Adenza sold for $10.5 billion

Nasdaq to acquire Adenza from Thoma Bravo for $10.5B in cash and stock

Nasdaq (NDAQ) announced it has entered into a definitive agreement to acquire Adenza, a provider of mission-critical risk management and regulatory software to the financial services industry, from Thoma Bravo for $10.5B in cash and shares of common stock.

The acquisition accelerates Nasdaq’s strategic vision to become the trusted fabric of the world’s financial system.

Upon the closing of the transaction, Holden Spaht, a Managing Partner at Thoma Bravo, is expected to be appointed to Nasdaq’s Board of Directors, which will be expanded to twelve members.

Adenza brings an attractive financial profile, with approximately $590M of 2023E revenue, organic revenue growth of approximately 15%, annual recurring revenue growth of 18%, and an adjusted EBITDA margin of 58%.

The company has a loyal and growing client base, with 98% gross retention, 115% net retention, and a durable mix of approximately 80% recurring revenue.

The addition of Adenza is projected to enhance Nasdaq’s already strong financial profile by growing Solutions Businesses revenue from 71% of total revenue today to 77% in 2023E, increasing adjusted EBITDA margin to 57%, and adding approximately $300M of annual unlevered pre-tax cash flow.

Nasdaq is acquiring Adenza for $10.5B, comprised of $5.75B in cash and 85.6M shares of Nasdaq common stock, based on the volume-weighted average price per share over 15 consecutive trading days prior to signing.

Nasdaq has obtained fully committed bridge financing for the cash portion of the consideration and plans to issue approximately $5.9B of debt between signing and closing and use the proceeds to replace the bridge commitment.

At the closing of the transaction, Nasdaq will issue the shares to the owners of Adenza, which is a company controlled by Thoma Bravo, representing approximately 14.9% of the outstanding shares of Nasdaq.

The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close within six to nine months.

NDAQ is down 11% to $51.30.

Following the Adenza transaction, Nasdaq expects leverage of approximately 4.7x and investment grade ratings of BBB/Baa2 Stable.

Nasdaq is committed to reducing leverage to 4.0x in 18 months and to approximately 3.3x in 36 months. Nasdaq intends to pursue its existing capital deployment plan, including steadily increasing its dividend per share and dividend payout ratio to achieve 35%-38% within three to four years.

The company intends to repurchase shares over time to partially offset dilution from the transaction in addition to continuing to offset employee share-based compensation.

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Japan’s Mizuho Financial buys Greenhill

Mizuho Financial Group to acquire Greenhill & Co. for $15 per share in cash

Mizuho Financial Group, Inc. (MFG) and Greenhill & Co., Inc. (GHL) announced a definitive agreement for Mizuho to acquire Greenhill in an all-cash transaction at $15 per share, reflecting an enterprise value of approximately $550M, including assumed debt.

Greenhill & Co., Inc.provides financial and strategic advisory services to corporations, partnerships, institutional investors, and governments worldwide. The company offers advisory services related to mergers and acquisitions, divestitures, restructurings, financings, private capital raising, and other similar transactions.

Through this transaction, Mizuho will accelerate its investment banking growth strategy, building on Greenhill’s 27-year history of advising important clients on significant mergers & acquisitions, restructurings and capital raising transactions.

Following completion of the transaction, Greenhill will operate globally from its 15 locations around the world as the M&A and restructuring advisory business of Mizuho.

That business will maintain the Greenhill brand, and the existing Greenhill leadership team will remain in place. Greenhill Chairman & Chief Executive Officer Scott Bok will become Chairman of the M&A and restructuring advisory business.

Current Greenhill Co-Presidents Kevin Costantino and David Wyles will become Co-Heads of the business.

The Greenhill business will sit within Mizuho’s banking division, led by Michal Katz, Head of Banking in the Americas.

With this transaction, Mizuho will welcome Greenhill’s 370 employees, as well as the valued client relationships they have built around the world.

Both management teams are committed to a seamless transition for all clients and employees.

The transaction is expected to close by year end and is subject to approval by Greenhill stockholders, as well as required regulatory approvals and other customary closing conditions.

GHL gained $7.88 to close at $14.66.

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FOMC to raise rates by 75 bp on September 21

Fed’s Waller supports ‘significant increase’ in policy rate at next meeting

The Federal Reserve release a transcript for a speech to be delivered by Governor Christopher Waller at the 17th Annual Vienna Macroeconomics Workshop, in which he plans to state:

Christopher Waller

Christopher J. Waller took office as a member of the Board of Governors of the Federal Reserve System on December 18, 2020, to fill an unexpired term ending January 31, 2030.

Prior to his appointment at the Board, Dr. Waller served as executive vice president and director of research at the Federal Reserve Bank of St. Louis since 2009.

There are three takeaways from my speech today.

First, inflation is far too high, and it is too soon to say whether inflation is moving meaningfully and persistently downward. The Federal Open Market Committee is committed to undertake actions to bring inflation back down to our 2% target.

This is a fight we cannot, and will not, walk away from.

