JetBlue buys Spirit Airlines

JetBlue to acquire Spirit at $33.50 per share in cash or $7.6B enterprise value

JetBlue Airways (JBLU) and Spirit Airlines (SAVE) announced that their boards of directors have approved a definitive merger agreement under which JetBlue will acquire Spirit for $33.50 per share in cash, including a prepayment of $2.50 per share in cash payable upon Spirit stockholders’ approval of the transaction and a ticking fee of $0.10 per month starting in January 2023 through closing, for an aggregate fully diluted equity value of $3.8B and an adjusted enterprise value of $7.6B.

The transaction consideration of $33.50 per share implies an aggregate fully diluted equity value of approximately $3.8 billion and an adjusted enterprise value of $7.6 billion.

JetBlue expects to achieve $600M-700M in net annual synergies once integration is complete, driven in large part by expanded customer offerings resulting from the greater breadth and depth of the combined network.

The combined company is projected to have annual revenues of approximately $11.9 billion based on 2019 revenues. JetBlue expects the transaction to be significantly accretive to earnings per share in the first full year following closing.

JetBlue expects to maintain balance sheet flexibility with post-transaction leverage of 3.0-3.5x, well inside historical levels, and to continue its deleveraging trajectory as it captures synergies.”

“The completion of the acquisition is subject to customary closing conditions, including receipt of required regulatory approvals and approval of Spirit’s stockholders.

The companies expect to conclude the regulatory process and close the transaction no later than the first half of 2024.

The four largest carriers control more than 80% of the market. Creating a low-fare, customer-centric challenger with size and scale is the best opportunity to disrupt legacy carrier pricing in the current landscape.

Even as the fifth-largest carrier, JetBlue, with Spirit, would have only 9% market share, compared to 13% for the fourth-largest airline and 23% for the largest carrier.

After the combination and with its committed upfront divestitures, the largest seat share a combined JetBlue-Spirit will have in any of its largest metro areas is 40%, compared to the 57-91% share legacy carriers have in their largest metro areas.

The airlines will continue to operate independently until after the transaction closes and their respective loyalty programs remain unchanged and customer accounts will not be affected in any way.

Following completion of the acquisition, the combined airline will be based in New York and be led by Robin Hayes. As previously announced, Spirit has terminated its prior merger agreement with Frontier. JetBlue has terminated its previously announced all-cash tender offer to acquire Spirit common stock.”

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American Campus sold for $12.8B

American Campus to be acquired by Blackstone for $65.47 per share in cash

American Campus Communities (ACC) announced that it has entered into a definitive agreement under which Blackstone (BX) Core+ perpetual capital vehicles, primarily comprised of Blackstone Real Estate Income Trust, alongside Blackstone Property Partners, will acquire all outstanding shares of common stock of ACC for $65.47 per fully diluted share in an all-cash transaction valued at approximately $12.8B, including the assumption of debt.

American Campus Communities, Inc. is the largest owner, manager and developer of high-quality student housing communities in the United States. The company is a fully integrated, self-managed and self-administered equity real estate investment trust (REIT) with expertise in the design, finance, development, construction management and operational management of student housing properties.

The purchase price represents a premium of 22% to the 90-calendar day volume-weighted average share price ending April 18, a premium of 30% over the closing stock price of February 16, the date immediately prior to the company disclosing receipt of an indication of willingness to offer to acquire the company, and a 14% premium to yesterday’s closing price.

The transaction has been unanimously approved by ACC’s board of directors and the independent Special Committee of ACC’s board and is expected to close in the third quarter of 2022, subject to approval by ACC’s shareholders and other customary closing conditions.

As a condition to the transaction, ACC has agreed to suspend payment of its quarterly dividend, effective immediately.

ACC shares are up $7.25 to $64.83.

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Crane to split into two companies!

Crane plans to split into two independent public companies

Crane (CR) announced that its Board of Directors has unanimously approved a plan to pursue a separation into two independent, publicly-traded companies to optimize investment and capital allocation, accelerate growth, and unlock shareholder value.

Upon completion, Crane Co.’s shareholders will benefit from ownership in two focused and simplified businesses that are both leaders in their respective industries and well-positioned for continued success:

Crane Co. will be a leading global provider of mission-critical, highly engineered products and solutions, with differentiated technology, respected brands, and leadership positions in its markets.

After the separation, Crane Co. will include the Aerospace & Electronics and Process Flow Technologies businesses.

