Cyber security M&A climbs as attacks increase

BY Richard Summerfield

Cyber security M&A is on the rise, as a result of the increasing number of successful, high-profile cyber attacks, the continued digitalisation of businesses and the proliferation of new regulations, such as the European Union’s General Data Protection Regulation (GDPR), according to Hampleton Partners’ 2018 Cybersecurity M&A Market Report.

“Hacking is the newest form of warfare against businesses as well as nation states. The average cost of a single data breach is now € 3 million, up by six percent in a year, plus the reputational damage which can be catastrophic,” said Henrik Jeberg, a director at Hampleton Partners. “Given the increasing market demand for cybersecurity solutions due to regulation, digitisation, high profile hacks and new technologies requiring security, we are not surprised to see a highly active M&A market for cybersecurity assets at high valuations. I expect cybersecurity to remain a hot topic in M&A, even if we go into a period of more volatile financial markets.”

There have been a number of notable M&A deals in the tech space this year, particularly in H2. The report identifies the identity and access management subsector as one of the most notable areas of activity. The space saw a number of large deals, including acquisitions by Verimatrix and Cisco.

The private equity (PE) industry has also become an active participant in the cyber security market. Indeed, PE investors have become top bidders for a number of large cyber security assets. Thoma Bravo, TPG Capital, Francesco Partners and Vista Equity Partners have all increased their investments in the cyber security space this year.

The importance of cyber security is becoming increasingly evident, particularly as the average cost of a cyber breach continues to rise. In 2017, the average cost of a single data breach rose 6 percent to €3m per breach. Moving forward, it seems likely that the cyber security space will remain a key target for acquirers in the months ahead.

Report: 2018 Cybersecurity M&A Market Report

GSK takes Tesaro in $5.1bn deal

BY Richard Summerfield

GlaxoSmithKline has agreed to acquire US cancer specialist Tesaro in a deal worth $5.1bn, including Tesaro’s outstanding debt.

Under the terms of the deal, GSK, the UK’s largest drug manufacturer, will pay around $75 a share to acquire Tesaor, a premium of 110 percent on the company’s 30 day average price and a premium of 60 percent on the stock’s closing price on Friday 30 November, the last day of trading before the deal was announced. The transaction is expected to complete in the first quarter of 2019, subject to the satisfaction of customary closing conditions.

The deal is a notable for GSK, granting the company access to Tesaro’s drug Zejula – a poly ADP ribose polymerase (PARP) inhibitor approved for treating ovarian cancer. PARP inhibitors block a family of DNA-repair proteins in cancer cells. Zejula is also being evaluated as a potential treatment for lung, breast and prostate cancer.

Zejula brought in $166m in revenue in the first nine months of 2018, with third-quarter sales growing more than 60 percent. According to Refinitiv data, industry analysts, on average, expect annual Zejula sales to reach $1bn by 2023. Tesaro expects sale of Zejula to be in the $233m to $238m range this year.

“The acquisition of Tesaro will strengthen our pharmaceuticals business by accelerating the build of our oncology pipeline and commercial footprint, along with providing access to new scientific capabilities”, said Emma Walmsley, chief executive of GSK. “This combination will support our aim to deliver long-term sustainable growth and is consistent with our capital allocation priorities. We look forward to working with Tesaro talented team to bring valuable new medicines to patients.”

“This transaction marks the beginning of a new global partnership that will accelerate our oncology business and allow our mission of delivering transformative products to individuals living with cancer to endure,” said Lonnie Moulder, chief executive of Tesaro. “Our board and management team are very pleased to announce this transaction, and we are grateful to the management team at GSK for their tremendous vision and the opportunity to preserve and build upon the impact we have had in the cancer community to date.”

News: GSK slides after buying cancer firm Tesaro for hefty $5.1 billion

Nexstar acquires Tribune Media in $6.4bn deal

BY Fraser Tennant

In a deal which makes it one of the largest regional TV station operators in the US, Nexstar Media Group, Inc is to acquire Tribune Media Company in a transaction valued at $6.4bn.

The definitive merger agreement will see Nexstar acquire all outstanding shares of Tribune Media for $46.50 per share in a cash transaction, including the assumption of Tribune Media’s outstanding debt.

The combination of two leading companies with complementary national coverage will reach approximately 39 percent of US television households. Furthermore, the combined entity will be among the leading providers of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms.

“We have long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies,” said Perry Sook, chairman, president and chief executive of Nexstar. “We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today’s rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate.” 

The transaction has been approved by the boards of directors of both companies.

