Canadian Pacific approaches Kansas City Southern again

Canadian Pacific says prepared to re-engage with Kansas City Southern

Canadian Pacific (CP) sent the following letter to the Surface Transportation Board in response to the Kansas City Southern (KSU) Board of Directors’ decision to terminate the Merger Agreement with CP:

Canadian Pacific wants to merge with Kansas City Southern

“I am writing on behalf of the Canadian Pacific Applicants in this proceeding to advise the Board and Interested Parties of the CP Applicants’ intentions in light of Kansas City Southern’s decision to terminate the merger agreement between CP and Kansas City Southern and to enter a merger agreement with Canadian National Railway.

For the reasons explained below, CP intends to proceed to prepare and file its Application in this docket seeking Board authority to control KCS and its U.S. rail carrier subsidiaries.

The decision of KCS’s board of directors to designate CN’s offer a “superior proposal” reflects the extreme price CN has offered KCS in order to extinguish CP’s proposed transaction,2 coupled with CN’s undertaking to attempt to absolve KCS and its shareholders of the regulatory risks associated with CN’s proposed acquisition through the use of a voting trust. In order to neutralize the regulatory risks posed by CN’s proposed transaction from the perspective of KCS’s shareholders,

CN’s agreement to acquire KCS is conditioned on CN’s ability to acquire KCS shares in advance of receiving Board approval to control KCS via the use of a voting trust.

On May 17, the Board ruled in Finance Docket No. 36514 that CN’s proposed acquisition of KCS is subject to the 2001 Major Merger rules, and, accordingly, that CN’s proposed use of a voting trust requires formal STB approval under 49 U.S.C. Section1180.4(b)(4)(iv).

The Combined network covers Gulf of Mexico to Pacific Ocean

The Board explained that it would “take a more cautious approach to a voting trust” in the CN proceeding and that its “consideration of whether the proposed use of a voting trust in a potential CN-KCS transaction is ‘consistent with the public interest’ would be informed by argument on both the potential benefits and costs of such use.”

CP believes that CN cannot demonstrate that its proposed use of a voting trust would be “consistent with the public interest” for reasons CP has already summarized and will address further in its comments on CN’s proposal in Finance Docket No. 36514, once CN refiles its motion seeking Board approval and the Board establishes a comment period.

Because STB Voting Trust Approval is a condition to closing, were CN unable to use a voting trust, CN’s proposed acquisition of KCS could not be consummated. KCS would then face the choice of whether to renegotiate the CN-KCS merger agreement in order to proceed with CN without the use of a voting trust.

Were KCS presented with the question of how to proceed following a decision by the Board not to approve CN’s proposed use of a voting trust, CP anticipates being available to engage with KCS to enter into another agreement to acquire KCS.

CP expects that such an agreement would be in substantially the form of the merger agreement previously entered into by CP and KCS, which was previously noticed in this docket and reviewed by the Board in connection with its approval of CP’s proposed voting trust agreement.

Accordingly, CP intends to proceed forward with the preparation of its Application in this docket seeking Board authority to acquire control of KCS.

CP believes that pursuing its Application is in the best interests of both KCS and the public so that the pro-competitive CP/KCS transaction can proceed to be reviewed by the Board and – in the event KCS’s agreement with CN is terminated or CN is otherwise unable to acquire control of KCS – a potential acquisition of KCS by CP could be implemented without undue delay, all in accord with the rulings and processes already established by the Board in this docket.

CP looks forward to establishing that its acquisition of control of KCS would be consistent with the public interest.”

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Consolidation in the media space!

AT&T, Discovery to create global DTC business through Reverse Morris Trust

AT&T (T) and Discovery (DISCA) announced a definitive agreement to combine WarnerMedia’s premium entertainment, sports and news assets with Discovery’s nonfiction and international entertainment and sports businesses to create a standalone global entertainment company.

ATT to merge it’s media assets with Discovery

Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, AT&T would receive $43B in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt, and AT&T’s shareholders would receive stock representing 71% of the new company; Discovery shareholders would own 29% of the new company.

The boards of both AT&T and Discovery have approved the transaction.