This year, these businesses are expected to generate approximately $1.9B in annual sales with a pre-corporate Adjusted EBITDA margin of approximately 18.5%.

The company will be well-positioned to accelerate organic growth in its large and attractive end markets, benefit from favorable secular trends, and apply its proven processes to drive growth through new product development and commercial excellence.

Richard Teller Crane, Founder of Crane Co.

Crane Co. is expected to have a strong, well-capitalized balance sheet underpinning a capital deployment strategy focused on supporting the company’s organic and inorganic strategic growth objectives, while providing a dividend in-line with peers.

Crane Co. will be led by Max Mitchell, who will continue to serve as President and Chief Executive Officer, with Rich Maue continuing to serve as Chief Financial Officer.

The company intends to continue to be listed on the NYSE under its current ticker symbol, “CR”.

Crane NXT will be a premier Industrial Technology business with substantial global scale, a best-in-class margin profile, and strong free cash flow generation.

This year, the Payment and Merchandising Technologies business that will become Crane NXT is expected to achieve approximately $1.4 billion in sales with a pre-corporate Adjusted EBITDA margin of approximately 28%.

In addition to its market leading brands, Crane NXT will differentiate itself through its technology leadership, positioning it to leverage long-term secular drivers including automation, security and productivity, across several high-growth adjacent markets.

After the separation, Crane NXT will be positioned to drive earnings growth through continued investment in the business and value-enhancing bolt-on acquisitions. Its balance sheet and strong free cash flow will also allow it to support a robust and differentiated level of capital return to shareholders that is expected to include a competitive dividend.

Crane NXT’s shares are expected to be listed on the NYSE under the ticker symbol “CXT”. A process is currently underway to identify Crane NXT’s chief executive, including evaluation of both internal and external candidates.

The executives currently leading Crane’s PMT business will continue to serve in senior positions with Crane NXT.

The separation is expected to occur through a tax-free distribution of the Aerospace & Electronics and Process Flow Technologies businesses to the Company’s shareholders.

Payment & Merchandising Technologies will be renamed Crane NXT concurrent with the separation, and the Aerospace & Electronics and Process Flow Technologies businesses will retain the Crane Co. name.

Upon completion of the separation, shareholders will own 100% of the equity in both of the publicly traded companies.

The separation is expected to be completed within approximately 12 months of this announcement, subject to the satisfaction of customary conditions and final approval of the separation by Crane Co.’s Board of Directors. Shareholder approval is not required.

Crane Co. will maintain its current capital deployment policies until the separation is completed.

CR is up $2.50 to $112.63.

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Nielsen sold for $16 billion

Brookfield Business Partners enters partnership to acquire Nielsen in $16B deal

Brookfield Business Partners (BBU) announced it has entered into a partnership to acquire Nielsen Holdings plc (NLSN) in an all-cash transaction valued at approximately $16B.

Nielsen Holdings operates as a measurement and data analytics company worldwide. The company provides viewership and listening data, and analytics principally to media publishers and marketers, and advertising agencies for television, computer, mobile, CTV, digital, and listening platforms. 

The companies said, investment highlights include, “Market-leading position. Nielsen is a global leader in audience measurement and a trusted partner to its customers across the entire media ecosystem.

The Company has more than 50 years of statistically significant historical data and its scale is unmatched by competitors.

Nielsen’s measurement data underpins the $100+ billion video and audio advertising markets and its measurement data is the established industry standard by which video and audio advertising spend transacts. Resilient performance and outlook.

The Company’s history of consistent growth is driven by its valued offering and longstanding customer relationships.

Nielsen’s scale and existing market position should support the Company’s ability to consistently grow its measurement business.

Value creation potential. Nielsen is well positioned to be the leader in cross-media measurement as audience viewership behavior continues to evolve.

The development and adoption of Nielsen ONE, Nielsen’s cross-media measurement service, will deliver a unified measure of consumer viewership across all media and support the Company’s growth strategy.”

Brookfield will invest approximately $2.65B by way of preferred equity, convertible into 45% of Nielsen’s common equity. Brookfield will be actively involved in the Company’s governance.

Brookfield Business Partners expects to invest approximately $600M, and the balance of Brookfield’s investment will be funded from institutional partners.

Prior to or following closing, a portion of Brookfield Business Partners’ commitment may be syndicated to other institutional investors.

The transaction is subject to customary closing conditions and is expected to close in the second half of 2022.

