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Marston’s and Carlsberg UK announce £780m merger

Brewer Marston’s is to merge with Carlsberg’s UK arm, uniting ales such as Pedigree and Hobgoblin with Danish Pilsner and Somersby cider.

Marston Carlsberg Merger

The joint venture is valued at £780m, with stock market-listed Marston’s taking a 40% stake in the merged firm.

The deal involves Marston’s six breweries and distribution depots, but not its 1,400 pubs.

The new Carlsberg Marstons Brewery Company will create “synergies and productivity” benefits, Marston’s said.

Marston’s employs a total 14,000 people.

Carlsberg UK will put its Northampton brewery, London Fields brewery, and national distribution centre into the joint venture. Marston’s will put in its six national and regional breweries – Marston’s, Banks’s, Wychwood, Jennings, Ringwood and Eagle – and 11 distribution depots.

The deal means Carlsberg will have access to Marston’s pubs to sell a wider range of brands.

Ralph Findlay, chief executive of Wolverhampton-based Marston’s, said the joint venture brings together companies known for heritage and brand portfolio.

Tomasz Blawat, managing director of Carlsberg UK, said the deal enables the companies to offer “a bigger beer portfolio of complementary international, national and regional brands”.

The coronavirus lockdown means UK pubs are closed, with many in the industry saying that a mooted re-opening with a two-metre rule for customers would not work. Some pub operators have suggested that a one-metre rule might be a better compromise.

 

Read More – www.bbc.co.uk

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Hedge fund criticises ‘unjust’ takeover bid for Sirius Minerals

Crispin Odey’shedge fund has attacked Anglo-American’s “unjust” takeover bid for Sirius Minerals, saying the £405m offer does not represent a fair price for shareholders in the troubled fertiliser miner.

Odey Asset Management, which owns 1.3% of Sirius, said it would vote against the mining giant’s 5.5p-a-share bid for the company, which plans to dig the UK’s first deep mine in 40 years under the North York moors.

In an open letter to Anglo’s boss, Mark Cutifani, and Chris Fraser, the chief executive of Sirius, the London-based fund argued that Anglo had stopped short of making a “final” offer so that it could raise its bid to see off any potential counter bid for the company.

Odey said it believed Anglo would be willing to “bid substantially more” for Sirius if a counter bid for the company emerged, which it said proved that the existing offer did not represent a fair price for the company.

 

“It is Odey’s belief that Anglo American’s current offer does not represent fair value for shareholders in Sirius,” said the letter, which was signed by Odey’s fund manager, Henry Steel. The hedge fund said it would vote against any offer that was not final or that was less than 7p a share.

The existing takeover offer would wipe out the investments of thousands of small shareholders, but it still won the support of the Sirius chairman, Russell Scrimshaw. He said last month it was “the only viable proposal” to save the company’s multibillion-pound project to develop the Woodsmith fertiliser mine under the North York moors.

 

Read More – www.theguardian.com

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As big bank M&A heats up, Morgan Stanley will pay $13B for E*Trade

Morgan Stanley declared Thursday that it has agreed to buy discount brokerage pioneer E*Trade for a whopping $13 billion—representing the priciest acquisition announced by a major US bank since 2008, according to PitchBook data, when regulators arranged a string of hasty mergers to rescue the financial system.

With the deal’s emergence, the online brokerage wars may have reached an apex. Trading commissions are out the window. Charles Schwab has gobbled up smaller rival TD Ameritrade. Now, America’s second-largest investment firm is plunging into the battle in a bid to further diversify its business.

“Wealth management and online brokerage are both relatively steady and relatively capital-light, especially in comparison to sales and trading operations,” said Morningstar equity analyst Michael Wong.

This diversification effort has fueled a consistent acceleration of M&A activity in the US financial services sector. Deal value hit a decade-peak in 2018, with about $289 billion worth of acquisitions in the space, according to PitchBook data. 2019 was in second place with deals totaling $230 billion.

 

Read more – www.pitchbook.com

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10 big things: Blue Apron, HQ Trivia move on to Plan B

Blue Apron set out to transform the way people eat. HQ Trivia wanted to build the future of TV. Both companies financed their dreams by raising a lot of money from some of venture capital’s biggest names. And for a while, both companies seemed on the brink of breaking through.

But startup life can be fickle. Gradually, the early success gave way not to failure, but to what’s in some ways worse: irrelevance. And when the next-big-thing buzz wore off, both Blue Apron and HQ Trivia were confronted with the realization that their original plans for supremacy might need a major adjustment.

Blue Apron is publicly seeking a buyer, and HQ Trivia has apparently risen from the dead after a raucous, live-streamed funeral. The existential angst emanating from a pair of former Silicon Valley darlings is one of 10 things you need to know from the past week:

1. Cooks and questions

I’ve written before in some length about the turbulent times at Blue Apron, a company that encapsulates the venture capital world’s brief infatuation with meal-kit delivery startups. This week, along with its Q4 earnings, the company announced it is evaluating strategic options, including a potential merger or outright sale.