Discovery to merge with ATT media

Bringing together the leadership teams, content creators, and series and film libraries.

The new company is projected for 2023 revenue of approximately $52B, adjusted EBITDA of approximately $14B, and free cash flow conversion rate of approximately 60%.

The transaction is expected to create at least $3B in expected cost synergies annually for the new company.

The new company will compete globally in the direct-to-consumer business bringing content to DTC subscribers across its portfolio, including HBO Max and the recently launched discovery+.

The transaction will combine WarnerMedia’s content library of IP with Discovery’s global footprint, local-language content and regional expertise across more than 200 countries and territories.

The companies announced that Discovery president and CEO David Zaslav will lead the proposed new company with a management team and operational and creative leadership from both companies.

Discovery’s current multiple classes of shares will be consolidated to a single class with one vote per share.

The new company’s board will consist of 13 members, seven initially appointed by AT&T, including the chairperson of the board; Discovery will initially appoint six members, including CEO David Zaslav.

The combination will be executed through a Reverse Morris Trust, under which WarnerMedia will be spun or split off to AT&T’s shareholders via dividend or through an exchange offer or a combination of both and simultaneously combined with Discovery.

The transaction is expected to be tax-free to AT&T and AT&T’s shareholders. In connection with the spin-off or split-off of WarnerMedia, AT&T will receive $43B in a combination of cash, debt securities and WarnerMedia’s retention of certain debt.

David Zaslav to head the new company

The new company expects to maintain investment grade rating and utilize the significant cash flow of the combined company to rapidly de-lever to approximately 3.0x within 24 months, and to target a new, longer term gross leverage target of 2.5x-3.0x.

WarnerMedia has secured fully committed financing for the purposes of funding the distribution.

The transaction is anticipated to close in mid-2022, subject to approval by Discovery shareholders and customary closing conditions, including receipt of regulatory approvals.

No vote is required by AT&T shareholders. Agreements are in place with John Malone and Advance to vote in favor of the transaction.

Elliott Management

Elliott Investment Management released a statement on behalf of Managing Partner Jesse Cohn and Portfolio Manager Marc Steinberg regarding AT&T’s plan to merge media assets with Discovery:

Elliott is a major shareholder in ATT

“It has been a transformational year at AT&T year since John Stankey took over as CEO, and today’s announcement represents another impressive step in the Company’s recent evolution.

AT&T has now executed on its promise to streamline operations and re-focus on its core businesses, all while improving operational execution, enhancing its financial position and advancing its corporate governance. As investors, Elliott supports AT&T in its efforts to best position the company for future success.”

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Merger in the REIT space

Equity Commonwealth to acquire Monmouth Real Estate for $3.4B

Equity Commonwealth (EQC) and Monmouth Real Estate (MNR) announced that they have entered into a definitive merger agreement by which Equity Commonwealth will acquire Monmouth in an all-stock transaction, valued at approximately $3.4B, including the assumption of debt.

The combined company is expected to have a pro forma equity market capitalization of approximately $5.5B.

Under the terms of the agreement, Monmouth shareholders will receive 0.67 shares of Equity Commonwealth stock for every share of Monmouth stock they own.

Based on the closing price for Equity Commonwealth on May 4, this represents approximately $19.40 per Monmouth share.

The merger agreement provides for Monmouth to declare and pay one additional regular quarterly common stock dividend of 18c per share without Equity Commonwealth paying a corresponding common dividend to its shareholders.

Accordingly, the total consideration to be received by the Monmouth shareholders in the transaction is $19.58 per Monmouth share.

Equity Commonwealth and Monmouth shareholders are expected to own approximately 65% and 35%, respectively, of the pro forma company following the close of the transaction.

Monmouth’s portfolio is comprised of 120 properties totaling 24.5M square feet. In addition, Monmouth has six properties totaling 1.8M square feet under contract and leased to investment grade tenants.

Closings for these acquisitions are expected in 2021 and 2022.

The company will continue to be led by president and CEO David Helfand and the existing senior management team.