NLSN is up $4.58 to $26.81.

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Alleghany sold for $11.6 billion

Berkshire Hathaway to acquire Alleghany for $848.02 per share

Berkshire Hathaway (BRK.A) and Alleghany (Y) jointly announced they have entered into a definitive agreement under which Berkshire Hathaway will acquire all outstanding Alleghany shares for $848.02 per share in cash.

Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally. 

The transaction, which was unanimously approved by both boards of directors, represents a total equity value of approximately $11.6B.

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Buffett buys Alleghany

The acquisition price represents a multiple of 1.26 times Alleghany’s book value at December 31, 2021, a 29% premium to Alleghany’s average stock price over the last 30 days and a 16% premium to Alleghany’s 52-week high closing price.

The transaction is expected to close in the fourth quarter of 2022, subject to customary closing conditions, including approval by Alleghany stockholders and receipt of regulatory approvals.

Alleghany will continue to operate as an independent subsidiary of Berkshire Hathaway after closing.

Chairman Jefferson Kirby, who controls 2.5% of Alleghany common shares, intends to vote his shares for the transaction.

Under the terms of the definitive merger agreement, Alleghany may actively solicit and consider alternative acquisition proposals during a 25-day “go-shop” period.

Alleghany has the right to terminate the merger agreement to accept a superior proposal during the go-shop period, subject to the terms and conditions of the merger agreement.

There can be no assurances that the “go-shop” process will result in a superior proposal, and Alleghany does not intend to communicate developments regarding the process unless and until Alleghany’s board of directors makes a determination requiring further disclosure.

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Investor demands replacing IAA CEO

Ancora urges IAA to replace CEO or run sale process

IAA, Inc. (IAA) operates a digital marketplace that connects vehicle buyers and sellers. The company’s platform facilitates the marketing and sale of total loss, damaged, and low-value vehicles for a range of sellers. It provides buyers with various bidding/buying digital channels, vehicle merchandising, evaluation services and online bidding tools, and replacement part inventory. 

IAA operates a car auction platform

Ancora Holdings Group, which beneficially owns approximately 2% of IAA’s outstanding common stock, sent a letter to the company’s board which stated in part,

“Given IAA’s underperformance and the fact that the Company’s market capitalization has plummeted by roughly 40% since reporting third quarter earnings in November 2021, the status quo cannot persist. We believe there are two strategic actions for the Board of Directors to consider at this point:

1. Replace Mr. Kett with a new CEO who is more dynamic and equipped to reinvigorate the organization. In our view, IAA needs a leader with a vision for achieving organic market share growth, improved margins and effective capital allocation.

2. If the Board is unwilling to act with urgency to improve leadership, it should run a formal sale process to sell the Company. ”

IAA salvage auction lot

The activist added, “In light of IAA’s attractive attributes and business model, we anticipate the Company would obtain a significant premium relative to its current share price if taken private by one of the many well-capitalized potential acquirers in the marketplace.

Ancora owns 5% of shares or $250M

We estimate a takeout price of $55 or more is achievable based on a trailing 12-month EBITDA of 15.5x and an analysis of peers’ valuations and precedent transactions.

2 At this point, a sale seems like the best risk-adjusted path forward for stockholders.”

IAA is up $2.51 to $38.83.

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Epam shares tumble on Ukraine exposure

 Epam Systems withdraws Q1, FY22 guidance due to events in Ukraine

EPAM Systems (EPAM) announced it is withdrawing its first quarter and 2022 financial outlook due to heightened uncertainties and regional impacts resulting from military actions in Ukraine.

EPAM Systems, Inc. provides digital platform engineering and software development services in North America, Europe, Russia, Belarus, Kazakhstan, Ukraine, Georgia, East Asia, Southeast Asia, and Australia. 

“EPAM’s highest priority is the safety and security of its employees and their families in Ukraine. The company is proactively working to relocate its employees to lower risk locations in Ukraine and neighboring countries.

The company is executing business continuity plans and accelerating hiring across multiple locations in Central and Eastern Europe, Latin America, and India.

EPAM continues to operate productively in more than 40 countries and is committed to providing consistent high-quality delivery in all our geographies around the world,” the company said.

Shares of the Newton Pennsylvania company are down 46% to $207.75. Stock has a 52-week trading range of $198.25 to $725.40. Today’s loss took the shares back to 2020 levels, wiping out two years of gains.