“We are delighted to have reached this agreement with Nexstar as it provides Tribune shareholders with substantial value and a well-defined path to closing,” said Peter Kern, chief executive of Tribune Media. “Together with Nexstar we can better compete by delivering a nationally integrated, comprehensive and competitive offering across all our markets. We believe this combination will produce an even stronger broadcast and digital platform that builds on the accomplishments of both companies and benefits our viewers and advertisers.”

The transaction is not subject to any financing condition and Nexstar has received committed financing for the transaction from BofA Merrill Lynch, Credit Suisse and Deutsche Bank.

Expected to close late in the third quarter of 2019, the Nexstar/Tribune Media transaction is subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.

Mr Kern concluded: “I look forward to working closely with the Nexstar team to deliver on the value of this compelling combination and to ensure a smooth transition and integration of our companies.”

News: Nexstar clinches deal to acquire Tribune Media

Helicopter-leasing company Waypoint files for Chapter 11

BY Fraser Tennant

The latest casualty of depressed global oil and gas prices, Ireland-based helicopter leasing company Waypoint Leasing Holdings Ltd has filed for Chapter 11 bankruptcy in New York and plans to restructure.

Waypoint, along with certain of its subsidiaries, expects to proceed to move through the restructuring process as quickly as possible, and is committed to working with its lenders and stakeholders toward a speedy and successful transformation of the company.

The world’s largest independent helicopter leasing company, Waypoint’s portfolio includes approximately 160 aircraft with a market value of $1.6bn. The company is backed by entities controlled by billionaire investors George Soros and Michael Dell.

“Waypoint’s Chapter 11 filing is the next step in our holistic transformation strategy and will provide us with the opportunity to emerge with a stronger, sustainable and more competitive balance sheet,” said Hooman Yazhari, chief executive of Waypoint. “It will further catalyse our ability to implement many of the innovative and evolutionary changes to our business model, allowing us to meet head-on the challenges and opportunities which our displaced industry presents.”

Over the past six months, Waypoint has been actively working with its lenders to de-lever its balance sheet and reposition for strength and stability. The company also plans to continue that work during the Chapter 11 process and, in addition to de-levering, will continue to implement strategic initiatives.

“During our continued transformation, our team will work as hard as possible to demonstrate Waypoint’s true value as the most dedicated and capable steward of our assets,” Mr Yazhari continued. “We will also continue our intense focus to deliver on the needs and requirements of our customers.”

Waypoint also stated that it would use the Chapter 11 process to facilitate the acquisition of Waypoint by a new owner, with a continued focus on its customers.

Mr Yazhari concluded: “I am incredibly grateful for our supportive stakeholders, including our global customer base, original equipment manufacturers and maintenance, repair and operating suppliers, other partners and our talented team of employees.”

Established in 2013, Waypoint’s fleet is supported by over 40 employees based in eight offices worldwide. In addition to Ireland, Waypoint has offices in London, the US, Canada, Hong Kong, Brazil and South Africa.

News: Helicopter Company Backed by Soros, Dell Flies into Chapter 11

PayChex takes Oasis Outsourcing to the bank

BY Richard Summerfield

Payroll processor PayChex Inc has agreed to acquire Oasis Outsourcing Acquisition Corp for $1.2bn in cash.

The deal is expected to be financed through a combination of cash on PayChex’s balance sheet and borrowings under existing credit facilities or new debt.

“This acquisition reinforces PayChex’s commitment to meet the HR technology and advisory needs of our clients and their employees in ways that are transforming their experience, and accelerates top-line growth,” said Martin Mucci, president and chief executive of PayChex.

He continued: “We know there’s a growing need today among small and mid-sized businesses for HR technology and outsourcing services, especially given the ever-increasing number of regulations around issues like paid family leave, health care, and anti-harassment training requirements. Those businesses need the integrated technology and expert support PayChex offers, expertise that grows with the addition of Oasis. This acquisition will strengthen our PEO growth strategy, gain scale for new products with our insurance carrier partners, provide a new client base to offer PayChex retirement and time and attendance products, and augment our experienced management team. This is a great time for our two companies to come together.”

For PayChex, the deal represents an opportunity to significantly advance its position in HR outsourcing, leveraging the scope of its technology platform and providing new clients access to PayChex’s products and technology-enabled services. As a result of the deal, PayChex will now serve more than 1.4 million worksite employees through its HR outsourcing service. PayChex believes that the deal will generate a number of revenue and cost synergies.

Oasis serves more than 8400 clients across all 50 states of the US with HR solutions, employee benefits, payroll administration and risk management services.

“We are delighted to announce our agreement to join forces with PayChex,” said Mark Perlberg, president and chief executive of Oasis. “Our combined company will have enhanced capacity to develop and deliver critical human resources and payroll solutions for the clients and employees we have the privilege to serve.”

News: Paychex to buy outsourcing firm Oasis for $1.2 billion

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