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September 10, 2020

Virtusa sold for $2 billion

Virtusa to be acquired by BPEA for $51.35 per share in cash deal valued at $2B

Baring Private Equity Asia, or BPEA, and Virtusa (VRTU) announced the companies have entered into a definitive merger agreement under which funds affiliated with BPEA will acquire all outstanding shares of common stock of Virtusa for $51.35 per share in an all-cash transaction valued at approximately $2B.

Virtusa Corporation provides digital engineering and information technology (IT) outsourcing services primarily in North America, Europe, and Asia.

The companies said in a release, “The price per share to be paid in the transaction, which was unanimously approved by the Virtusa Board of Directors, represents a premium of approximately 27 percent to the closing price of Virtusa common stock on September 9, 2020, the last trading day prior to the transaction announcement, and premiums of approximately 29 percent and 46 percent to Virtusa’s volume-weighted average prices, or VWAP, for the last 30 and 60 trading days, respectively.

In addition, the price paid implies a valuation of 16.2x Firm Value / Last Twelve Months EBITDA as of June 30, 2020. On July 20, 2020, the Virtusa Board of Directors received an unsolicited proposal from an interested party to acquire Virtusa.

Following receipt of the offer, consistent with the Board’s fiduciary duties to maximize shareholder value, the Board authorized the Company and its financial advisors to engage with other potential strategic buyers and financial sponsors regarding a potential acquisition of Virtusa.

As part of this process, the Company signed non-disclosure agreements with five parties and engaged with two others.

After an independent review of the alternatives available, including the value creation opportunity through continued execution of the Company’s strategic plan, the Virtusa Board unanimously determined that the all-cash premium transaction with BPEA for $51.35 per share in cash maximizes value for Virtusa’s shareholders.

The transaction, which is expected to close in the first half of 2021, is subject to the approval of Virtusa’s shareholders, customary regulatory requirements, including approval from The Committee on Foreign Investment in the United States, or CFIUS, and customary closing conditions.

The transaction is not subject to a financing condition.

The Orogen Group, which holds 108,000 shares of Virtusa Convertible Preferred Stock and whose CEO is Vikram Pandit, an independent member of the Board, has entered into a voting agreement under which it has agreed to vote all of Orogen’s Convertible Preferred Stock in favor of the transaction.

Orogen Group is a major shareholder of Virtusa

Orogen’s shares of preferred stock are convertible into 3,000,000 shares of Virtusa common stock and represent approximately 10 percent of the voting power in the Company.

The directors and executive officers of Virtusa have also entered into this voting agreement, and hold an additional approximate 5.7% of the voting power of the Company.”

VRTU closed at $40.50, last traded at $50.45.

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

February 6, 2020February 6, 2020

Unisys Federal sold for $1.2 billion

SAIC to acquire Unisys Federal for $1.2B in cash

Science Applications International Corp. (SAIC) announced that it has entered into a definitive agreement to acquire Unisys Federal (UIS), in an all-cash transaction valued at $1.2B, in a highly strategic and value creating transaction, the company said.

This represents a transaction multiple of approximately 10.5x CY2020 adjusted EBITDA, adjusted for the net present value of tax assets.

Unisys Federal, an operating unit of Unisys (UIS), is a provider of infrastructure modernization, cloud migration, managed services, and enterprise IT-as-a-service through scalable and repeatable solutions to U.S. federal civilian agencies and the Department of Defense.

SAIC expects to fund the $1.2B cash transaction through a combination of cash on hand and incremental debt.

The transaction is expected to close by the end of SAIC’s first quarter of fiscal year 2021, ending May 1, 2020, following customary closing conditions, including HSR regulatory clearance.

Unisys Federal sold to SAIC, Stockwinners

The transaction has been unanimously approved by SAIC’s Board of Directors. The businesses will continue to operate independently until the transaction closes.

“With the addition of Unisys Federal, SAIC will be a leading provider of digital transformation services and solutions to the federal government.