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U.S. Ecology sold for $2.2 billion

Republic Services to acquire US Ecology for $48.00 per share in cash

Republic Services (RSG) and US Ecology (ECOL) have entered into a definitive agreement under which Republic Services will acquire all outstanding shares of US Ecology for $48 per share in cash, representing a total value of approximately $2.2B including net debt of approximately $0.7B.

US Ecology, Inc. provides environmental services to commercial and government entities in the United States, Canada, Europe, the Middle East, Africa, Mexico, internationally. It operates through three segments: Waste Solutions, Field Services, and Energy Waste. It offers specialty waste management services, including treatment, disposal, beneficial re-use, and recycling of hazardous, non-hazardous, and other specialty waste at company-owned treatment, storage, and disposal facilities, as well as wastewater treatment services.

Republic Services, Inc. provides non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services in the United States. 

The transaction is not subject to a financing condition.

Republic Services intends to finance the transaction using existing and new sources of debt.

Following completion of the transaction, Republic Services expects to maintain a strong balance sheet and solid investment-grade credit rating.

The company plans net debt-to-EBITDA, as defined in our credit agreement, to return back below 3x within 18 months of closing the transaction.

The transaction was unanimously approved by the boards of directors of both companies and is expected to close by the end of the second quarter, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by holders of a majority of the outstanding shares of US Ecology’s common stock.

ECOL is up $19.28 to $47.48. RSG is up 24 cents to $127.19.

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Frontier buys Spirit Airlines

Frontier, Spirit to combine in deal that implies $25.83 per Spirit share

Spirit Airlines (SAVE) and Frontier Group Holdings (ULCC) announced a definitive merger agreement under which the companies will combine, creating America’s most competitive ultra-low fare airline.

Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, Spirit equity holders will receive 1.9126 shares of Frontier plus $2.13 in cash for each existing Spirit share they own.

This implies a value of $25.83 per Spirit share at Frontier’s closing stock price of $12.39 on February 4, 2022, representing a premium of 19% over the February 4, 2022, closing price of Spirit, and a 26% premium based on the 30 trading-day volume-weighted average prices of Frontier and Spirit.

The transaction values Spirit at a fully diluted equity value of $2.9B, and a transaction value of $6.6B when accounting for the assumption of net debt and operating lease liabilities.

Upon closing of the transaction, existing Frontier equity holders will own approximately 51.5% and existing Spirit equity holders will own approximately 48.5% of the combined airline, on a fully diluted basis, providing both Frontier and Spirit equity holders with substantial upside potential.

Spirit Route Map

The Board of Directors for the new airline will be comprised of 12 directors (including the CEO), seven of whom will be named by Frontier and five of whom will be named by Spirit.

Bill Franke, CEO of the Indigo Partners, will be Chairman of the Board of the combined company.

Frontier Route Map

The merger is expected to close in the second half of 2022, subject to satisfaction of customary closing conditions, including completion of the regulatory review process and approval by Spirit stockholders.

Frontier’s controlling stockholder has approved the transaction and related issuance of shares of Frontier common stock upon signing of the merger agreement.

The combined company’s management team, branding and headquarters will be determined by a committee led by Franke prior to close.

Separately, Spirit reported Q4 revenue $987.56M, consensus $963.15M.

“Our fourth quarter 2021 results came in better-than-expected, despite the negative impact from Omicron-related flight disruptions, primarily due to very strong demand over the peak December holiday period. I want to thank the entire Spirit team for their professionalism and commitment to providing excellent service to our Guests,” said Ted Christie, Spirit’s president and CEO.

Ted Christie, Spirit’s president and CEO

Spirit Airlines is up 15.9%, or $3.46 to $25.20. Frontier Group is up 14 cents to $12.81.

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Citrix Systems sold for $104 per share

Citrix to be acquired by Vista, Evergreen in $16.5B all-cash transaction

Citrix (CTXS) announced that it has entered into a definitive agreement under which affiliates of Vista Equity Partners, a global investment firm focused exclusively on enterprise software, data and technology-enabled businesses, and Evergreen, an affiliate of Elliott, will acquire Citrix in an all-cash transaction valued at $16.5B, including the assumption of Citrix debt.

Under the terms of the agreement, Citrix shareholders will receive $104.00 in cash per share.

The per share purchase price represents a premium of 30% over the company’s unaffected 5-day VWAP as of December 7, 2021, the last trading day before market speculation regarding a potential transaction, and a premium of 24% over the closing price on December 20, 2021, the last trading day prior to media reports regarding a potential bid from Vista and Evergreen.

