an acquisition of Deep Blue Communications, a specialist in commercial Wi-Fi networks. Terms we not disclosed, Deep Blue has become a leading managed Wi-Fi provider for retail and entertainment venues and is certified for several hospitality brands. “Customers will benefit from our expertise in advanced business and network solutions with Deep Blue Communications’ know-how in providing commercial, managed WiFi at scale,” says Bill Stemper

Cannabis

  1. Sunniva subsidiary, CP Logistics, LLC has acquired an 80% membership interest in 420 distributions, LLC and Coachella Distillation, LLC from Group Two Investments, LLC and will assume the existing leases of the commercial property located in Coachella.
    The acquired companies will file annual license applications for the Licenses which will extend the temporary status.
    Should the Annual Licences not be obtained, the acquired licenses shall revert to Group Two and the Purchase Price shall be repaid to CPL.
  2. Curaleaf Holdings announces a deal to purchase the cannabis business of Cura Partners (owners of the Select brand) in an all-stock deal valued at just under $1B. Select’s THC products are sold in more than 900 retailers in states like CA, AZ, OR and NV. Curaleaf will issue about 95.6M shares to Cura as consideration.
  3. Canopy Growth acquired C3 Cannabinoid Compound Company for €225.9 million (CDN $342.9 million) in cash. The German firm’s top product is dronabinol, a compound with standardized concentrations of tetrahydrocannabinol (THC). It is currently approved in Austria, Denmark, and Germany for the treatment of refractory nausea and vomiting in oncology and palliative care and for cancer pain. C3 has five products on the market and generated €27.1 million (CDN $41.5 million) in sales last year.
    Shares are off a fraction premarket.

FOOD

  1. JBT has signed a definitive deal to acquire Proseal UK Ltd., a provider of tray sealing technology for the food industry.
    Proseqqal is based in Adlington, UK, and has additional production facilities in Richmond, Va., and Melbourne Australia.
  2. Constellation Brands discloses that it acquired a majority stake in Nelson’s Green Brier Distillery after initially taking a minority stake in 2016.
    Nelson’s Green Brier is a craft Tennessee whiskey distillery that is set to release a Tennessee Whiskey later this year.
    “Our ventures group was created to identify up-and-coming brands, and we’re excited about one of our first ventures investments being folded into our portfolio,” says Constellation CEO Bill Newlands. “Whiskey is a red-hot category, and Tennessee whiskey fills a white space for us,” he adds
    The company expects to scale up Nelson’s Green Brier in the next few years. The investment is Constellation’s first ventures investment to be fully integrated into the business

Health

  1. Health savings account custodian HealthEquity has approached WageWorks with an acquisition offer.
    This move would create a larger administrator of consumer-directed health, commuter and employee benefit plans.
  2. Certain subsidiaries of Regional Health Properties have agreed to sell four skilled nursing facilities to affiliated of MED Healthcare Partners, LLC for a total of $28.5M in cash.
    The four are 182-bed Attalla Health & Rehab in Attala; 100-bed Healthcare at College Park in Georgia; 118-bed Quail Creek Nursing & Rehabilitation Center in Oklahoma City, OK and 100-bed Northwest Nursing Center in Oklahoma City. The deal should close within 30days after the due-diligence on May 15.
  3. The American Hospital Association (AHA) has asked the U.S. Department of Justice to “vigorously review” Centene’s proposed $17.3B acquisition of WellCare Health Plans as it believes the marriage will reduce competition and drive prices up.
    Centene CEO Michael Neidorff has already stated that he believes the company will have to make divestments in two states to get regulators to bless the deal
  4. 3M is scooping up privately held medical device maker Acelity Inc. in a deal valued at $6.7B, including debt.
    Acelity, under its KCI brand, makes advanced wound dressings and specialized systems that seal off wounds that continue to leak blood after suturing. It had revenue of $1.5B in 2018
    Excluding purchase accounting adjustments and anticipated one-time expenses related to the transaction and integration, 3M estimates the acquisition to be $0.25 accretive to earnings per share over the same period

Airways

  1. SkyWest makes a minority investment in Southern Airways, which is the parent company of Southern Airways Express and Mokulele Airlines.
    Financials weren’t disclosed.

