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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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Thomas Cook’s Nordic business lives on after private equity deal

A trio of investors—including two private equity firms—has teamed up to save Thomas Cook’s Nordic business a month after the British travel company suddenly declared bankruptcy, delisted its shares, ceased operations and stranded more than 150,000 customers.

European buyout firms Altor Equity Partners and TDR Capital, along with Norwegian real estate tycoon Petter Stordalen’s Strawberry Group, are slated to assume ownership of the Ving Group, as the Northern Europe unit is called. The group employs 2,300 people across charter businesses in Sweden, Norway, Denmark and Finland, along with Thomas Cook Airlines Scandinavia.

Strawberry Group and Altor will each buy 40 percent of Ving, while TDR Capital will purchase the remaining 20 percent, though no price was revealed. Following the acquisition, the investors will work to secure approximately 6 billion Swedish kronor (about $618 million) in liquidity and guarantees for the business.

Unlike the larger Thomas Cook Group, which was founded in the 1840s to serve the burgeoning British middle class, Ving has recently proved itself profitable. Some of the Ving units will declare bankruptcy in order to facilitate the redirection of all businesses to a freshly established company created by its new owners, but the company’s sale will ensure 400,000 people who have booked upcoming trips will be able to travel without issue.

“[The deal] secures the business and creates a stable foundation for future development,” Harald Mix, a partner at Altor, said in a statement.

Altor, based in Stockholm, has raised five funds since its creation in 2003. It has invested in more than 60 middle-market Northern European companies, worth a total of €8.3 billion (about $9.25 billion).

TDR Capital, founded in 2002, manages €8 billion in assets and is headquartered in London. It also focuses on mid-market companies, with a preference for growth-oriented investments.

Strawberry Group maintains 11 companies and invests primarily across the real estate, finance, hospitality and art industries. Stordalen is a Norwegian billionaire who, along with his three children, also owns the region’s largest resort chain, Nordic Choice Hotels. The brand operates 180 luxury hotels across five countries.

The buyout of Thomas Cook’s Nordic unit may be one of the more dramatic deals in recent memory, but it fits cleanly into the bigger picture of the region’s PE landscape. Nordic dealmakers such as Altor have maintained a relatively consistent slice of the European private equity pie over the past decade. As of September 30, Nordic PE deal value this year totaled about €26 billion, about 11% of overall European deal value, per PitchBook’s 3Q 2019 European PE Breakdown. Through the past decade, the Nordic region’s deals have largely hovered around that same share of the total.

 

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China-driven M&A in North America is nearly MIA this year

North American M&A activity involving Chinese buyers has fallen off a cliff this year. That’s not a complete surprise, but it’s not often you see such swift drop-offs without something alarming going on. China-driven M&A is on pace to fall by more than 90% from its 2016 peak, according to PitchBook’s 3Q 2019 North American M&A Report.

Just over $20 billion worth of North American M&A deals with Chinese acquirers have been consummated this year through 3Q, which would have been a blip in 2016, when $298.5 billion changed hands. Combined M&A value figures treaded water over the past two years, at least comparatively, and a few big deals were executed. In the background, though, volume slid very quickly, from 696 deals in 2016 to 496 in 2017, then to 274 deals last year, and finally, to only 73 so far this year:

US-based companies and Chinese acquirers have more or less ceased doing business, at least for now. Some of that is collateral damage from the trade war, but more of it is likely related to The Committee on Foreign Investment in the US. The CFIUS has effectively blocked several major transactions, mostly on national security grounds.

The list of affected sectors is broader than aerospace and semiconductors—reviews are now triggered for energy, transportation, healthcare and even financial services companies. Taken together, the regulatory territory covered by CFIUS reviews is quite extensive. The market is now very aware of the penalties involved, thanks to high-profile deals being scuttled by regulators—including some completed deals that had to be unwound after the fact. It would be interesting to track all of the broken deal fees and legal expenses involved in the deals that didn’t make it into the chart above.