The second takeaway is that the fears of a recession starting in the first half of this year have faded away and the robust U.S. labor market is giving us the flexibility to be aggressive in our fight against inflation.

For that reason, I support continued increases in the FOMC’s policy rate and, based on what I know today, I support a significant increase at our next meeting on September 20 and 21 to get the policy rate to a setting that is clearly restricting demand.

The final takeaway is that I believe forward guidance is becoming less useful at this stage of the tightening cycle.

Future decisions on the size of additional rate increases and the destination for the policy rate in this cycle should be solely determined by the incoming data and their implications for economic activity, employment, and inflation.” 

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Rate Hikes are Coming!

Fed Chair confirmed a 25 bp rate hike this month

Fed’s Beige Book was released a few minutes ago. The report reiterated the economy expanded at a “modest to moderate” pace. Many Districts reported that the surge in Covid cases and severe winter weather disrupted businesses. Some firms noted a “temporary” weakening in demand in the hospitality sector to Covid.

The Beige Book reports an expanding economy

“All Districts” said supply chain issues and low inventories continued to restrain growth, especially in construction.

The overall outlook for the next 6 months remained one of stable and general optimism, though with elevated uncertainty.

Powell, FOMC Chair, Stockwinners
Fed Chief Jerome Powell

For the labor market, the widespread strong demand for labor was hampered by “equally widespread reports of worker scarcity.”

Meanwhile,  Fed Chair Powell’s testified before the Congress today. He confirmed a 25 basis points rate hike is in the cards for the March 15-16 meeting.

FOMC as policymakers look to address “indisputably” high inflation pressures. He also suggested more aggressive increases could be warranted down the road. Powell said liquidity has been functional thanks to a number of measures and facilities put in place, including swap lines and the standing repo facility.

FOMC is looking to soak up liquidity

The Fed has “institutionalized liquidity provisions” — hence the geopolitical pressures have not added stresses in the funding markets.

The markets are sharply higher across all sectors.

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MoneyGram sold for $1 billion

The private equity firm will pay $11 a share for MoneyGram

Madison Dearborn Partners agreed to buy the company.

MoneyGram International, Inc. provides cross-border peer-to-peer payments and money transfer services in the United States and internationally. The company operates through two segments, Global Funds Transfer and Financial Paper Products. 

MoneyGram (MGI) has been a takeover target for years, as more people turn to online payments and away from old-school money-transfer services.

Chinese financial-services conglomerate Ant Group Co. agreed to buy MoneyGram in 2017, but walked away after pushback from regulators.

The acquisition by Madison Dearborn will enable MoneyGram “to accelerate the advancement of our digital growth strategy,” Chief Executive Officer Alex Holmes, who will continue to lead the firm after the deal is completed, said in the statement. “We will have greater opportunities to innovate and transform MoneyGram to lead the industry in cross-border payment technology and deliver a more expansive set of digital offerings.”

Remittances to most regions increased last year, aided by the economic recovery in the U.S. and Europe. Flows jumped almost 22% in Latin America and the Caribbean last year, 9.7% in the Middle East and North Africa, and 8% in South Asia, the World Bank said in November.

The MoneyGram acquisition, which includes a 30-day “go shop” period, is expected to be completed in the fourth quarter. Debt financing for the deal is being provided by Goldman Sachs Group Inc., Deutsche Bank AG and Barclays Plc.

MGI is up $1.77 to $10.72.

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U.S. opposition leads to cancelation of merger

Aon plc, Willis Towers Watson mutually agree to terminate combination pact

Aon plc (AON) and Willis Towers Watson (WLTW) announced that the firms have agreed to terminate their business combination agreement and end litigation with the U.S. Department of Justice.

The proposed combination was first announced on March 9, 2020.

“Despite regulatory momentum around the world, including the recent approval of our combination by the European Commission, we reached an impasse with the U.S. Department of Justice,” said Aon CEO Greg Case.

“The DOJ position overlooks that our complementary businesses operate across broad, competitive areas of the economy. We are confident that the combination would have accelerated our shared ability to innovate on behalf of clients, but the inability to secure an expedited resolution of the litigation brought us to this point.”

In connection with the termination of the business combination agreement, Aon will pay the $1B termination fee to Willis Towers Watson, Willis Towers Watson’s proposed scheme of arrangement has now lapsed, and both organizations will move forward independently.

Aon CEO Greg Case gives up on the merger, pays $1B breakup fee

Both firms will provide further financial updates and outlooks on their respective Q2 2021 earnings calls, which take place on July 30 for Aon and August 3 for Willis Towers Watson.

Aon plc, a professional services firm, provides advice and solutions to clients focused on risk, retirement, and health worldwide. AON is based in Ireland.

Willis Towers Watson Public Limited Company operates as an advisory, broking, and solutions company worldwide. Willis is headquartered in London.

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Curo Group shares jump on sale of its subsidiary!

Curo Group surges after Katapult announces merger with SPAC

Shares of Curo Group Holdings (CURO) have surged in Friday trading after the company announced earlier today that it is positioned to benefit from the announcement that Katapult Holding, a company approximately 40% owned by Curo and a leading provider of e-commerce point-of-sale lease purchase options for non-prime U.S. consumers, and FinServ Acquisition Corp.