In connection with the transaction, Vista and Evergreen intend to combine Citrix and Tibco Software, one of Vista’s portfolio companies.

Citrix makes software that workers use to log onto to their corporate programs virtually, a category of product extensively relied upon during the pandemic as businesses sought quick ways to keep remote workforces connected to central operations. Many are now planning permanent hybrid setups for home and office working, which is expected to grow the market for tools that help make this seamless.

As part of the transaction, Vista and Evergreen plan to combine Citrix with Tibco Software, an enterprise data management firm that’s one of Vista’s portfolio companies. The combination will create one of the world’s largest software providers, serving 400,000 customers, according to the statement.

Citrix shares are down 3.8% to $101.54.

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Kohl’s receives take over offer

The offer values the retailer at $9 billion

A group led by Acacia Research (ACTG), which is controlled by activist investor Starboard Value, offered to buy Kohl’s (KSS) for $64 per share in cash, a 37% premium to Friday’s closing price of $46.84 and an offer that values the department store operator at roughly $9B. There are no guarantees that the group will ultimately line up all the funding needed and make a firm offer, but the bidders told the company they have assurances from bankers about being able to get financing for the bid, sources added. 

Kohl’s (KSS) is fielding takeover offers from at least two suitors, CNBC’s Lauren Thomas and Leslie Picker reports. Sycamore is willing to pay at least $65 per share for Kohl’s, people familiar with the matter tell CNBC.

The offer from Sycamore came two days after Acacia Research (ACTG), which is backed by activist investment firm Starboard Value, offered to pay $64 a share for Kohl’s, sources said. According to the sources, Acacia and Starboard would likely partner with Oak Street Real Estate Capital to try and sell off Kohl’s real estate to raise more money.

Kohl’s confirmed that it has received letters expressing interest in acquiring the company. The Kohl’s board of directors will determine the course of action that it believes is in the best interests of the company and its shareholders. Shareholders are not required to take any action at this time. Kohl’s does not intend to further comment publicly on these matters unless it determines it is in the best interests of shareholders to do so.

Cowen

 Cowen analyst Oliver Chen raised the firm’s price target on Kohl’s to $75 from $73 and keeps an Outperform rating on the shares. The analyst said the potential bid implying 3.7x TTM EV/EBITDA appears very modest based on his leveraged buyout returns analysis. He said a transaction would likely require monetization of $3bn+ of real estate via a sale leaseback. He believes other strategic/financial bidders are possible.

Citi

Citi analyst Paul Lejuez keeps a Buy rating on Kohl’s with a $73 price target following reports that Starboard Partners and Acacia Capital made an unsolicited bid for the retailer at $64 per share. The analyst believes Kohl’s management is using appropriate strategies to drive value and that the Sephora partnership “is a game-changer.” However, he also believes Kohl’s is a “mispriced asset.” The company is a strong free cash flow generator, and it doesn’t seem to be getting credit by the market, “making it reasonable to consider offers,” says Lejuez.

Credit Suisse

Credit Suisse analyst Michael Binetti notes media reported that Starboard-backed activist Acacia (ACTG) has made a bid of $64/share for Kohl’s (KSS), and that other suitors are contacting Kohl’s as well. The focus seems aligned with another activist pushing Kohl’s to act more urgently to turnaround retail ops, but more importantly to significantly bolster shareholder cash returns via more aggressively exploring potential monetization of real estate assets, the analyst notes.

Binetti believes that the key question is whether Kohl’s will see a bidding war that could result in the stock running above the current activist’s bid at $64/share. Per conversations with real estate contacts, Kohl’s could certainly fetch higher valuations for its stores, the analyst contends. Activist plans typically focus on strategies like pulling forward monetization of real estate today, and Binetti does think there’s some merit to Kohl’s embracing a slightly more aggressive real estate strategy to bolster shareholder returns today. He has a Neutral rating and a price target of $70 on the shares.

KSS is up $15.84 to $62.68.

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GE to split into three companies

General Electric to form three public companies

GE announced its plan to form three industry-leading, global public companies focused on the growth sectors of aviation, healthcare, and energy, by: Pursuing a tax-free spin-off of GE Healthcare, creating a pure-play company at the center of precision health in early 2023, in which GE expects to retain a stake of 19.9 percent; and Combining GE Renewable Energy, GE Power, and GE Digital into one business, positioned to lead the energy transition, and then pursuing a tax-free spin-off of this business in early 2024.