Media

  1. Cableco Altice USA has agreed to buy upstart streaming firm Cheddar for $200M in cash, giving a lift to its own news operations. It will make Cheddar with Altice’s News 12 channel and i24News.
    The deal came together in the past six weeks, Altice USA chief Dexter Goei tells WSJ: “We’ve been dancing around this for the last couple of years.”
    Cheddar, which launched with a focus on financial/ business content, has spread rapidly on distribution channels and skinny bundles in part due to a strategy of pursuing carriage without charging affiliate fees. Steinberg says he will reinvest some deal proceeds into Altice USA stock as a sign of commitment to integration.
  2. Rogers Media has made a new move into podcasting with the acquisition of Vancouver-based Pacific Content, one of the largest branded content podcast businesses in North America. The company works with prominent companies and advertisers to connect brands to their target audiences.
    “Podcasting is a big part of the future of audio. We quickly identified its immense potential and are being aggressive in this space,” says Rogers’ Julie Adam.
    Some 265 of Canadians listen to podcasts at least once a month, with 18% listening weekly, Rogers says, while 32% of Americans listen monthly and 22% weekly.

Sinclair Broadcast Group has its deal to acquire 21 former Fox regional sports networks from Walt Disney, The Wall Street Journal reports. The deal — valued at more than $10B — could be announced as soon as tomorrow, WSJ says. That covers the RSNs Disney agreed to sell as part of its Fox media asset deal outside the YES Network — separately valued in the $4B range and headed for a separate deal involving the New York Yankees.
Sinclair Broadcast Group has confirmed a deal to acquire 21 of the former Fox regional sports networks from Walt Disney, for $10.6B valuation. That reflects a purchase price of $9.6B after adjusting for minority equity interests. The deal excludes the YES Network, the most valuable by far of the networks, which is headed for a separate deal involving the New York Yankees. The transaction involves a newly formed indirect wholly owned subsidiary of Sinclair — Diamond Sports Group — and entertainer/entrepreneur Byron Allen has agreed to become a related partner. The transaction has gotten unanimous approval from the boards at Sinclair and Disney. It’s expected to be highly accretive to free cash flow, and brings consolidated net leverage to 4.7x and 5.1x through the preferred financing, Sinclair says.

Sinclair Broadcast Group is up 14.6% postmarket, an after-hours leader among stock movers after resuming trading in the wake of a deal to acquire 21 Former Fox regional sports networks and Fox College Sports. Disney which once hoped to get $20B for the non-YES regional sports networks, but has agreed to a deal with an enterprise value of $10.6B — is flat after hours. In an 8-K filing, Sinclair notes a termination fee of $864M  due to Disney if Disney terminates the deal as a result of a failure of Sinclair’s Diamond to consummate the deal after closing conditions are satisfied. Leverage plays a part in the deal, considering Sinclair’s closing market cap of $4B. Either party can terminate the deal if it’s not consummated on or before Feb. 3, 2020.

Education

  1. McGraw-hill Education and Cengage Learning Holdings II are planning an all-stock merger, which would better set them to compete as the rise of digital books and course material pressures printing. The new company would be headed by Cengage CEO Michael Hansen.
    Based on revenue multiples of publicly traded rivals, the combination could be valued ar around $5B, trailing roughly $8.5B markets capitalization of Londen based Pearson.

Real Estate

  1. New Residential Investment agrees to take a minority stake in Covius Holdings, a provider of technology-enabled services to the financial services industry. Covius’s services include settlement and title, document and letter fulfillment, regulatory compliance, quality assurance, commercial and residential loan due diligence and business process automation.
    Covius, which is expanding into other product categories in the mortgage industry, intends to use the proceeds to support strategic acquisitions and other growth initiatives.
  1. Intercontinental Exchange agrees to acquire the operator of one of the largest networks connecting agents and jurisdictions for handling residential mortgage records. The acquisition expands ICE Mortgage Services portfolio and will help support the residential lending industry’s shift to digitization that will help streamline the mortgage closing process.
    Provo, UT-based Simplifile has no debt and the transaction is expected to close in Q3.
  1. Booking Holdings to acquire Venga, a guest management platform for restaurants and other businesses. Following the acquisition, Venga will align closely with Booking Holdings’ brand OpenTable to further improve offerings for its 51,000+ restaurant partners.
    Terms of the transaction undisclosed.
  1. Under terms of the amended merger agreement, Jefferies Financial Group will issue two shares of Jefferies common stock for each HomeFed common stock to be acquired. There won’t be a collar or cash election option.
    The merger agreement was amended following feedback received by Jefferies and the special committee from HomeFed stockholders unaffiliated with Jefferies.
    The original agreement had an option to elect $38 per share in cash for HomeFed shares.

Source: https://seekingalpha.com/market-news/m-a

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