It isn’t clear that an end to the trade war would lead to an immediate recovery in the M&A market. Activity would pick up to some degree with an agreement, but most of these cross-border cancellations boil down to those security concerns, many of them well-founded. As long as Donald Trump remains in office, China remains communist and we continue to give each other the side eye, it may be radio silence on the M&A front for a while.

 

Read More – www.pitchbook.com

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Permira-backed TeamViewer defies European IPO drought

PE-backed software company TeamViewer has announced plans to go public on the Frankfurt Stock Exchange by the end of the year. The offering could be one of Germany’s largest listings since 2017, with the expected valuation said to be between €4 billion and €5 billion (between around $4.4 billion and $5.5 billion).

Based in the city of Göppingen, TeamViewer develops a platform for online meetings and remote desktop access that has been installed on over 2 billion devices. Last year, the company reportedly generated sales of €230 million and EBITDA of €121 million.

Permira bought the business in 2014 for a reported €870 million from GFI Software. The PE firm is anticipated to sell between 30% and 40% of its shares, according to the Financial Times, but is said to be retaining its position as a majority stakeholder. Permira was reportedly approached by Hellman & Friedman and Vista Equity Partners in 2017, with each firm offering separate bids of some $2 billion to acquire TeamViewer.

If successful, the listing bucks a trend that has seen a significant drop in European IPOs. According to data from PitchBook, public offerings on the continent are at their lowest levels in nearly a decade. So far this year, 106 European companies have gone public compared with 311 last year. What’s more, very few of the companies that debuted on the markets this year raised large amounts of cash.

Only three businesses from the continent have broken the €1 billion mark in eight months. The largest IPO came courtesy of Italian lender Nexi, which priced its shares at €9 apiece to raise more than €2 billion in April. Europe’s second-biggest listing of the year saw Volkswagen’s truck and bus unit Traton make its stock market debut at €27 per share which brought in €1.55 billion. The final company that raised at least €1 billion is Trainline, the developer of a platform offering train and bus tickets. The KKR-backed business secured £951 million (around $1.2 billion at the time) by floating in London.

Some European businesses have avoided the markets altogether or backed out of scheduled IPOs. In July, Swiss Re pulled plans to list its UK life insurance arm ReAssure, which could have given the business a market cap of up to £3.3 billion. The group cited weak demand and heightened caution as its reasons, suggesting that certain political events may play a role in IPO suspension.

Of course, Brexit gets some of the blame, especially in the UK, but political uncertainty may not be the only reason for the lackluster demand for IPOs. Considering share price performance, European businesses haven’t been the best performers when going public. Traton’s stock has pretty much been on a downward spiral since the company’s June IPO—closing Wednesday at just over €22 per share—while Nexi’s stock fell a reported 6.2% on its first day. And we all know the debacles that were the Aston Martin and Funding Circle listings.

Still, there is hope that if it is executed, TeamViewer’s public debut will fare better than some of its peers, with its profitability and the attractiveness of the software market.

 

Read more – www.pitchbook.com

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Station F: A symbol of France’s startup ambitions

Two years ago, the French people elected Emmanuel Macron as their 25th president. His pro-business policies and visions of transforming the slow-moving state into a European powerhouse of innovation helped make him the youngest leader of the nation. Sensing change in the air, Station F, which is said to be the world’s largest startup campus, launched in Paris to represent France’s tech renaissance.

Based in Paris’ 13th arrondissement, or district, Station F sits in an unused rail depot said to span the length of the Eiffel Tower. It is home to over 1,000 startups and offers incubator programs run by companies including Facebook, L’Oréal and Microsoft.

In addition to its working spaces, event areas and restaurant, Station F launched a co-living space in June. The space is the largest of its kind in Europe, according to the company, with the capacity to house 600 startup founders and employees. All of these elements combined have reportedly attracted a steady stream of tech juggernauts like Facebook COO Sheryl Sandberg and Twitter co-founder Jack Dorsey, as well as French dignitaries.

Perhaps a surprise to some, Station F is a private sector initiative rather than government-backed. It’s owned by Xavier Niel, the founder of telecommunications provider Illiad and international seed investor Kima Ventures. Having a high-profile backer is surely a huge benefit for Station F’s startups, especially when it comes to raising money. Several Station F businesses have secured millions of euros from investors.