(FSRV), a publicly traded special purpose acquisition company, or “SPAC,” have entered into a definitive merger agreement.

The transaction values Katapult’s equity at $908M, which includes an earnout of up to $75M in the form of additional common shares in the new public company, Curo said.

“Based on Curo’s ownership in Katapult, the transaction announced today will provide consideration consisting of a combination of cash and stock in the new company to CURO of $365M, which includes an earnout of up to $30M in the form of additional common shares in the new public company.

To date, Curo has made a total cash investment in Katapult of $27.5M,” the company noted.

Upon the closing of the transaction, Curo anticipates receiving cash of up to $125 million and maintaining an ownership stake of at least 21% of the fully-diluted shares of the new public company, CURO added. In afternoon trading, Curo shares have risen $7.09, or 81%, to $15.88. Shares hit a high of $20.81.

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Waddell & Reed sold for $1.7 billion

Macquarie to acquire Waddell & Reed for $25 per share

Waddell & Reed (WDR) announced it has entered into a merger agreement with Macquarie Asset Management, the asset management division of Macquarie Group (MQBKY), under which Macquarie would acquire all of the outstanding shares of Waddell & Reed for $25.00 per share in cash representing total consideration of $1.7B.

The transaction represents a premium of approximately 48% to the closing price of Waddell & Reed common stock on December 1, 2020, the last trading day prior to the transaction announcement, and a premium of approximately 57% to Waddell & Reed’s volume-weighted average price for the last 90 trading days.

On completion of the transaction, Macquarie has agreed to sell Waddell & Reed Financial, Inc.’s wealth management platform to LPL Financial Holdings Inc. (LPLA), a U.S. retail investment advisory firm, independent broker-dealer, and registered investment advisor custodian, and also enter into a long-term partnership with Macquarie becoming one of LPL’s top tier strategic asset management partners.

As a result of the transaction, Macquarie Asset Management’s assets under management are expected to increase to over $465B, with the combined business becoming a top 25 actively managed, long-term, open-ended U.S. mutual fund manager by assets under management, with the scale and diversification to competitively position the business to maintain and extend its high standards of service to clients and partners.

The transaction has been approved by the Boards of Directors of Waddell & Reed Financial, Inc., Macquarie Group and LPL and is expected to close in the middle of 2021, subject to regulatory approvals, Waddell & Reed Financial, Inc. stockholder approval and other customary closing conditions.

Waddell & Reed Financial, Inc. provides investment management and advisory, investment product underwriting and distribution, and shareholder services administration to mutual funds, and institutional and separately managed accounts in the United States. 

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IHS Markit sold for $44 billion

S&P Global, IHS Markit to merge in all-stock deal

S&P Global (SPGI) and IHS Markit (INFO) announced they have entered into a definitive merger agreement to combine in an all-stock transaction which values IHS Markit at an enterprise value of $44B, including $4.8B of net debt.

Under the terms of the merger agreement, which has been unanimously approved by the boards of both companies, each share of IHS Markit common stock will be exchanged for a fixed ratio of 0.2838 shares of S&P Global common stock.

Upon completion of the transaction, current S&P Global shareholders will own approximately 67.75% of the combined company on a fully diluted basis, while IHS Markit shareholders will own approximately 32.25%.

Serving a global customer base across financial information and services, ratings, indices, commodities and energy, and transportation and engineering, the pro forma company will provide differentiated solutions to the workflows of many companies.

Combined, the two companies will provide solutions across data, platforms, benchmarks and analytics in ESG, climate and energy transition.

The pro forma company will have 76% recurring revenue and expects to realize 6.5%-8% annual organic revenue growth in 2022 and 2023, balanced across major industry segments.

The combined company will target 200 basis points of annual EBITA margin expansion.

The transaction is expected to be accretive to earnings by the end of the second full year post-closing.

The combined company expects to deliver annual run-rate cost synergies of approximately $480M, with approximately $390M of those expected by the end of the second year post-closing, and $350M in run-rate revenue synergies for an expected total run-rate EBITA impact of approximately $680M by the end of the fifth full year after closing.

The combined company expects to generate annual free cash flow exceeding $5B by 2023, with a targeted dividend payout ratio of 20%-30% of adjusted diluted EPS and a targeted total capital return of at least 85% of free cash flow between dividends and share repurchases.

Both companies expect to maintain their current dividend policies until the close of the transaction.

Following closing, the company will be headquartered in New York with a presence in key global markets across North America, Latin America, EMEA and Asia Pacific.

The leadership team will comprise senior leaders from both organizations.

Ewout Steenbergen, executive VP and CFO of S&P Global, will serve as CFO of the combined company.

Ewout Steenbergen will serve as CFO of the new company

The transaction is expected to close in the second half of 2021, subject to, among other things, the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, other antitrust and regulatory approvals, and other customary closing conditions.

The transaction requires the approval of shareholders of both S&P Global and IHS Markit and is not subject to any financing conditions.

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