Global M&A value in 1H 2016 hits $1.71 trillion

BY Fraser Tennant

In its ‘Global M&A Review: First Half 2016’, Dealogic reveals that the total M&A value seen in the first half (1H) of 2016 was $1.71 trillion – an impressive figure in itself, although it represents an 18 percent year-on-year drop, from $2.09 trillion.

In terms of the key regional headline data, US targeted M&A volume was $748.5bn – down 18 percent year-on-year. Looking to Europe, the Middle East and Africa (EMEA), targeted M&A volume was $428.4bn, down 14 percent year-on-year and the lowest 1H total since 2011 ($67.1bn).

As far as global cross-border M&A volume is concerned, the review found that cross-border activity in 1H 2016 is valued at $580.9bn, down 6.6 percent year-on-year from $616.4bn. Furthermore, the US was the leading target accounting for 35 percent of volume ($205.8bn), up 39 percent year-on-year ($148.4bn) and the highest 1H volume on record.

In terms of Asia Pacific M&A, China accounted for 54 percent of targeted volume with $243.9bn – its highest 1H share on record and a record 21 percent share as an acquiring nation.

Leading the M&A adviser rankings is Goldman Sachs with transactions totalling $438.7bn, followed by Morgan Stanley on $330.0bn and Bank of America Merrill Lynch on $299.1bn.

Technology was the top sector with a total of $294.8bn, which was the second highest 1H volume on record (trailing the $304.6bn 1H volume seen in 2000). Conversely, the Telecom sector saw the biggest year-on-year drop among the top 10 sectors in 1H M&A deal volume – down some 70 percent from the $200.5bn seen in 1H 2015 to $60.7bn.

The Dealogic review also showcases the ‘Top 10 Announced M&A Transactions 1H 2016’ with Bayer’s $62.0bn bid for Monsanto in May 2016 top of the list.

Second on the list is the $48bn acquisition of Syngenta by China National Chemical Corp (ChemChina) in February 2016, the largest ever cross-border transaction by a Chinese acquirer. In third place is the April 2016 deal which saw Abbot Laboratories acquire St Jude Medical for $30.6bn.

Finally, the Dealogic data confirms that the total value of withdrawn M&A in 1H 2016, at $606.4bn, was more than double the same period in 2015 at $233.3bn. These withdrawn deals include the aborted transactions involving Energy Transfer Equity/Williams Companies in June 2016 and Pfizer/Allergan in April 2016.

Report: Dealogic - Global M&A Review: First Half 2016

Marriott and Starwood deal finally wins European approval

BY Richard Summerfield

The European Commission has finally acquiesced and granted unconditional antitrust approval to US hotel chain Marriott International’s $12.1bn cash and share purchase of Starwood Hotels and Resorts Worldwide Inc. Under the terms of the original Marriott/Starwood merger, Starwood shareholders will receive 0.8 shares of Marriott common stock plus $21.00 in cash.

Marriot had initially moved to acquire Starwood in March after the Chinese insurance company Anbang unexpectedly decided to abandon is $14bn all-cash offer for Starwood. Marriott and Anbang had been embroiled in a three week bidding war for Starwood, however the US firm is inching closer to being able complete the deal and combine its brands – which include the Ritz-Carlton – with Starwood’s own Sheraton and Westin properties.

Marriott currently operates more than 4500 hotels in 85 countries. Starwood, by comparison, manages around 1300 hotels in nearly 100 countries. As a result of the merger, Marriott will become the largest hotel company in the world. It is also believed that the firm will benefit from synergies of around $200m a year across the combined firm’s 29 hotel chains.

In a statement announcing the Commission’s decision, EU Competition Commissioner Margrethe Vestager said: “This is an important merger for the hotel industry and its customers. Our investigation confirmed that the hotel sector will remain competitive for customers in Europe following the merger.”

The Commission investigated the impact of the planned takeover in Barcelona, Milan, Venice, Vienna and Warsaw, where both brands have a strong presence. The investigation indicated that the merger would have little impact in any of these cities, given the strong offering from competing hotels in each location.

Though the deal has won European approval, the transaction is not yet confirmed. Chinese antitrust clearance is still required before the merger can be completed. Both parties have confirmed that they expect final clearance to arrive in the next month or so, meaning the deal will close in July at the earliest.

However, like much of the global economy, the threat posed by Brexit may yet have an impact on the completion of the deal. Immediately following the 'Leave' vote by the UK, stock prices for many hotel companies, including Marriott, fell dramatically. Though the decline has no direct impact on the relationship of the merger agreement, it could potentially impact the amount of money owed to Starwood’s shareholders.

News: EU clears Marriott's purchase of Starwood Hotels

Tesla makes “no-brainer” $2.8bn offer to acquire SolarCity

BY Fraser Tennant

In an attempt to create a renewable-energy giant, electric car maker Tesla Motors has made an offer, believed to be in the region of $2.8bn, to acquire solar panel company SolarCity.

According to a statement and a letter to the SolarCity board of directors on the Tesla website, the acquisition proposal consists of an offer to acquire all of the outstanding shares of common stock of SolarCity in exchange for Tesla common shares. 

Furthermore, subject to the completion of due diligence, Tesla proposes an exchange ratio of 0.122x to 0.131x shares of Tesla common stock for each share of SolarCity common stock. 

Tesla’s proposal represents a value of $26.50 to $28.50 per share, or a premium of approximately 21 percent to 30 percent over the closing price of SolarCity’s shares - based on the closing price (Wednesday 22 June) of SolarCity’s shares and the 5-day volume weighted average price of Tesla shares.