GE to split into three

Following these transactions, GE will be an aviation-focused company shaping the future of flight.

As independently run companies, the businesses will be better positioned to deliver long-term growth and create value for customers, investors, and employees, with each benefitting from: Deeper operational focus, accountability, and agility to meet customer needs; Tailored capital allocation decisions in line with distinct strategies and industry-specific dynamics; Strategic and financial flexibility to pursue growth opportunities; Dedicated boards of directors with deep domain expertise; Business- and industry-oriented career opportunities and incentives for employees; and Distinct and compelling investment profiles appealing to broader, deeper investor bases.

GE Chairman and CEO H. Lawrence Culp, Jr. said, “At GE we have always taken immense pride in our purpose of building a world that works. The world demands-and deserves-we bring our best to solve the biggest challenges in flight, healthcare, and energy.

By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees. We are putting our technology expertise, leadership, and global reach to work to better serve our customers.”

Culp will serve as non-executive chairman of the GE healthcare company upon its spin-off.

He will continue to serve as chairman and CEO of GE until the second spin-off, at which point, he will lead the GE aviation-focused company going forward.

Peter Arduini will assume the role of president and CEO of GE Healthcare effective January 1, 2022.

Peter Arduin

Scott Strazik will be the CEO of the combined Renewable Energy, Power, and Digital business while John Slattery continues as CEO of Aviation.

Scott Strazik

GE intends to execute the spin-offs of Healthcare in early 2023 and of the Renewable Energy and Power business in early 2024.

John Slattery

The respective capital structures, brands, and leadership teams for each independent company will be determined and announced later.

Where required to do so, GE will consult with employee representatives in line with its legal obligations before any final decisions are taken.

Through the transition, GE will be able to monetize its stakes in AerCap and Baker Hughes, prioritizing further debt reduction.

Each of the three resulting independent companies will be well capitalized with investment-grade ratings.

Following the spin-off transactions, GE will retain other assets and liabilities of GE today, including run-off insurance operations.

Upon closing the Healthcare transaction, GE expects to retain a stake of 19.9 percent in the healthcare company to provide capital allocation flexibility.

GE also intends that Healthcare will issue debt securities, the proceeds of which will be used to pay down outstanding GE debt.

The transactions are not subject to bondholder consent.

The company expects to incur one-time separation, transition, and operational costs of approximately $2 billion and tax costs of less than $0.5 billion, which will depend on specifics of the transaction.

The proposed spin-offs of Healthcare and the Renewable Energy and Power business are intended to be tax-free for GE and GE shareholders for U.S. federal income tax purposes.

The transactions are subject to the satisfaction of customary conditions, including final approvals by GE’s Board of Directors, private letter rulings from the Internal Revenue Service and/or tax opinions from counsel, the filing and effectiveness of Form 10 registration statements with the U.S. Securities and Exchange Commission, and satisfactory completion of financing.

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Exxon gets into plastic recycling!

 Exxon Mobil announces plans to build plastic waste recycling facility

Exxon Mobil (XOM) plans to build its first, large-scale plastic waste advanced recycling facility in Baytown, Texas, and is expected to start operations by year-end 2022.

A smaller, temporary facility, is already operational and producing commercial volumes of certified circular polymers that will be marketed by the end of this year to meet growing demand.

The new facility follows validation of Exxon Mobil’s initial trial of its proprietary process for converting plastic waste into raw materials.

“We’ve proven our proprietary advanced recycling technology in Baytown, and we’re scaling up operations to supply certified circular polymers by year-end,” said Karen McKee, president of ExxonMobil Chemical Company. “Availability of reliable advanced recycling capacity will play an important role in helping address plastic waste in the environment, and we are evaluating wide-scale deployment in other locations around the world.”

To date, the trial has successfully recycled more than 1,000 metric tons of plastic waste, the equivalent of 200M grocery bags, and has demonstrated the capability of processing 50 metric tons per day.

Upon completion of the large-scale facility, the operation in Baytown will be among North America’s largest plastic waste recycling facilities and will have an initial planned capacity to recycle 30,000 metric tons of plastic waste per year.

Operational capacity could be expanded quickly if effective policy and regulations that recognize the lifecycle benefits of advanced recycling are implemented for residential and industrial plastic waste collection and sorting systems.