Team Vitality reportedly landed a €20 million (around $22 million) investment from entrepreneur Tej Kohli in November; the esports company was developed under the tutelage of Naver, a South Korean search engine provider. In February, co-living space provider Colonies received €11 million in a round that included Idinvest Partners and Kima, per reports. And in April, cybersecurity company Alsid, which is part of aerospace giant Thales Group’s program, raised €13 million in a round led by Idinvest Partners.

 

Read More – www.pitchbook.com

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Fans at crisis club Bury turn out to clean up their stadium

Bury have been given until 5pm on Tuesday to secure their future, with current owner Steve Dale in talks with data analytics company C&N Sporting Risk over a potential takeover.

However, EFL executive chair Debbie Jevans has suggested that deadline could be extended if only “one per cent” of the deal remains to be completed.

Volunteers have been arriving at Gigg Lane this morning to help after an appeal from the club to help clean up the stadium.

“Whilst the EFL and our potential new owners proceed with their necessary paperwork and dealings, the club needs to prepare the Stadium in order for Saturdays EFL Sky Bet League One clash with Doncaster Rovers to take place.

“With Tuesday’s deadline firmly set, preparations for our first game of the season will commence at 9:00am on Tuesday morning.”

“Recent events, over the summer months, have left the club with just a skeleton staff and we must, therefore, call on voluntary help in order to get the Stadium ready.”

– Bury FC

Read More – www.itv.com

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IWG may launch US IPO, extending co-working space growth frenzy

International Workplace Group is considering an IPO in New York for its US-based operations, according to Sky News. Such a spinoff could reportedly be worth up to £3 billion (about $3.67 billion), nearly equal to IWG’s £3.64 billion (about $4.45 billion) market cap as of August 26. The company did not immediately respond to PitchBook’s request for comment.

The news came less than two weeks after WeWork released its S-1 document August 14, revealing 1H 2019 losses of over $900 million while holding a footprint comparable to IWG’s. As a result, IWG’s consideration of an IPO is perhaps a direct response to WeWork’s advance, evidenced by IWG’s insistence of only considering underwriters that are not involved with WeWork’s IPO, again per Sky News.

IWG isn’t the only player in this space making moves after WeWork’s S-1 reveal.

On Thursday, New York-based Industrious reeled in $80 million from Brookfield Property Partners and fitness club provider Equinox, among others. CEO Jamie Hodari expects the company to be profitable within a “few months,” according to Reuters. On Wednesday, New York-based Knotel announced it had pulled in $400 million at an over $1 billion valuation in a round led by Wafra.

Lesser-known competitors, such as The Yard, Convene, BHIVE Workspace, Alley, and The Wing, also stand to possibly beef up their game as WeWork’s IPO plays out.

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Cloudflare’s IPO filing at a glance: rising revenue, falling losses and risky customers

A day after WeWork’s blockbuster IPO filing appeared, another big VC-backed name has advanced to the next step in 2019’s IPO frenzy.

Web services unicorn Cloudflare has publicly released its S-1, planning to trade on the NYSE under the symbol NET. The company did not disclose the number of shares that would be offered and set a placeholder target of raising $100 million. Goldman Sachs, Morgan Stanley and JP Morgan are the lead underwriters.

Founded in 2009, the San Francisco-based cybersecurity and internet services provider grew relatively quickly in its early days, followed by something of a plateau in the past few years. Cloudflare was valued at $6.3 million after a $2.25 million Series A in 2009, and its valuation began steadily rising from there, jumping to $80 million in 2011, $1 billion in 2012 and $1.8 billion in 2015 following a $182 million Series D. The company stayed off the fundraising radar for four years, before raising $150 million this past March amid rumors of the impending public debut.

Key figures

A key challenge for Cloudflare is that it operates in a relatively saturated field, in contrast to some of the other VC-backed unicorns in relatively new industries. Cloudflare counts Cisco, Zscaler, Akamai, Amazon and Microsoft as just some of its competitors, resulting in comparatively more modest YoY growth rates than those in WeWork’s prospectus, for example.