Upon closing, the number of trustees on Equity Commonwealth’s board will be expanded to 10, with two individuals designated by Monmouth’s board.

Sam Zell will remain the chairman of the board of trustees.

The transaction is expected to close during the second half of 2021, subject to customary closing conditions, including approval by the common shareholders of both Equity Commonwealth and Monmouth.

Sam Zell to become Chairman of the new company

The board of trustees of Equity Commonwealth and the board of directors of Monmouth Real Estate have each unanimously approved the transaction.

Equity Commonwealth ( EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC’s same property portfolio is comprised of 4 properties and 1.5 million square feet.

Monmouth Real Estate Investment specializes in single tenant, net-leased industrial properties, subject to long-term leases, primarily to investment-grade tenants. Monmouth Real Estate is a fully integrated and self-managed real estate company, whose property portfolio consists of 121 properties, containing a total of approximately 24.5 million rentable square feet, geographically diversified across 31 states. 

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Microsoft buys Nuance

Microsoft to acquire Nuance for $56.00 per share in cash, or $19.7B

Microsoft (MSFT) and Nuance Communications (NUAN) announced they have entered into a definitive agreement under which Microsoft will acquire Nuance for $56.00 per share, implying a 23% premium to the closing price of Nuance on Friday, April 9, in an all-cash transaction valued at $19.7B, inclusive of Nuance’s net debt.

Nuance sold for $19.7B

Nuance is a trusted cloud and AI software leader representing decades of accumulated healthcare and enterprise AI experience.

Mark Benjamin will remain CEO of Nuance, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft.

The transaction is intended to close this calendar year.

Upon closing, Microsoft expects Nuance’s financials to be reported as part of Microsoft’s Intelligent Cloud segment.

Microsoft expects the acquisition to be minimally dilutive (less than 1%) in fiscal year 2022 and to be accretive in fiscal year 2023 to non-GAAP earnings per share, based on the expected close timeframe.

Non-GAAP excludes expected impact of purchase accounting adjustments, as well as integration and transaction-related expenses.

The acquisition will not impact the completion of its existing share repurchase authorization.

Nuance Communications, Inc. provides conversational and cognitive artificial intelligence (AI) innovations that bring intelligence to everyday work and life. The company delivers solutions that understand, analyze, and respond to people – amplifying human intelligence to increase productivity and security.

B. Riley analyst Zach Cummins reiterates a Buy rating on LivePerson (LPSN) with a $77 price target after Microsoft (MSFT) acquired Nuance Communications (NUAN), a provider of conversational commerce solutions, with expertise geared toward the healthcare vertical.

The potential deal acquisition provides a “positive valuation data point” for LivePerson, a leading provider of conversational commerce solutions across the telecom, financial services, retail, and consumer verticals, Cummins tells investors in a research note.

LivePerson currently trades at an enterprise value to sales multiple of 6.5 times, below the comp group median of 9.5 times and Nuance’s implied takeout multiple of 12.5 times, says the analyst.

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Merger in the railroad space!

Canadian Pacific to buy Kansas City Southern in $29B deal

Canadian Pacific Railway (CP) and Kansas City Southern (KSU) announced they have entered into a merger agreement, under which CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately $29B, which includes the assumption of $3.8B of outstanding KCS debt.

The transaction, which has the unanimous support of both boards of directors, values KCS at $275 per share, representing a 23% premium, based on the CP and KCS closing prices on March 19, 2021.

Following the closing into a voting trust, common shareholders of KCS will receive 0.489 of a CP share and $90 in cash for each KCS common share held.

Following final approval from the Surface Transportation Board, the transaction will combine the two railroads to create the first rail network connecting the U.S., Mexico, and Canada.

Canadian Pacific Rails

Joining seamlessly in Kansas City, Mo., in America’s heartland, CP and KCS together will connect customers via single-network transportation offerings between points on CP’s system throughout Canada, the U.S. Midwest, and the U.S. Northeast and points on KCS’ system throughout Mexico and the South Central U.S.

While remaining the smallest of six U.S. Class 1 railroads by revenue, the combined company will be a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people and generating total revenues of approximately $8.7 billion based on 2020 actual revenues.