This exciting opportunity advances our strategy by building on our modernization capabilities, increasing customer access, accelerating growth and enhancing shareholder value,” said SAIC CEO Nazzic Keene.

“The financial benefits of acquiring Unisys Federal are compelling, including accretion of adjusted EBITDA margins, non-GAAP earnings per share, and cash generation.”

The transaction multiple of approximately 13x LTM 9/30/19 Adjusted EBITDA represents a significant premium to Unisys’ trading multiple.

Net proceeds are largely expected to be used to pay down debt and reduce pension obligations, thereby significantly improving Unisys’ balance sheet, its U.S. pension funded status and overall financial flexibility.

The transaction was unanimously approved by the Unisys board and is expected to close in the first half of 2020, subject to customary closing conditions. Unisys’ U.S. Federal business represents more than 1,900 associates, with approximately $689 million in revenue for the LTM period ended September 30, 2019.

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November 13, 2019

Tech Data sold for $5.4 billion

Tech Data to be acquired by Apollo Global for $130 per share in cash

Tech Data (TECD) announced it has entered into a definitive agreement to be acquired by an affiliate of funds managed by affiliates of Apollo Global Management (APO).

Tech Data is taken private at $130 per share, Stockwinners

Through the agreement, the affiliate of the Apollo Funds will acquire all of the outstanding shares of Tech Data common stock for $130 per share in a transaction with an enterprise value of approximately $5.4B.

Apollo buys Tech Data for $5.4B, Stockwinners

The purchase price represents a 24.5% premium to the unaffected 30-day volume weighted average closing share price of Tech Data’s common stock ended October 15, the last trading day prior to published market speculation regarding a potential transaction involving the company.

The Tech Data Board of Directors has unanimously approved the transaction and recommends that Tech Data shareholders vote in favor of the transaction.

The transaction is not subject to a financing condition and is expected to close in the first half of calendar year 2020, subject to the satisfaction of customary closing conditions including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, foreign regulatory approvals and approval by the holders of a majority of the outstanding Tech Data shares.

Tech Data expects to hold a Special Meeting of Shareholders to consider and vote on the transaction agreement as soon as feasible after the mailing of the proxy statement to shareholders.

Consistent with the Board’s commitment to maximizing shareholder value, the terms of the agreement provide that Tech Data will be permitted to actively solicit alternative acquisition proposals from third parties during a “go-shop” period from the date of the agreement until December 9.

There is no guarantee that this process will result in a superior proposal. Following the close of the transaction, Rich Hume will continue to lead Tech Data as CEO, and the company will continue to be headquartered in Clearwater, Florida.

Tech Data will become a privately held company, and Tech Data’s common shares will no longer be publicly listed.

Tech Data Corporation operates as an IT distribution and solutions company. The company offers endpoint portfolio solutions, including personal computer systems, mobile phones and accessories, printers, peripherals, supplies, endpoint technology software, and consumer electronics. It also provides advanced portfolio solutions, such as data center technologies comprising storage, networking, servers, advanced technology software, and converged and hyper-converged infrastructure, as well as specialized solutions.

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July 12, 2018

CA Technologies sold for $18.9 billion

Broadcom to acquire CA Technologies for $44.50 per share in cash

Stockwinners, Winning stock research since 1998 — CA Technologies sold for $18.9 billion, Stockwinners

Broadcom (AVGO) and CA Technologies (CA) announced that the companies have entered into a definitive agreement under which Broadcom has agreed to acquire CA to build one of the world’s leading infrastructure technology companies.

Under the terms of the agreement, which has been approved by the boards of directors of both companies, CA’s shareholders will receive $44.50 per share in cash. This represents a premium of approximately 20% to the closing price of CA common stock on July 11, 2018, the last trading day prior to the transaction announcement, and a premium of approximately 23% to CA’s volume-weighted average price for the last 30 trading days.

The all-cash transaction represents an equity value of approximately $18.9B, and an enterprise value of approximately $18.4B.