Once valued at $2 billion by VCs, life has gotten much tougher for Blue Apron since a 2017 IPO. The company has never turned an annual profit—although it did cut its losses by nearly half from 2018 to 2019, dropping from $122.1 million to $61.1 million—and revenue has been steadily shrinking.

In addition to revealing new financial numbers and plans to sniff around a sale, Blue Apron also announced the closure of a fulfillment center this week. The combination was enough to send the company’s stock price plummeting even further. It closed Friday with a market cap of less than $40 million, meaning its valuation has declined by more than 98% from its VC-backed high point.

If Blue Apron is able to find a buyer, two obvious options might be an established grocery chain or a larger food-delivery company. Those were the routes taken by some of Blue Apron’s former rivals in recent years: Fellow meal-kit startup Plated sold itself to Albertsons, while Home Chef was acquired by Kroger and Maple was gobbled up by Deliveroo.

Talks of an acquisition were also at the root of HQ Trivia’s recent drama.

The startup burst onto the scene in 2017 with its joke-filled, live-streamed trivia games, where users could win money by correctly answering an increasingly difficult slate of questions. The next year, it raised $15 million in a round reportedly led by Founders Fund, valuing the company at $100 million, according to PitchBook data.

Co-founder Rus Yusupov, who previously co-founded Vine, took to the pages of The New York Times to proclaim HQ Trivia’s “ambitions to essentially build the future of TV.” But instead, viewers slowly began to drift away, and funding dried up.

On Valentine’s Day, Yusupov reportedly sent a memo to workers announcing that a planned acquisition had fallen through and that HQ Trivia would cease operations that day. That night, HQ Trivia broadcast what was purportedly its last episode ever, replete with f-bombs, spraying champagne, complaints about high-priced dog food, and statements from host Matt Richards like, “Why are we shutting down? I don’t know. Ask our investors.”

But Monday morning brought a twist. Yusupov tweeted that after a “busy weekend,” he’d found a new buyer for HQ Trivia that wanted to keep the company up and running. Employees and fans are surely trying not to dwell on a succeeding tweet from Yusupov admitting that it’s “[n]ot a done deal yet.”

No matter what happens, we haven’t heard the last of the story. The Hollywood Reporter indicated Friday that The Ringer is planning a new podcast charting the trivia company’s rise and fall.

Today, neither Blue Apron nor HQ Trivia is where they hoped they would be back in 2017. One could go so far as to say recent events at the companies have been disastrous. But the fact remains that both have been more successful than, I don’t know, 97% of all startups that get up and running. Creating a sustainable company is really hard. Almost everyone fails. And almost everyone fails long before the point of making national headlines or reaching a unicorn valuation.

And who knows: Maybe new ownership is all Blue Apron and HQ Trivia need to mount wholesale turnarounds. The past week, though, brought plenty of reason for pessimism.

Grocery shopping may very well be transformed in the coming years, and a new future of TV may be built. But I don’t think Blue Apron and HQ Trivia will be the ones doing it.

Read More – www.pitchbook.com

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Optiv confirms ‘temporary’ UK closure and turns attention to M&A

Security giant says it is still committed to European expansion

US-based MSSP Optiv has confirmed what it called a “downsizing” of its UK operation, claiming the move is temporary as it turns its attention to M&A.

CRN reported yesterday that Optiv was in the process of shutting down in the UK, keeping on a handful of staff to continue any outstanding customer transactions.

 

In a statement Optiv called the move “temporary”, insisting that it still has plans to build a presence in Europe and has looked at 40 European businesses to acquire before deciding it “simply couldn’t justify the high valuations of these companies”.

“After a comprehensive strategic review, we’re temporarily downsizing our London-based organic operations,” Optiv said.

“We remain committed to serving the European market, clients, partners and prospects,” it added, claiming it could acquire “once European valuations right-size”.

Optiv’s CMO had previously said that the firm looked at acquiring the likes of SecureData and SecureLink, opting against making a bid because it thought the pair were overvalued.

SecureData was bought last year for a multiple of 20 times its EBITDA.

Micky Patel – partner at August Equity, which sold SecureData to Orange – told CRN earlier this year that the multiple was achieved because SecureData was unique in that it was a cybersecurity service provider that had scaled.

A panel of private equity investors also told delegates at CRN‘s Channel Conference MSP that they believe high multiples are here to stay.

 

Read More – www.channelweb.co.uk

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Yahoo Japan and Line set to merge

Japan’s biggest search engine and messaging app are set to merge under a deal agreed by their parent companies.

Yahoo Japan is the country’s biggest search engine, and has e-commerce and online banking subsidiaries.

