Client – Ardor Engineering Ltd – Precision Engineering Company – Tier 1 Supplier to Nuclear and Defence.
Instruction – Disposal of business to trade or non-trade buyer.
Role – Review market opportunities, benchmarked possible share price, source buyers based on management culture and ethos. Generate sealed bids. Manage through to Completion.
Result – Successful sale of Company to a non-trade buyer – Tower Growth Management LLP.
Client – G Brocklehurst Transport Ltd – Sophisticated Transport and Logistics Company.
Instruction – Disposal of business to trade buyer.
Role – Review market opportunities, benchmarked possible share price, source trade buyers based on management culture and ethos. Generate sealed bids. Manage through to Completion.
Result – 5 trade buyers through to final bidding. Secured final offers from £550 M turnover transport Company. The scorecard showed a disparity in incoming management culture. Terminated all trade offers. Secured funding for MBO. Project managed to completion. Shareholders able to exit the business and ethos and culture maintained.
Despite Brexit, the UK is still the top destination for US-EU inbound M&A activity, representing nearly 40 per cent of EU deals since 2009 – and activity could pick up with greater Brexit certainty.
The report, which gathers the collective thoughts of Akin Gump lawyers and senior dealmakers at global companies to see how Brexit, global trade disputes and this year’s US elections are shaping the deal landscape, also finds that even though M&A now involves additional layers of geopolitical and regulatory complexity brought on by global trade tensions and political turbulence, deals are getting done.
with Republicans and Democrats offering starkly divergent platforms on a number of key policy issues, the report says the results of the 2020 US elections are certain to influence M&A activity in 2020 and beyond.
Following a decisive UK election outcome, the report suggests that deal activity could pick up. “There is an M&A backlog, as some deals went on hold before the election,” says Akin Gump corporate partner Gavin Weir. “This bodes well for activity in 2020 as buyers and sellers return to the market.”
Sebastian Rice, partner in charge of Akin Gump’s London office, adds: “There is recognition that the [deal] process is more complex, but if you address issues early, deals will close.”
Looking at deal activity in the United States, Jeff Kochian, co-head of Akin Gump’s corporate practice, says: “The US M&A market has been very strong for the last several years. In spite of global trade and political volatility, the strong US economy and bullish equity markets have been particularly helpful to strategic buyers. Private equity has also been very active, doing more, albeit somewhat smaller deals.”
Boris Johnson has unveiled £350m in funding to help industry to reduce carbon emissions in a bid to speed up progress towards the UK’s 2050 net zero goal.
The funding will go to a range of businesses and projects working across industries such as heavy industry, construction, space and transport.
Johnson said that the coronavirus pandemic meant that it was “more important than ever that we keep up the pace of change to fuel a green, sustainable recovery.
“The UK now has a huge opportunity to cement its place at the vanguard of green innovation, setting an example worldwide while growing the economy and creating new jobs’.
Of the funding, £139m will go to heavy industry to support the transition from natural gas to hydrogen, as well as scaling up the development of carbon capture and storage (CCUS) technologies.
The two technologies have both long been earmarked as critical to the transition to a green economy, with 40 businesses last month writing to chancellor Rishi Sunak in support of a country-wide hydrogen strategy.
In addition, £149m will go towards developing the use of innovative materials, such as so-called “green steel” across industry, while £26m will be put towards supporting low-carbon building techniques.
A prolonged bounce in Tesla’s share price means its chief executive Elon Musk has qualified for a $2.1bn payout, in his second award since May.
The electric carmaker’s six-month average market capitalisation officially surpassed $150bn today, triggering the vesting of the second of 12 tranches of options granted to Musk in 2018.
Musk, who is also majority owner and chief executive of rocket firm Space X, receives no salary.
Tesla is now the world’s most valuable carmaker, almost reaching $300bn this month to be worth more than the market values of Toyota, Ford, General Motors and Fiat Chrysler combined.
It is set to report its quarterly earnings on Wednesday evening, which if profitable, will determine whether Tesla can enter the S&P 500 index on Wall Street.
Analysts’ estimates for Tesla currently range from an adjusted loss as steep as $2.53 a share to a $1.41 per share profit.
However on average, they expect an adjusted 11 cents loss per share and a net loss of $240m, according to Refinitiv data.
Tesla shares have surged more than 275 per cent so far this year, though reporting a loss this evening could send its stock plummeting.
Earlier this month, Tesla surpassed expectations when it announced it had delivered more than 90,000 vehicles in the quarter, defying a wider industry downturn.
But while vehicle deliveries increased 2.5 per cent on a quarterly basis, production dropped nearly 20 per cent. Tesla had previously predicted it would deliver at least 500,000 vehicles by the end of the year.
Its main Fremont carmaking plant was shut for six weeks earlier this year due to lockdown measures during the coronavirus pandemic, putting a dampener on production numbers.
Tesla has said it plans to open a new plant in the south-west of the US as soon as the third quarter, but it has yet to announce a location.
As the restrictions of lockdown have begun to ease, many more of us are returning to the workplace. To help companies get back up and running as safely as possible, the Government has put together Covid-19 secure guidelines.
