News Stories Flashcards
Orange / MasMovil Deal
o I found interest in the merger between Orange and MasMovil, a joint venture signed in July 2022 with an enterprise value of EUR18.6 billion. The new firm will become the dominant player in the Spanish telecommunications industry, surpassing competitors Telefonica and Vodafone.
o The strategic rationale for this transaction is the creation of a single, stronger business that would enable the widespread introduction of 5G and fibre to the Spanish market. In addition, it reduces the number of major mobile operators from four to three, thereby bolstering their competitive position whilst creating substantial synergies. In fact, Orange expects that the joint venture will generate synergies of more than EUR450 million from the third-year post closing.
o This deal stood out to me due to the rarity of telco M&A caused by stringent regulations and oligopolistic markets, as well as my parents living in Spain, meaning I have a vested interest in a merger that creates the largest player in the Spanish telecommunications market. Moreover, I am familiar with Vodafone’s previous M&A activity, and given that Orange was formerly a Vodafone subsidiary, I found it ironic that Vodafone’s Spanish operations would be considerably smaller than those of the merged entity.
- Adobe and Figma deal
o Valued at around $20 billion for half cash half stock, to be completed in 2023.
o Strategic rationale is expanding Adobe’s tools to include collaboration, which has been particularly useful during pandemic.
o Reason it is interesting to me is that it is the largest price for a VC-backed company, as well as highest revenue multiple ever paid for a late-stage software firm. With the current environment of higher interest rates decreasing the profitability of buyouts using high value of debt, we could see VC-backed companies looking to exit through M&A deal, which could mean there is more activity in this space for advisory firms like Gleacher Shacklock to advise on. Also, biggest acquisition for Adobe, and is perceived to have overpaid, given figma valued at $10 billion in last funding round a year ago
* Was around $380 before merger, now just under $300
- Vodafone and three to merge
Announced at start of October, the two firms are looking to merge in an all stock deal, where Vodafone gets 51% of combined entity and three 49%.
* This deal would allow Vodafone and three, which are the third and fourth biggest players in UK telco space, to challenge the two biggest players, O2 and EE
* Strategic rationale for this is scale, and this is what is needed to enable the rollout of 5G across the UK.
* The reason I found this so interesting is that Ofcom, the telco regulator has previously said no mergers between the big 4 telco companies in UK, but has recently relaxed this stance and will be evaluating on a case by case basis.
* Given that the Uk government see 5G as critical for transforming the UK economy, it will be interesting to how it plays out and whether the competition and markets authority step in or allow this deal to go through.
Credit Suisse restructuring
A potential restructuring that caught my attention is current situation with Credit Suisse and that looking slightly vulnerable.
* hypothesis is that this is because of various scandals harming reputation, as well as its M&A business being very exposed to capital market raises which have not been common in recent times due to conditions, and so revenues in this area are very much down and they have even looked to rebrand the investment banking business.
* However, has a very strong wealth management business, so could see this as a standalone business. Will be interesting to see how it plays out, as is a major player in the investment banking space.
* Now seeing them sell minority stakes in other small Swiss banking companies in an effort to raise capital
https://www.ft.com/content/12f4b647-a3a8-45a3-96cf-0f146c31a136?FTCamp=engage/CAPI/app/Channel_Refinitiv//B2B
EY Spin off
- Interesting story is about EY spinning off its audit and consulting arms into two separate companies due to concerns around conflicts of interest.
- This could be a very profitable restructuring for advisory arm, as currently they audit some big clients like google and amazon, and can’t advise them on their dealings because of the conflict of interest.
- If they do split, the longstanding relationships could be used to win new contracts with these big companies, meaning the consulting business could thrive with this restructuring.
Porsche IPO
- Porsche IPO’d in a deal worth
- Europes largest IPO in a decade
- Valuation of slightly over EUR75 min, parent company Volkswagen still owns 75% but 25% has been sold to fund VW’s electric vehicle transition
- Stood out to me because IPO market has been very much inactive this year compared to last, so to have an IPO of this size was interesting
- VW were worried about car sales because of global recession, and hence wanted to raise capital to fund VW’s electric vehicle transition
- Raised about $10 bn from IPO, and then around $10 bn from a private placement to a holding company owned by the heirs of Porsche’s founder
- 50% of funds being distributed in special dividend and company retaining rest for EV expansion
- Now higher than initial IPO price
Deal Gleacher worked on
$0.5bn, 75% acquisition
Despite not being the largest transaction, I find Gleacher Shacklock advising Schroders’ on their acquisition of a majority stake in Greencoat Capital to be highly interesting. During a prior internship, I completed a rotation in impact investing, gaining an insight into the critical role of sustainable investments in combatting climate change. Therefore, Gleacher Shacklock’s participation in this space interests me not only because of Schroders’ prestigious brand name, but also because of the positive future implications of this deal. Providing the private capital required for the energy transition that will enable a net-zero future is becoming increasingly crucial, and Gleacher Shacklock’s role has facilitated this important transition.
Qatar Sports Investments of Braga
- Agreed to buy almost 22% of Portuguese soccer club SC Braga at ~£88mn valuation. Announced in October
- Same owners as PSG, smaller club in Portugal compared to Sporting Lisbon, Porto and Benfica.
- Interested as am an avid football fan, and the clear transition towards multi club ownership (City Investment Group have 10 already) is interesting one, and very interesting history of deals in Football, including Chelsea takeover, Saudi takeover of Newcastle and Glazer leveraged buyout of Manchester United.
https://www.bloomberg.com/news/articles/2022-10-10/psg-s-qatari-owner-buys-22-stake-in-portuguese-soccer-club?srnd=deals
Bang Energy Files for chapter 11
Bang energy, energy drink company, filed for restructuring after owing $500mn to Monster beverage co (people who produce monster energy) and over $100mn to Pepsi.
Got into trouble over stagnant sales, as the market now favours a bit healthier energy drinks. Reason it stood out to me is that the chapter 11 was actually filed on Bang Energy’s 10th birthday, with a catchy headline getting my attention, and it was a good case study to get to grips with what restructuring is about
Warner Bros Cartoon Network Restructuring
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ITV restructuring
https://www.ft.com/content/a5721ba7-837c-4b17-a265-eda3c2bfa7a1
Kroger buying ambertsons
https://www.cnbc.com/2022/10/14/kroger-agrees-to-buy-albertsons-for-24point6-billion.html
Asos Debt deal
Amending terms on ts £350mn revolver borrowing facility, changing some of the covenants to give ASOS significantly increased financial flexibility, against an uncertain economic backdrop. after lower than expected sales in recent months, earnings announced on Wednesday,.
Also comes as share price is down over 90% from highs, and ASOS in financial difficulty with recent negative earnings, so will be interesting to see how this develops
https://www.reuters.com/business/retail-consumer/asos-talks-amend-credit-facility-terms-2022-10-15/
Largest IPOs in 2021
Rivian raised $12bn in Nov 2021, valued at around $65bn, Done awfully; lost around 75% of value
Bumble raised around $2bn in Feb 2021, valued at around $8bn, also done awfully; lost around 70% value
Current us interest rates
3 - 3.25%, likely to increase further