The transaction is expected to drive Broadcom’s long-term Adjusted EBITDA margins above 55% and be immediately accretive to Broadcom’s non-GAAP EPS.

On a combined basis, Broadcom expects to have last twelve months non-GAAP revenues of approximately $23.9B and last twelve months non-GAAP Adjusted EBITDA of approximately $11.6B.

Broadcom intends to fund the transaction with cash on hand and $18B in new, fully-committed debt financing.

Broadcom expects to maintain an investment grade rating, given its strong cash flow generation and intention to rapidly de-leverage.

The transaction is subject to customary closing conditions, including the approval of CA shareholders and antitrust approvals in the U.S., the EU and Japan.

Careal Property Group AG and affiliates, who collectively own approximately 25% of the outstanding shares of CA common stock, have entered into a voting agreement to vote in favor of the transaction.

The closing of the transaction is expected to occur in the fourth calendar quarter of 2018.

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July 2, 2018

Dell to become a Public company again

Dell Technologies concludes strategic review

Dell Technologies (DVMT) announced that it has reached an agreement with its Special Committee of independent directors to exchange the outstanding Class V tracking stock for Class C common stock of Dell Technologies or an optional cash election.

Dell Technologies Class C common stock will become publicly listed on the New York Stock Exchange.

Dell Technologies will propose to exchange each share of Dell Technologies Class V tracking stock for 1.3665 shares of Dell Technologies Class C common stock, or at the holder’s election, $109 in cash, subject to the aggregate amount of cash consideration not exceeding $9B.

All of the shares of Class V tracking stock of holders who do not opt to receive cash will be converted into Class C common stock, and the Class V tracking stock will be eliminated.

The offer of $109 in cash consideration per share represents a 29% premium to the Class V share closing price prior to announcement and gives holders of Class C common stock the opportunity to participate in Dell Technologies’ future value creation.

Following the close, current Class V stockholders will own 20.8%-31.0% of Dell Technologies, depending on cash election amounts. Based on an implied value of $109 per share, Dell Technologies, excluding the Class V common stock, had a pre-transaction equity value of $48.4 billion and a pro forma fully diluted equity value of $61.1 – 70.1 billion.

VMware’s board of directors, on the recommendation of a special committee of its directors, has voted to declare an $11 billion cash dividend pro rata to all VMware stockholders contingent on satisfaction of the other conditions to the completion of the transaction. Dell Technologies’ share of such dividend will be approximately $9 billion.

Dell Technologies intends to use the dividend proceeds to finance the cash consideration paid to Class V stockholders, with remaining cash proceeds, if any, being used to fund future share repurchases or debt pay-down.

In the most recent quarter, the company generated revenue of $21.4 billion, a 19% increase year-over-year, net loss decreased 55% to $0.5 billion and the company generated $2.4 billion of adjusted EBITDA, a 33% increase year-over-year.

Over the trailing twelve-month period Dell Technologies generated $82.4 billion of revenue with a net loss of $2.3 billion and cash flow from operations of $7.7 billion.

Over the same period, Dell generated $83.5 billion of non-GAAP revenue, $4.8 billion of non-GAAP net income and $9.7 billion of adjusted EBITDA.

Dell Technologies has maintained a disciplined pace of deleveraging, having paid down $13 billion of gross debt since its merger with EMC in September 2016.

A special committee of independent members of VMware’s board of directors recommended that the VMware board declare the contingent cash dividend to support the transaction.

Dell Technologies believes the elimination of the Class V tracking stock and simplification of the VMware ownership structure is beneficial to VMware Class A public stockholders. VMware Class A public stockholders will also participate pro rata in the significant return of capital.

VMware will remain an independent publicly traded company. VMware has benefited from substantial synergies as part of the Dell Technologies family. VMware generated approximately $400 million in growth synergies in FY18 related to its affiliation with Dell Technologies, and in FY19 is on track to achieve $700 million faster than initially expected.

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