If you and your staff can’t work from home and do need to return to the workplace to do your job, employers have been introducing a range of measures to reduce the risk of infection.
These include cleaning, hand washing and an increase in hygiene procedures, with hand sanitisers around the workplace. Workspaces are cleaned and disinfected more regularly, with emphasis on regularly touched surfaces.
Social distancing guidelines (2m) should also be maintained wherever possible and signage acts as a useful reminder.
It’s also recommended that workers don’t share workstations and visitors should be seen by appointment only.
What’s more, the Government recommends that companies adapt staggered arrival and departure times, and employees avoid public transport if possible (see above).
Meet two UK businesses who’ve started their journey back to work, adopting the Government’s Covid-19 guidelines…
Mike Malpas lives and breathes print. An account director at family-run Hampton Printing near Bristol, his day-to-day job involves high-end print clients. Not only is he usually on the road meeting people, he spends time on the shop floor and manages a team – and wanted to get back to work quickly.
“Our clients still need things printed and this can’t be done from home,” he explains. His company is currently working with the NHS to deliver potentially life-saving materials, as well as Rolls-Royce, among others.
Hampton Printing’s 32,000 square foot space is already a clean, dust-free environment, but the entire workspace had to be altered to ensure it is Covid-19-ready and safe for staff returning to work. Out of its 56 staff, 20 have now returned to work, including Malpas.
Reduced staff numbers help social distancing and, in every area of the business, there is hand sanitation, and signage about social distancing rules. Doors are also kept open so nobody touches the handles.
Hampton Printing also sanitises any paper that is delivered, then leaves it for six hours before printing to maintain high hygiene standards. The company has also retained two full-time cleaners who clean every single work surface on a daily basis.
“These measures make us all feel safe,” Malpas explains. “It feels great to be back at work and getting into a routine again.”
Brewer Marston’s is to merge with Carlsberg’s UK arm, uniting ales such as Pedigree and Hobgoblin with Danish Pilsner and Somersby cider.
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.
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.
Too much of the discussion around Brexit’s impact on the City has treated it as something of an inconvenience that must be “managed”. This is perhaps understandable — business rarely likes change, certainly not on this scale. But it’s time that we start talking about the opportunities Brexit will present to the City.
The conversation largely remains dominated by politicians, with some in the UK government championing “permanent equivalence”, while figures from the EU’s Michel Barnier to Sir Jon Cunliffe, deputy governor of the Bank of England, warn that significant divergence is both likely and necessary.
Such divergence is typically framed negatively, with the focus being on the possibility of the City losing unfettered access to the EU’s Single Market. However, I see two potential ways in which London’s financial institutions might not just survive but thrive from the opportunity presented once the transition period ends in December.
First, if the regulatory regime diverges even slightly from that of the EU by placing less onerous requirements on financial organisations, it can have a positive knock-on effect on UK banks’ performance and competitiveness
As we have seen in the US, a more flexible approach to regulation has been a contributing factor to the stronger recovery and greater profitability of the American banking industry over the past decade.
City advocacy groups are already eyeing a new regulatory framework beyond the Markets in Financial Instruments Directive (Mifid II) — the EU directive that instituted an extensive set of new obligations on banks, fund managers, brokers, exchanges, and underlying investors.
Overseen solely by the UK government, such a framework would inevitably better reflect the priorities of UK firms: maintaining financial stability and investor protections, without inhibiting the City’s global competitiveness.
The second and much less talked about opportunity is something over which financial institutions have far more direct influence. Long-established firms are in a constant struggle to keep pace with the technical requirements of regulatory change. Often, to meet tight deadlines, changes are shoe-horned into existing architectures at the expense of technical progress and evolution. This was the experience for many European banks around Mifid II’s adoption.
That represented a huge missed opportunity. The ultimate goals of new regulations are not necessarily detrimental to banks’ commercial interests. In fact, as with Mifid II, they are often directly aligned. For example, the requirement to comprehensively categorise and record all customer interactions, if done properly, can be an accelerator for better customer relationship management and risk control.
Technological advancement is already driving the reconfiguration of banks’ tech systems. The City should embrace divergence not simply as a new box-ticking requirement, but as an opportunity to expand outside of constraints and give London’s financial services the technological edge over its international competitors.
While we may be a long way from knowing where the chips will fall, and a clean break may remain the less likely outcome, firms must stop undervaluing the possibility and start considering the opportunities for the financial services industry.
Despite geopolitical fears and the spectre of a global economic slowdown organisations are continuing to look to M&A to achieve growth. According to the Global Capital Confidence Barometer as we move into a new decade 52 per cent of organisations are planning to actively pursue M&A over the next 12 months. In particular tech, B2B and luxury have all been earmarked as sectors with over average potential for activity.
However, the stats show that between 50 and 85 per cent of the deals will fail. With the average transaction value set at around $52 million; the stakes are high. However, for the 15-50 per cent of M&A deals that are successful the rewards far outweigh the risk.
Cultural difference is the most vaunted reason for a failed merger. The dissonance between two organisations can be extremely divisive and the inability to align them from the offset can quickly and easily set in the rot which eventually turns gangrenous and ultimately becomes terminal. Even the most seemingly trivial of differences can be a powerful indicator that all is not right with a deal.