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Sale of British Steel subsidiary to French firm protects 400 jobs

York-based TSP Projects will be folded into Systra, which will take on pension liabilities

A subsidiary of British Steel has been sold by the government to the French company Systra in a deal that protects 400 jobs.

The deal is not expected to have any impact on discussions on the rest of British Steel, as exclusive talks continue between the government’s official receiver, the state employee managing the sale, and Oyak, the Turkish military pension fund.

York-based TSP Projects, which designs and builds large rail infrastructure projects, will be folded into Systra. The proceeds of the sale are likely to be allocated to lenders to British Steel, which collapsed into liquidation in May.

Neither the government nor the companies disclosed the sale price but Systra will also take on TSP’s £70m pension liabilities, a hangover from the company’s days as a division of British Rail before privatisation.

Craig Scott, the chief executive of TSP Projects, said the liquidation of British Steel had never threatened his company, which was performing well and counted firms including Network Rail, Siemens and Costain among its clients.

“We would always have found a buyer,” said Scott. He added that he was “pleased to get out from the association with British Steel in administration and to be able to get on with focusing on our business. We’re moving to an owner where we’re part of their core business and it’s a permanent home.”

He said Systra and TSP Projects were growing, meaning that none of the company’s 400 jobs would be lost and more staff could be hired. “We do not have sufficient people to deliver the pipeline we have got coming, so together we need to grow,” he said.

TSP Projects has worked on projects such as the redevelopment of King’s Cross and Reading stations and is also working on infrastructure at Gatwick airport’s station and upgrades to the TransPennine Express rail route.

Most of its employees are based in York but it also has outposts in Birmingham, Manchester, Reading and Bristol.

Systra, an engineering group specialising in transport, is owned by the French state railway companies SNCF and RATP, which runs public transport in Paris, and a consortium of French banks.


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Sainsbury’s shares dive after Asda merger put in doubt

Sainsbury’s shares have dived 15% after the UK’s competition watchdog cast doubt on its plan to buy Asda.

Customers could see higher prices and less choice if the two grocers combined, the Competition and Markets Authority (CMA) said.

It said it could block the deal or force the sale of a large number of stores or even one of the brand names.

However, it also said it was “likely to be difficult” for the chains to “address the concerns”.

Sainsbury’s boss said the findings were “outrageous”.

In its provisional report on the proposed merger, the CMA also said the merger could lead to a “poorer shopping experience”.

Stuart McIntosh, chair of the CMA’s independent inquiry group, said it had found “very significant competition concerns in a number of areas – they are to do with grocery shopping in supermarkets, grocery shopping online and the companies’ petrol stations”.

“However, if one recognises that the competition concerns are quite broadly based… putting together a package of measures which addresses those concerns is likely to be complex and quite challenging,” he said.

But Sainsbury’s chief executive Mike Coupe described the CMA’s analysis as “fundamentally flawed” and said the firm would be making “very strong representations” to it about its “inaccuracy and lack of objectivity”.

“They have fundamentally moved the goalposts, changed the shape of the ball and chosen a different playing field,” he told the BBC.

“This is totally outrageous.”


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Cathedral City maker Dairy Crest to be bought by Saputo

Dairy Crest, whose brands include Cathedral City cheddar and Country Life butter, has agreed to be bought by a Canadian company in a near-£1bn deal.

Saputo, one of the biggest dairy processors in the world, will pay 620p a share, valuing Dairy Crest at £975m.

The deal is Saputo’s first in Europe and it said Dairy Crest was an “attractive platform” for UK growth.

Dairy Crest said “virtually” all its 1,100 UK jobs are safe, including 150 at its head office in Surrey.

However, the Unite union said it would be “seeking an urgent meeting” with Saputo about assurances over job security.

Dairy Crest’s share price, which has risen steadily this week, had jumped almost 12% in late morning trading on Friday.

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Bottler Coca-Cola HBC buys Serbian confectionary firm

Soft drink bottler Coca Cola HBC said on Monday it would buy Serbian confectionary business Bambi for an enterprise value of 260 million euros ($294 million) from private equity investor Mid Europa Partners, expanding its portfolio of beverages and increase its presence in the Western Balkans.

The Swiss-based company, which bottles and sells Coca-Cola Co drinks in 28 countries, said Bambi had revenue of around 80 million euros in 2018.

Shares of the company fell last week after it warned of higher finance costs on its existing borrowing and weak consumer spending in several of its markets this year.


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Merger growth drives Grant Thornton International to record £4.3bn revenues

Grant Thornton International reported record revenues of $5.45bn (£4.28bn), lifted by income expansion from international mergers, and strong growth in its tax and advisory arms.

The figure is up $450m on last year, representing an average growth of 9.4 per cent across the whole organisation – slightly behind the 10.7 per cent global growth at BDO, one of its chief mid-market rivals.