Combined Companies Rails

The combination is expected to be accretive to CP’s adjusted diluted EPS in the first full year following CP’s acquisition of control of KCS, and is expected to generate double-digit accretion upon the full realization of synergies thereafter.

To fund the stock consideration of the merger, CP will issue 44.5 million new shares.

The cash portion will be funded through a combination of cash-on-hand and raising approximately $8.6B in debt, for which financing has been committed.

As part of the merger, CP will assume approximately $3.8B of KCS’ outstanding debt.

Following the closing into trust, CP expects that its outstanding debt will be approximately $20.2B. Pro forma for the transaction, CP estimates its leverage ratio against 2021E street consensus EBITDA to be approximately 4.0-times with the assumption of KCS debt and issuance of new acquisition-related debt.

In order to manage this leverage effectively, CP will be temporarily suspending its normal course issuer bid program, and expects to produce approximately $7B of levered free cash flow over the next three years.

CP estimates its long-term leverage target of approximately 2.5x to be achieved within 36 months after closing into trust.

The combined company will remain committed to maintaining strong investment grade credit ratings while continuing to return capital for the benefit of shareholders.

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Wrike sold for $2.25B cash

Citrix to acquire Wrike for $2.25B in cash

Citrix Systems (CTXS) announced that it has entered into a definitive agreement to acquire Wrike, a rapidly growing, recognized leader in the SaaS collaborative work management space, for $2.25B in cash.

Wrike ended calendar year 2020 with more than $140 million in unaudited SaaS ARR, reflecting more than 30 percent CAGR in SaaS ARR over the prior two years.

Citrix spends $2.55B to expand its offerings

The company is expected to have approximately 30 percent stand-alone growth to between $180M-$190M in SaaS ARR1 in 2021, with the opportunity to accelerate growth over time under Citrix’s ownership.

The addition of Wrike is highly complementary to Citrix’s existing customer base and is expected to accelerate Citrix’s SaaS ARR growth.

Wrike founders cash out

Financing and purchase accounting impacts to deferred revenue will affect 2021 non-GAAP earnings per share. Integration and other costs related to the acquisition are expected to be modestly dilutive to non-GAAP earnings per share in 2021.

The transaction is expected to be neutral to Citrix’s fiscal year 2022 non-GAAP earnings per share and free cash flow, and accretive thereafter.

Citrix expects to fund the transaction with a combination of new debt and existing cash and investments.

Citrix is committed to its investment grade credit ratings and plans to return to historical leverage levels within 24 months.

Citrix has obtained a commitment from JPMorgan Chase Bank, N.A. for a $1.45B senior unsecured 364-day bridge loan facility.

The transaction, which has been unanimously approved by the board of directors of both Citrix and Wrike, is expected to close in the first half of 2021, subject to regulatory approvals and other customary closing conditions.

SaaS is the new trend in software usage

Until close, the companies will continue to operate independently.

Upon closing, Andrew Filev, Wrike CEO will continue to lead the Wrike team and report to Arlen Shenkman, EVP and CFO, Citrix.

CTXS closed at $132.00.

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$5B Merger in LNG Space

New Fortress Energy to buy Hygo ,Golar LNG Partners combined in $5B deal

New Fortress Energy (NFE) announced that it has entered into definitive agreements to acquire Hygo Energy Transition a 50-50 joint venture between Golar LNG Limited (GLNG) and Stonepeak Infrastructure Fund II Cayman.

New Fortress goes shopping

“With a strong presence in Brazil and a world-class LNG shipping business, Hygo and GMLP are excellent additions to our efforts to accelerate the world’s energy transition,” said Wes Edens, Chairman and CEO of NFE.

“The addition of Hygo will quickly expand our footprint in South America with three gas-to-power projects in Brazil’s large and fast-growing market. With GMLP, we gain LNG ships and world-class operators that are an ideal fit to support our existing terminals and robust pipeline.”

“We are impressed with what Wes Edens and the NFE team have created and their commitment to changing the energy industry,” said Golar LNG Chairman Tor Olav Troim.