 

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Despite signs of a potential recession, deal maker sentiment remains optimistic

Recent news about the yield inversion will probably have an effect on investor psyche. Inversions have historically predated recessions by as many as 24 months—one lag in particular (2005-2007) also included a significant rise in the S&P. In four of the last five recessions, the lag between inversion and the start of a recession has lasted at least a year.

It’s a bit different with market corrections, which in two of five cases have begun in three months or less. Another tidbit came earlier this year from Bain & Co.’s Hugh MacArthur, who noted “only three periods historically [where] private multiples generally exceed the public average: during the ‘Barbarians at the Gate’ era of the mid-1980s, during the exuberant runup to the 2008 global financial crisis, and now.”

The sky has been falling for a long time among prognosticators, and the “tea leaves” in the featured chart don’t give us much of a schedule to work with. At PitchBook, we’ve been trying to gauge investor sentiment through our PE Deal Multiples Survey. In our last survey, we asked respondents for their reasons for canceling or renegotiating their most recent transactions. Here are their responses:

Those answers painted an optimistic picture among dealmakers, with only 7% citing negative changes in market fundamentals. The two most-cited responses reflect a strong market—41% said they found adverse information during due diligence and 24% said another buyer swooped in with a better offer.

Even not-that-bad information found during diligence is legitimate grounds to rethink purchase prices. There isn’t a lot of room for error with today’s multiples, and we’ve heard plenty of anecdotes of deals taking upward of 12 months to close. Furthermore, there are lots of buyers trying to put their money to work, so overcautious dealmakers will lose out to higher bidders. Those two reasons accounted for 65% of our results.

We’re curious about your thoughts as dealmakers, and our newest survey is now live. All deal data is kept confidential and isn’t published on our database. Participants receive the full aggregated report and are entered into a $300 Amazon gift card drawing—and everyone gets a candid look of current market sentiment, which may shift in the next month, or year, or two years.

 

Read More – www.pitchbook.com

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CBS, Viacom enter streaming wars with $30B combination

In the latest example of major consolidation in the media industry, CBS and Viacom have officially agreed to conduct a long-awaited merger, creating a new company called ViacomCBS with a combined market cap of around $30 billion. The deal will merge CBS’s broadcast offerings and the Showtime network with MTV, Comedy Central, the Paramount film studio and other Viacom brands, adding a broad collection of new content to CBS All Access, the network’s existing streaming service.

As consumer tastes have evolved and in-home streaming has emerged as perhaps the dominant entertainment form of our time, many of the industry’s biggest players have turned to M&A to augment their offerings. It’s been a little more than a year since AT&T acquired Time Warner for $85 billion, adding brands like HBO and Turner to its stable. And earlier this year, Disney beat out Comcast to purchase a raft of TV and film assets from 21st Century Fox for approximately $71 billion, making major content additions ahead of the planned launch of its Disney+ streaming service. Disney also took control of Hulu earlier this year, valuing the streaming pioneer at $15 billion.

The newly formed ViacomCBS, though, will be considerably smaller than some of its streaming competition. AT&T and Disney both have market caps of over $240 billion, making them more than 8x the size of ViacomCBS. Netflix carries a market cap of more than $135 billion, even after its stock has slid in recent weeks in the wake of disappointing 2Q results.

The combination of Viacom and CBS has long been rumored, due largely to the very close ties between the two New York-based companies. They were in fact the same company until 2006, when media tycoon Sumner Redstone split them into two entities. Redstone and his National Amusements holding business have maintained control over both Viacom and CBS in the years since, with his daughter Shari Redstone assuming more power in recent years as her father has reportedly battled health issues.

Current Viacom president and CEO Bob Bakish will assume those same roles at the new ViacomCBS, while Joe Ianniello, the acting head of CBS, will remain in charge of CBS-branded assets. Ianniello has been the interim CEO at CBS since longtime leader Leslie Moonves stepped down last September following several allegations of sexual harassment.

 

Read More – www.pitchbook.com