Peter Bodin, chief executive of the professional services firm’s international network, headquartered in the UK, said: “Our success this year is the result of a deliberate strategic focus on our core mid-market client base, and our key strategic growth markets where we want to be successful.

“Being clear on where we need to develop our capabilities, and focusing on quality in those core markets, has underpinned this performance.”

Strong mergers and acquisitions activity underpinned much of Grant Thornton International’s growth, with the firm making 24 deals with 10 other companies. Mergers in Japan and South Africa drove revenue increases of 18.7 per cent and 54.7 per cent in Asia and Africa respectively. Average growth in Europe stood at 7.7 per cent.

The US remained its biggest market, generating $2.5bn in fee income, followed by $1.5bn in Europe.

“It’s great to see our firms from markets across the globe flourishing as we continue to build a sustainable next-generation professional services organisation,” said Bodin.

Across its service lines, tax grew by 14.8 per cent, and advisory by 10.4 per cent.

Full results for Grant Thornton’s UK operations have not yet been released. The firm is currently the UK’s fifth-largest auditor – behind global giants the Big Four – Deloitte, EY, KPMG and PwC – but is set to lose that title after the impending merger of sixth-place BDO UK with Moore Stephens.


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Takeda and Shire shareholders back £46bn drugs takeover

Japanese drugs giant Takeda’s £46bn ($59bn) takeover of Irish pharmaceuticals firm Shire has been approved by both sets of shareholders.

The acquisition, the largest by a Japanese company, propels Takeda into the world’s top 10 list of biggest pharmaceutical companies.

Shire shareholders met in Dublin to approve the deal. Takeda investors gave the green light earlier in the day.

Some Takeda investors objected over fears it will increase the firm’s debt.

The votes to approve the takeover follow a long-running battle in which Takeda made multiple offers for Shire.

On Tuesday, Kazuhisa Takeda, a member of the firm’s founding family, spoke out against the deal over concerns with the level of debt it would add to Takeda.

Takeda plans to finance the takeover via the issue of new shares in exchange for Shire stock, bank loans and bonds.

The takeover is part of Takeda’s strategy to become a global pharmaceutical company. The firm wanted to buy Shire to strengthen its cancer, stomach and brain drug portfolios.

But one of its potentially lucrative treatments will have to be sold off at the direction of European regulators over competition concerns.

“We are delighted that our shareholders have given their strong support to our acquisition of Shire,” said Takeda chief executive Christophe Weber after the investor vote in Osaka.

Shire was founded in the UK, but moved its corporate headquarters to Dublin a decade ago. It has 24,000 employees in 65 countries.


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This day in buyout history: Vista teams with Vivek on pioneering software takeover

For tech startups, the late 1990s were a different time. A more IPO-friendly time.

For one such example, we turn to a software provider that’s now well into adulthood—and one that entered private equity ownership four years ago today.

In our current ecosystem, new companies often stay private for a decade or longer, piling up venture capital funding to support long-term growth. But when Tibco Software got up and running in 1997, only two years passed before the company’s public debut. Led by founder Vivek Ranadivé (today the owner of the NBA’s Sacramento Kings), Tibco began trading on the NASDAQ in July 1999 with an offer price of $15 per share.

The move paid off in an immediate way. After less than six months as a public company, Tibco stock closed the year at $153 per share, representing a stunning tenfold increase in market value for the Palo Alto-based maker of business software.

In retrospect, it was a manifestation of a dot-com bubble stretched nearly to the point of bursting. Unlike many of its peers, though, Tibco survived when the bubble ultimately did pop—but it was some time before the company thrived again. Its stock price languished in the single digits into the 2010s, at which point a steady stream of acquisitions began to drive Tibco’s share value up. By 2012, it was over $30 per share. And once that figure started falling again, the buyout firms began to circle.

Ultimately, it was Vista Equity Partners that made a deal, acquiring Tibco for $24 per share in cash in a takeover worth a total of $4.3 billion that was officially announced December 5, 2014. Ranadivé stepped down from his position as CEO, with fellow longtime executive Murray Rode taking over the top spot.

At the time, such a lofty price was rarefied air for a software company being taken private by a PE firm. But in the months and years that immediately followed Vista’s Tibco takeover, such deals experienced a boom—not on the level of the dot-com boom, but certainly a real change in the way software companies were bought and sold.

In April 2015, Thoma Bravo and the Ontario Teachers’ Pension Plan acquired application performance specialist Riverbed Technology for about $3.5 billion. Informatica, a creator of data integration software, sold four months later to a private equity consortium for some $5.3 billion. During 1Q 2016, IT infrastructure specialist SolarWinds sold to Silver Lake and Thoma Bravo for $4.5 billion and Vista sealed another huge deal in the space, buying Solera, which makes risk and protection software, for $6.5 billion. A few months later, Thoma Bravo bought data manager and analytics business Qlik for $3 billion.