“They share our vision to provide cheaper and cleaner energy to a growing population. The consolidation of two of the entrepreneurial LNG downstream players gives the company improved access to capital and creates a unique world-leading energy transition company which Golar shareholders will benefit from being a part of going forward.”

With the acquisition of Hygo, NFE will acquire an operating floating storage and regasification unit terminal and a 50% interest in a 1500MW power plant in Sergipe, Brazil as well as two other FSRU terminals with 1200MW of power in advanced stages in Brazil.

Hygo’s fleet consists of a newbuild FSRU and two operating LNG carriers.

NFE will also acquire a leading owner of FSRUs and LNG carriers as well as a pioneer in floating liquefaction technologies with the GMLP transaction.

The addition of GMLP’s fleet of six FSRUs, four LNG carriers and a 50% interest in Trains 1 and 2 of the Hilli, a floating liquefaction vessel, is expected to support both NFE’s , NFE will acquire all of the outstanding shares of Hygo for 31.4M shares of NFE Class A common stock and $580M in cash.

The transaction is valued at a $3.1B enterprise value and a $2.18B equity value.

Pursuant to the transaction, GLNG will receive 18.6 million shares of NFE Class A common stock and $50 million in cash and Stonepeak will receive 12.7 million shares of NFE Class A common stock and $530 million in cash.

Hygo’s Board of Directors, together with GLNG and Stonepeak, the shareholders of Hygo, have unanimously approved the proposed transaction with NFE.

The closing of the transaction is subject to the receipt of certain regulatory approvals and third party consents and other customary closing conditions, and is expected to occur in the first half of 2021.

Under NFE’s agreement with GMLP , NFE has agreed to acquire all of the outstanding common units of GMLP for $3.55 per common unit in cash.

NFE has also agreed to acquire GMLP’s general partner for equivalent consideration based on the general partner’s economic interest in GMLP.

The preferred units of GMLP will remain outstanding. The transaction is valued at a $1.9B enterprise value and $251 million common equity value.

GMLP’s Board of Directors, acting upon the recommendation of a special committee of independent directors of GMLP, unanimously approved the proposed transaction with NFE.

The closing of the transaction is subject to the approval by the holders of a majority of GMLP’s outstanding common units, the receipt of certain regulatory approvals and third party consents and other customary closing conditions, and is expected to occur in the first half of 2021.

GLNG has entered into a support agreement with NFE committing to vote its approximately 30.8% interest in GMLP’s common units in favor of the transaction.

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Aerojet Rocketdyne sold for $5 billion

Lockheed Martin to acquire Aerojet Rocketdyne

Lockheed Martin (LMT) announced it has entered into a definitive agreement to acquire Aerojet Rocketdyne (AJRD) for $56 per share in cash, which is expected to be reduced to $51 per share after the payment of a pre-closing special dividend.

Aerojet sold for $5 billion

This represents a post-dividend equity value of $4.6B and a total transaction value of $4.4B including the assumption of net cash.

As part of approving the transaction, Aerojet Rocketdyne announced a special cash dividend, revocable at its option through the payment date, of $5 per share to its holders of record of common stock and convertible senior notes as of the close of business on March 10, 2021, and payable on March 24, 2021.

Lockheed Martin brings most of it’s rocket manufacturing to in-house with this deal

The transaction is expected to close in the second half of 2021 and is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by Aerojet Rocketdyne’s stockholders.

Aerojet Rocketdyne designs, develops, manufactures, and sells aerospace and defense products and systems in the United States.

The Aerospace and Defense segment offers aerospace and defense products and systems for the United States government, including the Department of Defense, the National Aeronautics and Space Administration, and aerospace and defense prime contractors. This segment provides liquid and solid rocket propulsion systems, air-breathing hypersonic engines, and electric power and propulsion systems for space, defense, civil, and commercial applications; and armament systems.

Large Solid Rockets made by Aerojet

The Real Estate segment engages in the re-zoning, entitlement, sale, and leasing of the company’s excess real estate assets. It owns approximately 11,394 acres of land adjacent to the United States Highway 50 between Rancho Cordova and Folsom, California east of Sacramento.