Line is the country’s dominant messaging app, and is also popular in Southeast Asia and Taiwan.

Analysts say the merger will help the companies compete with Japan’s other online giants.

Yahoo Japan has long offered a diverse range of services but has lagged behind many of its competitors, said Seijiro Takeshita, from the University of Shizuoka.

“This will be a very big headache and threat to the players like NTT Docomo and Rakuten,” he said.

Big in Japan

While Google is the predominant search engine in the US and Europe, Yahoo is Japan’s most popular search engine.

More than 50 million people visit Yahoo Japan’s website every month.

Yahoo Japan is no longer linked to its US namesake, which sold its remaining stake in the company in 2018.

Line, which is owned by South Korean company Naver, has roughly 80 million users in Japan and a similar number in Southeast Asia and Taiwan.

The app itself is perhaps best known for cartoonish stickers, a feature which its competitors have also adopted.

In recent years, Yahoo Japan’s parent company, Softbank, has bet billions on primarily Asian-based tech companies.

The deal could also make it a dominant player in the payments market in Japan.

Softbank already has its own payment service PayPay.

With this deal, it will scoop up Linepay, which is used by many of its competitors.

“I think there will be a lot of game-changing issues that will go on,” said Mr Takeshita.

 

Read More- www.bbc.co.uk

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A buyer for British Steel is welcome but what’s Jingye’s strategy?

It’s hard to see why the Chinese firm wants to take over a loss-making business in a tough market.

 

Half the woes for steelmakers in Britain derive from dumping into world markets by Chinese producers, or so we have been told for a couple of decades. So it is a strange sort of rescue for British Steel that ownership should pass to a little-known Chinese conglomerate, Jingye, offering a vague promise to invest a large sum.

Any buyer is better than none, of course, since the effects of irreversible closure of the Scunthorpe steelworks would be appalling. Top of the list would be 4,000 jobs, with another 20,000 in the supply chain. Then there would be the huge environmental clean-up costs.

Jingye counts as a more credible owner than Greybull Capital, the private equity outfit that took British Steel into administration. Yet it is still hard to understand why a Chinese group, which is only the world’s 37th largest producer of steel, wants to own a loss-making producer on the other side of the world.

 

Tata Steel couldn’t make financial sense of what it called its “long products” business, so gave it away to Greybull for £1 in 2016. Industry conditions haven’t notably improved for high-cost European producers since then. The price of iron ore, of the two key raw materials, is high. And complaints about energy and environmental costs, the other half of the industry’s troubles, are constant.

Perhaps Jingye wants overseas assets to balance the volatility in its home market. Or perhaps it calculates that a purchase of British Steel will open up opportunities to export to the UK some of its current products. But those theories are speculative. This £50m purchase may just be a hopeful punt in which the downside risks are deemed tolerable.

 

Read More – www.theguardian.com

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These firms are keying 2019’s record rate of add-ons

Private equity firms are living in the age of the add-on.

Through the first nine months of the year, add-ons to existing portfolio companies accounted for 68% of all private equity investments in the US—the highest annual rate on record—according to PitchBook’s 3Q 2019 US PE Breakdown. With deal multiples spiking across the broader buyout market, this inorganic growth is one of the few ways left for investors to find the potential for value creation to which they’ve grown accustomed.

As with every investment trend, some firms have embraced the strategy more fully than others. In ascending order, here’s a look at the six investors who have been most active in the US add-on market during 2019, according to PitchBook data, along with a rundown of the sorts of deals they’ve been getting done:

T-5. Insight Partners—30 add-ons

Until earlier this year, Insight Partners was known as Insight Venture Partners. That’s reflective of how the firm differs from most of the other firms on this list. Instead of focusing almost exclusively on buyouts and other private equity deals, Insight operates across a much broader segment of the private investment spectrum. It’s just as well known for its venture deals (or perhaps more so) as it is for conducting control investments.

But those control investments are still a major part of its strategy. And this year, it’s led to a spate of add-ons for a number of different portfolio companies, with a seeming focus on deploying new types of software across a range of sectors.

One example is Community Brands, a creator of software for nonprofits and other well-meaning organizations, which earlier this year announced three add-ons in a single day. Another is Enverus, which changed its name from Drillinginfo in August. The developer of software and data analytics for the energy sector has been busy building out its suite of services, acquiring one company that provides maps of the Permian Basin in March and another that makes billing and revenue software for the oil sector in July.

T-5. Harvest Partners—30

Harvest Partners, a New York-based firm that’s been making private equity investments since 1981, has taken a more diverse approach to its add-on activity in 2019, with no single portfolio company dominating its dealmaking.