“We believe that our proposal offers fair and compelling value for SolarCity and its stockholders, while also giving SolarCity’s stockholders the opportunity to receive Tesla common stock at a premium exchange ratio and the opportunity to participate in the success of the combined company through their ongoing ownership of Tesla stock”, said Tesla.

Explaining the offer to acquire SolarCity, Tesla said that its mission has always been tied to sustainability, having launched, in March 2015, Tesla Energy, a battery system that allows homeowners, business owners and utilities the opportunity to benefit from renewable energy storage (via its Powerwall and Powerpack home battery solutions).

“It’s now time to complete the picture”, continued Tesla in its statement. “Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently, but they still need access to the most sustainable energy source that’s available: the sun.”

The acquisition of SolarCity, if completed, is expected to yield significant benefits for Tesla’s shareholders, customers and employees.  

“Culturally, this is a great fit. Both companies are driven by a mission of sustainability, innovation, and overcoming any challenges that stand in the way of progress. The offer to acquire SolarCity is only the first step toward a successful combination of Tesla and SolarCity”, concluded the Tesla statement.

Entrepreneur Elon Musk, chairman of SolarCity and chief executive of Tesla, this week described the deal as “logical, obvious and a no-brainer.”

News: Elon Musk Aims to Shore Up SolarCity by Having Tesla Buy It

Monumental $26.2bn deal sees Microsoft acquire LinkedIn

BY Fraser Tennant

In a monumental deal which combines the world's leading platform and productivity company with the world’s leading professional network, Microsoft Corp is to acquire LinkedIn Corporation in a transaction valued at $26.2bn.

Under the terms of the definitive agreement, Microsoft will acquire LinkedIn for $196 per share in an all-cash transaction, with the professional network retaining its distinct brand, culture and independence. In addition, Jeff Weiner will remain as CEO of LinkedIn and will report to Satya Nadella, CEO of Microsoft.

The world's largest and most valuable professional network, over the past year LinkedIn’s innovations, have resulted in an increase in membership, engagement and financial results, including: (i) 19 percent growth year over year (YOY) to more than 433 million members worldwide; (ii) 9 percent growth YOY to more than 105 million unique visiting members per month; (iii) 49 percent growth YOY to 60 percent mobile usage; (iv) 34 percent growth YOY to more than 45 billion quarterly member page views; and (v) 101 percent growth YOY to more than 7 million active job listings.

"The LinkedIn team has grown a fantastic business centred on connecting the world's professionals," said Mr Nadella. "Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organisation on the planet."

Microsoft has said that it will finance the deal transaction primarily through the issuance of new indebtedness and, upon closing, expects LinkedIn's financials to be reported as part of Microsoft's Productivity and Business Processes segment.

"Just as we have changed the way the world connects to opportunity, this relationship with Microsoft, and the combination of their cloud and LinkedIn's network, now gives us a chance to also change the way the world works," said Mr Weiner. "For the last 13 years, we've been uniquely positioned to connect professionals to make them more productive and successful, and I'm looking forward to leading our team through the next chapter of our story."

Unanimously approved by the boards of directors of both LinkedIn and Microsoft, the deal is subject to approval by LinkedIn's shareholders, the satisfaction of certain regulatory approvals and other customary closing conditions.

The Microsoft/LinkedIn transaction is expected to close by the end of 2016.

News: Microsoft to buy LinkedIn for $26.2 billion in its largest deal

Thoma Bravo acquires Qlik for $3bn

BY Richard Summerfield

Visual analytics company Qlik has been acquired by private equity firm Thoma Bravo in a $3bn deal, the two firms have announced.

The deal, which will be an all cash affair, is expected to close in the third quarter of 2016, provided the transaction wins the approval of Qlik’s shareholders and satisfies the usual closing conditions, according to a joint statement announcing the merger. The offer will see Qlik’s shareholders receive $30.50 per Qlik share held, a premium of 40 percent over the company's 10 day average stock price prior to 3 March 2016.

According to the statement, Qlik, which went public in 2010, will remain headquartered in Radnor, Pennsylvania. The company will also retain its existing management team.

“We believe the proposed transaction is in the best interest of Qlik’s shareholders and provides the Company with additional flexibility to execute our strategic plan as we continue to diligently provide customers with the premier products and services they have come to expect,” said Lars Björk, chief executive of Qlik. “Thoma Bravo recognises the value that Qlik delivers – a platform that lets our customers see the whole story that lives within their data. Thoma Bravo has an excellent track record of investing in outstanding technology businesses for the long-term, and I am confident our employees, customers and partners will greatly benefit from our partnership with them.”

The future of Qlik had been up for debate for some time. Indeed, the company had been on the hunt for potential buyers and is believed to have received preliminary offers from a number of interested parties, including private equity groups. However, it was Thoma Bravo’s interest in the company that proved decisive.

“We look forward to partnering with the Qlik team as they continue to grow their platform-based approach to business intelligence (BI) and analytics,” said Orlando Bravo, a managing partner at Thoma Bravo. “As the need for analytic solutions grows, Qlik is well-positioned to continue to drive innovation and lead the market.”

Qlik has become the latest in a string of companies to be acquired by private equity groups at the urging of activist hedge fund Elliott Management Corp. Elliott disclosed an 8.8 percent stake in the company in March and began agitating for a sale. Qlik follows Compuware Corp, Riverbed Technology Inc, Blue Coat Systems and Informatica into private equity ownership in the wake of Elliott activism.

News: Thoma Bravo to buy analytics firm Qlik in $3 billion deal