AJRD closed at $42.02. LMT closed at $356.03.

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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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Pluralsight sold for $3.5 billion

Pluralsight to be acquired by Vista for $20.26 per share in cash

Pluralsight (PS) announced that it has entered into a definitive agreement to be acquired by Vista Equity Partners.

Pluralsight sold for $3.5 billion

Pluralsight, Inc. operates a cloud-based technology skills platform in the United States, Europe, the Middle East, Africa, and internationally. Its platform products include Pluralsight Skills for individuals and teams to acquire technology skills through skill development experiences, such as skill assessments, a curated library of expert-authored courses, directed learning paths, interactive content, and business analytics; and Pluralsight Flow, which gives technology leaders objective data and visibility into workflow patterns to measure the productivity of their software developers. 

Under the terms of the agreement, Vista, in partnership with its institutional co-investors including Partners Group, will acquire all outstanding shares of Pluralsight common stock for $20.26 per share in an all-cash transaction valued at approximately $3.5B.

Company has benefited from “stay home”

The purchase price represents a premium of approximately 25% to the company’s volume weighted average closing stock price for the 30 trading days prior to today’s announcement.

The deal has been unanimously approved and recommended by an independent Transaction Committee and then unanimously approved by the Pluralsight board.

Vista gambles $3.5 billion on cloud based learning

Pluralsight has also entered into a voting agreement with certain of its shareholders, under which such shareholders have agreed to vote all of their Pluralsight shares in favor of the transaction.

The Pluralsight shares subject to the voting agreement represent a majority of the current outstanding voting power of Pluralsight shares. “In response to receipt of unsolicited acquisition interest, Pluralsight engaged in a robust process, including evaluating transaction alternatives against Pluralsight’s standalone plan and other strategic alternatives,” the company said.

The transaction is expected to close in the first half of 2021. PS closed at $18.98.

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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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Collectors Universe sold for $75 per share

Collectors Universe to be acquired by investor group for approx. $700M

Collectors Universe (CLCT) announced that it has entered into a definitive agreement under which an investor group led by entrepreneur and sports card collector Nat Turner, D1 Capital Partners L.P., and Cohen Private Ventures will acquire all of the Company’s outstanding shares of common stock for $75.25 per share in cash.

Collectors Universe, Inc. provides authentication, grading, and related services to dealers, collectors, and retail buyers and sellers of coins, trading cards, event tickets, autographs, and historical and sports memorabilia in the United States. The company operates in three segments: Coins, Trading Cards and Autographs, and Other Collectibles. It also publishes magazines that provide market prices and information for various collectibles and high-value assets that are accessible on its websites.

Nat Turner pushed for this transaction

The transaction represents a premium of approximately 30% over the Company’s 60-day volume-weighted average price ended on November 25, 2020, the last full trading day before today’s announcement.

The transaction, which was approved by the Collectors Universe Board of Directors, represents fully diluted equity value of approximately $700M, and is not subject to any financing contingency.

Joseph J. Orlando, President and CEO of Collectors Universe, will continue to lead Collectors Universe, which will retain its headquarters in Santa Ana, California.

Joseph J. Orlando, President and CEO of Collectors Universe

The transaction will be completed through a cash tender offer for all of the outstanding common shares of Collectors Universe for $75.25 per share in cash, to be commenced as promptly as reasonably practicable, followed by a merger in which any remaining outstanding shares of Collectors Universe will be converted into the right to receive the same cash price per share paid in the tender offer.

The closing of the tender offer is subject to certain limited and customary conditions, including the tender by Collectors Universe shareholders of at least one share more than 50% of Collectors Universe’s issued and outstanding shares and expiration or early termination of the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

The Collectors Universe Board of Directors recommends that all shareholders tender their shares in the offer.

The transaction is expected to close in the first calendar quarter of 2021.

Upon completion of the transaction, Collectors Universe will become a privately held company and its shares will no longer be listed on any public market.

CLCT last traded at $75.22, up $2.67.