Add those deals to the Tibco acquisition and that’s six of the nine most expensive take-private software deals in the US and Europe since the start of 2010, all occurring in a span of just over 20 months, per the PitchBook Platform.

And now, already, the firms that pumped billions of dollars into those take-private transactions are looking to realize their investments. In October, SolarWinds made a return to the public markets with an IPO, less than three years after going private. And in August, Bloomberg reported that Vista had held discussions about selling Tibco, in part to get out from under a debt load that now nears $3 billion.

The software company’s next move is still uncertain. But if the past two decades are any indication, whatever it is, the deal might prove to be at the forefront of another new trend in the public and private markets.


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Retail Mergers and Acquisitions Rise by 15% as Businesses Try to Combat Falling Sales

The number of retail sector mergers and acquisitions has grown by 15 per cent in the last year as companies try to make up for struggling sales, a new study reveals.

Figures compiled by law firm RPC show there have been 37 retail mergers and acquisitions (M&A) deals in the year to 31 March, compared with 32 in 2016-17.

RPC said the recently announced Asda and Sainsbury’s merger was a good example of the recent trend for businesses in the food side of the retail sector to “add economies of scale to make up for slowing organic sales growth”.

Firms are also favouring M&A over flotations, due to weak demand from investors. Selling up to a competitor is seen as a more secure way for existing investors to exit a smaller retailer than an IPO which could be cancelled at any point “due to short-term volatility or poor sentiment towards the sector”.

“Through mergers such as Asda and Sainsbury’s, market leaders are looking beyond all the hype about the ‘meltdown of the high street’ and getting on with building breadth of offering and scale,” said RPC corporate partner Karen Hendy.

However, while the number of deals has jumped, the overall value of those transactions has fallen 16 per cent to £3.7bn, from £4.3bn the year before. Ms Hendy said: “It is important that sellers and creditors are sensible over the prices they are expecting from M&A deals in the current climate.”

Meanwhile, RPC said there is still interest in buying distressed retailers’ assets but buyers are looking for substantial discounts, and the number of retailers entering insolvency has risen by 7 per cent in the last year.

UK M&A deals announced in 2017-18 include:

  • The Co-op’s approach for Nisa, valued at £143m

  • Tesco Opticians’ acquisition by Vision Express owner Grandvision

  • Multiyork Furniture’s acquisition by DFS

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Radio giant Sirius acquires Pandora Media in $3.5bn deal

Two US companies are set to create the world’s largest audio entertainment business after radio giant SiriusXM announced it will pay $3.5bn (£2.7bn) for streaming service Pandora Media.

The all-share deal, which will be finalised in the first half of next year, will create a $7bn entity.

Shares in the target rose 18.4 per cent to $10.75 in pre-market trading, above Sirius’ implied price of $10.14.

The deal gives Sirius better mobile strength, stronger digital presence, and access to Pandora’s ad capabilities.

SiriusXM chief executive Jim Meyer said the deal “represents an exciting next step in our efforts to expand our reach out of the car even further”.

“Through targeted investments, we see significant opportunities to drive innovation that will accelerate growth beyond what would be available to the separate companies, and does so in a way that also benefits consumers, artists, and the broader content communities,” he added.

Shares in Pandora climbed 37.1 per cent in August after better-than-expected second quarter results, posting a 2.1 per cent year-on-year revenue increase to $384.8m.

Discounting the divestment of Ticketfly to Eventbrite for $200m, revenues increased 12 per cent.

Pandora’s declining advertising income was offset by a 67 per cent increase in subscription revenue.

Sirius already held a 15 per cent stake in Pandora following its $480m investment in the company earlier this year, replacing a $150m investment from private equity firm KKR.

Sirius is advised by Allen & Company and Bank of America Merrill Lynch. Centerview, LionTree and Morgan Stanley are advising the sell side.

Both boards have unanimously approved the transaction, and it awaits the go-ahead from Pandora shareholders.

Sirius expects to count over $5.7bn in 2018 revenues, with adjusted earnings of $2.2bn before tax, depreciation and amortisation.

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BP To Buy BHP’s US Shale Oil And Gas Assets For $10.5bn

BP has agreed to buy US shale oil and gasfields from the Anglo-Australian miner BHP for $10.5bn (£8bn), in the UK firm’s biggest acquisition in nearly two decades.

Bob Dudley, BP’s chief executive, lauded the deal as transformational and industry watchers said the move significantly beefed up the company’s US shale presence, which was small compared to peers.

The acquisition will boost BP’s US oil and gas production by nearly a fifth and marks a new period of growth for the company, which is emerging after years under the $65bn burden of the Deepwater Horizon disaster.

In total, 470,000 acres of assets are covered in the deal, including fields in the Permian in west Texas, the Eagle Ford in south Texas and Haynesville in east Texas and Louisiana.

Analysts said Eagle Ford was the most valuable of the three because of its scale and economics, while the Permian offered the greatest long-term promise.

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