Acquisitions Archives

Markross121_ January 2, 2019 No Comments

Wagamama workers to share £4m Christmas bonus after chain’s sale

Staff to receive up to £2,000 each following £559m takeover by Restaurant Group

Wagamama staff are to receive Christmas bonuses of up to £2,000 each after the £559m sale of the restaurant chain.

Around 4,000 staff will share in a £4m bonus pot as part of a payout ordered by the outgoing chief executive, Jane Holbrook, and Wagamama’s former private equity owner Duke Street.

Head chefs and managers will bank £2,000 each, while waiting staff will pocket £1,000, provided they have worked at Wagamama for more than 12 months.

It is understood that the bonus is meant as a token of appreciation from Holbrook and Duke Street, which will receive a massive windfall from Wagamama’s sale.

Duke Street acquired Wagamama in 2011 for £215m and last month sold the chain to Frankie & Benny’s owner, the Restaurant Group.

The Restaurant Group chief executive, Andy McCue, plans to accelerate the rollout of Wagamama across the UK, expand concessions and pilot pan-Asian cuisine “food-to-go” offerings.

The firm will also explore international growth opportunities for Wagamama.

As part of the deal, Emma Woods will replace Holbrook as chief executive and the chairman, Allan Leighton, will join the Restaurant Group board.

When it was first announced in October, the deal raised eyebrows as it comes at an increasingly challenging time for the eating-out sector, which is suffering from a slowdown in consumer spending.

Unilever buys meat-free food company The Vegetarian Butcher

Acquisition of Dutch brand highlights scramble to tap into meat substitutes market

Tofu turkey is on the table for this Christmas, just one ingredient of a surge in the meat alternatives market.

Unilever is buying the meat-substitute company The Vegetarian Butcher as it looks to cash in on the growing number of consumers turning their backs on meat.

Founded by the former cattle farmer Jaap Korteweg, the Dutch brand’s quirky products – which include “nochicken” nuggets and “chickburgers”, apparently with the same “taste and structure” as patties made out of chicken – have earned it a cult following among vegetarians and vegans.

In the UK, its products are sold largely through healthfood shops, and also in Waitrose.

Unilever’s Nitin Paranjpe said it had been attracted to the brand’s “clear mission” and strong position in a booming market for meat alternatives.

The deal comes as manufacturers, supermarkets and restaurants scramble to tap into the burgeoning vegan market, which has expanded as more people drop meat from their diet for health or ethical reasons. The UK has an estimated 22 million “flexitarians” – those who enjoy meat but want to reduce their consumption. Last month a plant-based burger that “bleeds”, from the US brand Beyond Meat, made its debut in Tesco.

Unilever, which owns household brands from Magnum to Marmite, said the acquisition of The Vegetarian Butcher, for an undisclosed sum, fitted its strategy to move into healthier plant-based foods with a lower environmental impact. Unilever already sells 700 vegan and vegetarian products under existing brands such as Knorr, Hellmann’s and Ben & Jerry’s.

“The brand will fit in well within our portfolio of ‘brands with purpose’ which have a positive social impact [and] are better positioned to meet the needs of consumers,” said Paranjpe. Last year Unilever, which also owns PG Tips and Liptons, bought Bristol-based ethical tea brand Pukka Herbs.

Visa to buy British payments firm Earthport for £198m

Visa has made a £198m takeover bid for British payments company Earthport.

Shares in the firm rocketed by 270 per cent on Thursday after the offer was announced to the London Stock Exchange.

Earthport specialises in cross-border payments, with clients including Bank of America Merrill Lynch, Ripple and TransferWise.

The company was founded in 1997 and employs more than 200 people across offices in London, New York, Miami, Dubai and Singapore.

Its chair, Sunil Sabharwal, said the firm saw the offer as an “opportunity for shareholders to realise an immediate and attractive cash value in Earthport”.

The deal values Earthport at a 250 per cent premium to its average share price in the six months to 24 December.