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American Renal Associates sold for $853M

American Renal Associates to be acquired by Nautic Partners for $11.50 per share

American Renal Associates (ARA) announced that it has entered into a definitive agreement to be acquired by Innovative Renal Care, an affiliate of Nautic Partners, a middle market private equity firm, in an all-cash transaction that values the company at an aggregate enterprise valuation of approximately $853M excluding non-controlling interest.

ARA sold for $11.50 per share

Under the terms of the agreement, ARA shareholders will receive $11.50 per share in cash.

This consideration represents an approximate premium of 66% to the company’s closing price on October 1.

The board of ARA unanimously approved the agreement. The transaction is expected to close in Q1 of 2021, subject to shareholder and regulatory approvals, as well as the satisfaction of customary closing conditions.

Centerbridge Partners has entered into a voting agreement pursuant to which it has agreed to vote in favor of the transaction.

The agreement includes a 40-day “go-shop” period, which permits ARA’s board, with the assistance of independent financial and legal advisors, to actively solicit alternative acquisition proposals from third parties, and potentially enter into negotiations with parties that make alternative acquisition proposals.

The board has appointed a special committee of independent directors to oversee the go-shop process.

ARA will have the right to terminate the agreement with Nautic to enter into a superior proposal subject to the terms and conditions of the agreement.

There can be no assurance that this process will result in a superior proposal, and ARA does not intend to disclose developments with respect to the solicitation process unless and until its special committee or the board makes a determination requiring further disclosure. The period commences on the date of the agreement.

ARA closed at $6.92.

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ArcelorMittal USA sold for $1.4B

Cleveland-Cliffs to acquire ArcelorMittal USA for $1.4B in cash, stock

Cleveland-Cliffs (CLF) announced that it has entered into a definitive agreement with ArcelorMittal (MT), pursuant to which Cleveland-Cliffs will acquire substantially all of the operations of ArcelorMittal USA and its subsidiaries for approximately $1.4B.

Upon closure of the transaction, Cleveland-Cliffs will be the largest flat-rolled steel producer in North America, with combined shipments of approximately 17M net tons in 2019.

The company will also be the largest iron ore pellet producer in North America, with 28M long tons of annual capacity.

Cleveland Cliff goes shopping

ArcelorMittal USA will be acquired by Cleveland-Cliffs on a cash-free and debt-free basis, with a combination of 78.2M shares of Cleveland-Cliffs common stock, non-voting preferred stock with an approximate aggregate value of $373M and $505M in cash.

The enterprise value of the transaction is approximately $3.3B, which takes into consideration the assumption by Cleveland-Cliffs of pension/OPEB liabilities and working capital.

In 2018 and 2019, ArcelorMittal USA averaged annual revenues of approximately $10.4B and annual adjusted EBITDA of approximately $700M.

The assets acquired include s steelmaking facilities, eight finishing facilities, two iron ore mining and pelletizing operations, and three coal and coke making operations.

The transaction is anticipated to be EPS accretive, and Cleveland-Cliffs expects the acquisition to reduce the company’s leverage from 4.3x to 3.6x on a pro-forma 2019 adjusted EBITDA basis, including the expectation of approximately $150M in estimated annual cost savings.

Facilities in play

The acquisition is also expected to increase the company’s liquidity substantially due to an increased ABL borrowing base.

The facilities included in the transaction are: Steelmaking: Indiana Harbor, Burns Harbor, Cleveland Coatesville, Steelton, Riverdale. Finishing: Columbus , Conshohocken, Double G. Coatings JV, Gary Plate, I/N Tek JV with Nippon Steel, I/N Kote JV with Nippon Steel and Weirton. Mining and Pelletizing: Hibbing JV and Minorca. Met Coal / Cokemaking: Monessen, Princeton and Warren.

The transaction has been approved by the board of directors of both companies and is expected to close in Q4, subject to the receipt of regulatory approval and the satisfaction of other customary closing conditions.

The cash consideration from Cleveland-Cliffs is expected to be financed using available cash on hand and liquidity. Cleveland-Cliffs has received commitments to increase its existing asset based lending facility.

MT last traded at $13.36, CLF last changed hands at $6.47.

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