ExxonMobil is developing plans to build approximately 500,000 metric tons of advanced recycling capacity globally over the next five years.

In Europe, the company is collaborating with Plastic Energy on an advanced recycling plant in Notre Dame de Gravenchon, France, which is expected to process 25,000 metric tons of plastic waste per year when it starts up in 2023, with the potential for further expansion to 33,000 metric tons of annual capacity.

The company is also assessing sites in the Netherlands, the U.S. Gulf Coast, Canada, and Singapore.

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Spectrum Brands shares soar on sale of it’s division

Spectrum Brands agrees to sell Hardware & Home Improvement segment for $4.3B

Spectrum Brands Holdings (SPB) announced it has entered into a definitive agreement to sell its HHI segment to ASSA ABLOY (ASAZY) for $4.3B in cash, which it said represents over 14 times HHI’s expected FY21 Adjusted EBITDA.

Upon closing of the transaction, Spectrum Brands expects to receive approximately $3.5B in net proceeds, subject to final tax calculations and purchase price adjustments.

Spectrum Brands expects to use the proceeds from this transaction to repay debt and reduce its gross leverage ratio to approximately 2.5x times in the near term.

Excess proceeds are expected to be allocated to invest for organic growth, fund complementary acquisitions and return capital to shareholders.

The company expects to maintain its quarterly cash dividend of 42c per common share, which will be subject to the company’s continued review from time to time.

The sale of HHI is expected to close following the receipt of certain regulatory approvals and customary closing conditions.

The results of operations of HHI will be reported as discontinued operations beginning in the fourth quarter of 2021. David Maura, CEO of Spectrum Brands, said, “I am exceedingly proud of the fact that our Hardware & Home Improvement business nearly doubled its EBITDA under Spectrum Brands’ ownership.

I am pleased to know that HHI has found a new home with a great partner, and I am confident that ASSA ABLOY will take it to its highest potential, bringing great value and innovation to consumers for generations to come.

We believe this transaction demonstrates the tremendous value of Spectrum Brands as an owner and steward of our businesses and places the Company in a strong position for the future by allowing us to further reduce our leverage levels, and enhance our capital allocation strategy.

Our remaining business will be more focused, allowing us to prioritize innovation to accelerate organic growth and pursue synergistic acquisitions to further drive value creation in Global Pet Care and Home & Garden, while continuing to look for strategic and organic ways to enhance the value of Home and Personal Care.

After the closing, we will become a more pure play consumer staples company with higher growth rates and strong margins.”

The company added: “Spectrum Brands will be a simplified business consisting of three focused business units with leading market share, strong growth opportunities and consistent performance.

The pro forma business generated $3.0B in net sales and $386 million in Adjusted EBITDA representing a 13.0% margin for the LTM period ended July 4, 2021.

Spectrum Brands will report its fourth quarter 2021 results in mid-November and expects to provide Fiscal 2022 Earnings Framework at that time.”

ASSA ABLOY AB is a Swedish company that provides door opening products, solutions, and services for the institutional, commercial, and residential markets in Europe, the Middle East, Africa, North and South America, Asia, and Oceania.  In addition, the company offers entrance automation products, services, and components, such as automatic swing, sliding, and revolving doors; industrial doors; garage doors; high-performance doors; docking solutions; hangar doors; gate automation products; components for overhead sectional doors and sensors; and high security fencings and gates. The company provides its products primarily under the ASSA ABLOY, Yale, and HID brands.

Spectrum’s Hardware & Home Improvement segment offers hardware products under the National Hardware and FANAL brands; locksets and door hardware under the Kwikset, Weiser, Baldwin, EZSET, and Tell Manufacturing brands; and plumbing products under the Pfister brand. Its Home and Personal Care segment provides home appliances under the Black & Decker, Russell Hobbs, George Foreman, Toastmaster, Juiceman, Farberware, and Breadman brands; and personal care products under the Remington and LumaBella brands.

The company’s Global Pet Care segment provides rawhide chewing, dog and cat clean-up and food, training, health and grooming, small animal food and care, and rawhide-free products under the 8IN1 (8-in-1), Dingo, Nature’s Miracle, Wild Harvest, Littermaid, Jungle, Excel, FURminator, IAMS, Eukanuba, Healthy-Hide, DreamBone, SmartBones, ProSense, Perfect Coat, eCOTRITION, Birdola, and Digest-eeze brands.

ASAZY is down 38 cents to $15.53 per share while SPB is up $15 to $94.

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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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