In recent weeks, it’s been busy with Integrity Marketing Group, a distributor of life and health insurance that Harvest bought into alongside existing backer HGGC in August. (Of note to some, surely, is the fact that the chairman of Integrity’s board is Steve Young, the NFL hall of famer who’s also a co-founder of HGGC). Integrity was already on an add-on binge before Harvest entered the picture, and it’s kept it up in the meantime, acquiring four different insurance marketing companies in October alone, per PitchBook data.

The co-investor relationship with HGGC isn’t rare for Harvest. Some of its other portfolio companies that have been busy conducting add-ons this year are also examples of Harvest investing alongside fellow firms, including recycling specialist Valet Living (which it backs along with Ares Management) and insurance brokerage Acrisure (both Blackstone and Partners Group). That likely lightens some of the sourcing, diligence and dealmaking loads.

 

Read More – www.pitchbook.com

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Google snaps up Fitbit for $2.1bn

Google has snapped up the Fitbit activity tracker business in a $2.1bn (£1.6bn) deal that will enable the search giant to go toe-to-toe with Apple in the fast-growing smartwatch and wearables business.

Google is paying cash for the San Francisco-based Fitbit, which was set up in 2007.

It is paying $7.35 per share – a premium of more than 70% to the Fitbit share price before the shares were suspended earlier this week amid takeover speculation.

The price, however, is a fraction of the company’s value when it floated in 2015. The shares were initially priced at $20, and soared to more than $50 in the weeks following the initial public offer. But it has suffered in recent years from competition from bigger rivals Apple, Samsung and China’s Xiaomi. In August the group’s shares hit a low of $2.85.

The deal, which is Google’s biggest consumer purchase since it bought home-tech business Nest five years ago for $3bn, will have to be approved by shareholders and regulators, especially over how it handles Fitbit users’ data. The firm claims to have 28m active users worldwide and its fitness trackers store location and physical health data for users who monitor their activity, sleep and and exercise using a range of wearable devices.

Fitbit said it would not sell customers’ personal data and pledged that wellness data would not be used by Google ads.

Google has offered its own fitness tracking service, called Google Fit, since 2014, but has relied on third parties such as Fossil and Tag Heuer to produce Android-compatible smartwatches.

In a blogpost announcing the deal Rick Osterloh, Google’s senior vice president in charge of devices & services, said Fitbit had been a pioneer but that Google could “help spur innovation in wearables and build products to benefit even more people around the world.”

The market for wearables is growing rapidly. Last week, in its latest quarterly financial results, Apple reported annual sales growth of more than 50% in its “wearables” division, which includes watches. The iPhone-maker’s total sales from wearables over the three month period were £6.5bn.

The deal will expand Google’s range of consumer products, which already includes smartphones, headphones, smart speakers and laptops.

Osterloh wrote that Google would not misuse Fitbit users’ personal data: “We will never sell personal information to anyone. Fitbit health and wellness data will not be used for Google ads. And we will give Fitbit users the choice to review, move, or delete their data.”

Earlier this week, amid reports that the deal was being finalised, the British Labour party wrote to the UK’s competition regulator calling for the takeover to be blocked. Tom Watson, the shadow digital, culture, media and sport secretary, called the deal a “data grab”.

He said: “If this acquisition were to proceed, Google could have information on how we sleep, when we move, what we eat, on our breathing and our heartbeats. This data could hardly be more sensitive, but … all this information could then be used [for] micro-targeting, advertising, and behaviour modification. The risk to consumers here is significant.”

Watson has also written to the information commissioner, Elizabeth Denham, expressing concern over the data aspects of the merger and asking her office to assess whether it raises privacy concerns.

 

Read More – www.theguardian.com

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Vauxhall fears after car giants Fiat and PSA announce merger

Fiat Chrysler is to merge with Vauxhall’s owner PSA to create the world’s fourth largest car company.

The two sides say they have yet to finalise all the details, but the 50-50 merger is expected to provide significant cost savings.

That has raised concerns at Vauxhall, which employs 3,000 people in the UK, as it could be vulnerable to any restructuring.

Unions called for talks with France’s PSA, which owns Peugeot and Citroen.

Fiat Chrysler, the Italian-US business behind Jeep, Alfa Romeo, and Maserati, has been looking for a big tie-up for years, believing that consolidation in the global industry is needed to cuts costs and overcapacity, and fund investment in electric vehicles.

It has tried previously to form alliances with General Motors and Renault.

A combined Fiat Chrysler-PSA will have a market value of about $50bn (£39.9bn) with annual sales of 8.7 million vehicles. The companies said there are no plans to shut factories, but UK unions are uneasy about the impact on Vauxhall.

“Merger talks combined with Brexit uncertainty is deeply unsettling for Vauxhall’s UK workforce which is one of the most efficient in Europe,” said Unite national officer Des Quinn.

“The fact remains, merger or not, if PSA wants to use a great British brand like Vauxhall to sell cars and vans in the UK, then it has to make them here in the UK.”

 

Read More – www.bbc.co.uk