Mr Sabharwal added: “Visa shares our vision of growth and expansion for Earthport and, as such, we believe it is a suitable and appropriate partner for our employees, partners, customers and other stakeholders.”

Amanda Mesler, chief executive of Earthport, said: “Having been appointed as Earthport’s CEO in July, my focus following a full strategic review has been to rapidly implement a transformational growth strategy. Whilst I believe Earthport is well positioned to deliver the potential it has always possessed, the all-cash offer from Visa represents a very attractive and immediate return for our shareholders.”

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.

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.

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

Markross121_ December 4, 2018 No Comments

Pret a Manger to give employees £1,000 bonus after £1.5bn sale

Pret a Manger has been sold to investment firm JAB, the sandwich seller announced today, and plans to hand out £1,000 to each of its 12,000 workers when the £1.5bn deal completes.

The ubiquitous high street chain is currently majority owned by private equity group Bridgepoint, as well as other minority shareholders. The sale is expected to be completed by the end of this summer.

Markross121_ November 7, 2018 No Comments

Competition watchdog clears SSE-Npower merger

A merger between SSE and Npower’s retail operations has been cleared by the UK’s competition watchdog.

The Competition and Markets Authority (CMA) said it had given final clearance to the deal after concluding households would still have “plenty of choice” on standard variable tariffs (SVTs).

It found the two providers were “not close rivals” on the tariffs, which offer the most expensive deals.

The merger will create the UK’s second biggest energy supplier.

The CMA launched a full inquiry into the merger in May after its initial probe found the tie-up could reduce competition, potentially leading to higher prices for households.

It provisionally cleared the deal in August.

Anne Lambert, chairwoman of the inquiry group examining the deal, said: “With many energy companies out there, people switching away from expensive standard variable tariffs (SVT) will still have plenty of choice when they shop around after this merger.

“But we know that the energy market still isn’t working well for many people who don’t switch, so we looked carefully at how the merger would affect SVT prices.

“Following a thorough investigation and consultation, we are confident that SSE and Npower are not close rivals for these customers and so the deal will not change how they set SVT prices.”

Fujifilm-Xerox merger back on track?

Japan’s Fujifilm has won an appeal in a legal fight with Xerox that had halted a planned merger between the firms.

Fujifilm now plans to push ahead with talks on the $6.1bn (£4.6bn) merger with the US printer maker, according to Japan’s Kyodo news agency.

In May, Xerox ended its controversial sale to Fujifilm after reaching a settlement with activist investors Carl Icahn and Darwin Deason.

But Fujifilm says its original deal remains the best option for shareholders in both companies.

“(The) Court’s decision will allow us to discuss with Xerox the fulfillment of the original agreement. All Xerox shareholders ought to be able to decide for themselves the operational, financial, and strategic merits of the transaction to combine Fuji Xerox and Xerox,” it said.

Markross121_ November 7, 2018 No Comments

Wagamama noodle chain sold to Frankie and Benny’s owner

The noodle chain Wagamama has been bought by the owner of the Garfunkel’s and Frankie and Benny’s restaurant chains for £357m in cash.

The deal marks a shift for Restaurant Group, most of whose restaurants and gastropubs focus on US, TexMex and traditional British cuisine, and is expected to generate cost synergies of about £22m.

Restaurant Group, which also owns the Chiquito chain, will launch a £315m rights issue to fund the deal, which it expects to be earnings enhancing in the first full year and accretive thereafter.

The company said the deal had an enterprise value of £559m, and included 138 directly operated Wagamama restaurants in the UK and the US as well as 58 franchised restaurants in Europe, the Middle East and New Zealand.

Wagamama began in 1992 in Bloomsbury, central London, by Alan Yau, who subsequently created the Michelin-starred Chinese restaurants Hakkasan and Yauatcha. It has expanded steadily to a national presence since, becoming a familiar feature on British high streets.

The deal will be funded through a combination of cash, debt and the rights issue.

Wagamama’s current owner, the private equity firm Duke Street Capital, bought the chain in 2011 for a reported £215m.

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