Vantiv and Worldpay in $10.4bn merger

BY Richard Summerfield

US credit card payment processing company Vantiv Inc has agreed to acquire its UK rival Worldpay in a deal worth $10.4bn, a move which will create a $29bn global payments giant.

Under the terms of the deal, Vantiv shareholders will own 57 percent of the newly combined group while Worldpay investors will hold the remaining 43 percent. Vantiv has offered 55 pence in cash, 0.0672 of a new Vantiv share, an interim dividend of 0.8 pence per Worldpay share and a special 4.2 pence dividend, for WorldPay.

The combined company will be led by Vantiv CEO Charles Drucker as executive chairman and co-CEO. Current Worldpay CEO Philip Jansen will be co-CEO of the joint group. Vantiv CFO Stephanie Ferris, will continue as CFO of the combined group. The board will consist of five Worldpay and eight Vantiv directors.

“Our combined company will have unparalleled scale, a comprehensive suite of solutions, and the worldwide reach to make us the payments industry global partner of choice," said Mr Drucker in a statement announcing the deal.

“The growth of e-commerce and the way consumers expect to transact is increasing complexity for businesses around the world,” Mr Jansen said, adding that the “combination of scale, innovation, technology and global presence will mean that we can offer more payment solutions to businesses, whether large or small, global or local".

Vantiv expects the deal to result in annual recurring pretax cost synergies of about $200m by the end of the third year following completion of the merger. It expects to incur one-off integration and restructuring costs of about $330m, most by the end of the second year.

The two firms initially announced their intention to merge in July, however given the scale and complexity of the deal, it has taken a number of weeks for management of both companies to reach an agreement on certain conditions, including guaranteeing a London listing for the newly merged company.

The deal is the latest in a number of mergers in the evolving payments processing industry. Consumer trends are changing, and as more people turn away from cash transactions and utilise smart devices and mobile payments in the future, the industry is likely to look very different in the coming years.

News: U.S. card firm Vantiv clinches $10 billion deal to buy Worldpay

Discovery Communications to acquire Scripps Networks Interactive for $14.6bn

BY Richard Summerfield

Consolidation and changing viewer trends are having a dramatic effect on the television industry, with landmark deals unveiled regularly. This week, it was announced that Discovery Communications and Scripps Networks Interactive are to merge in a cash and stock deal worth $14.6bn, or $90 per share. Discovery will be paying a 34 percent premium on Scripps stock price on 18 July, the day before news of a potential deal surfaced.

The transaction is expected to generate synergies of around $350m, according to a joint statement, and could include significant job cuts. Scripps shareholders will receive $63 a share in cash and $27 a share in Discovery’s Class C common stock, based on its 21 July closing price. Discovery will also assume Scripps' existing net debt of $2.7bn.

"This is an exciting new chapter for Discovery. Scripps is one of the best run media companies in the world with terrific assets, strong brands and popular talent and formats. Our business is about great storytelling, authentic characters and passionate super fans. We believe that by coming together with Scripps, we will create a stronger, more flexible and more dynamic media company with a global content engine that can be fully optimized and monetized across our combined networks, products and services in every country around the world," said David Zaslav, president and CEO of Discovery Communications.

"Through the passion and dedication of our incredible employees, and with the support of the Scripps family, we have built a lifestyle content company that touches the lives of consumers every single day," said Kenneth W. Lowe, chairman, president and CEO of Scripps Networks Interactive. "This agreement with Discovery presents an unmatched opportunity for Scripps to grow its leading lifestyle brands across the world and on new and emerging channels including short-form, direct-to-consumer and streaming platforms."

The deal is the latest move in an increasingly active television industry which is trying to come to terms with a new paradigm. TV ratings and advertising revenue are in decline, and as more consumers choose to ‘cut the cord’, turning to streaming services such as Netflix and Amazon Prime, companies are looking to secure content deals. Once the merger is complete, the company will offer 300,000 hours of content and enjoy a 20 percent share of ad-supported cable audiences in the US.

News: Discovery aims for content clout with Scripps Network bid

Jimmy Choo sold for $1.2bn

BY Richard Summerfield

Luxury shoe manufacturer Jimmy Choo Plc has been sold to fashion brand Michael Kors in a deal worth $1.2bn, or $1.35bn including assumed net debt.

According to a statement announcing the deal, Jimmy Choo investors will receive 230 pence, or about $3, for each share held. The price represents a 36.5 percent premium to the company’s share price in April, before the company announced it was putting itself up for sale. The deal is expected to close in Q4 2017.

Though the company has retained many of its celebrity endorsements since it shot to fame in the late 1990s and early 2000s, it has struggled to retain its status in recent years. Furthermore, JAB Holding, the company which holds a 70 percent stake in Jimmy Choo, having acquired the brand for £500m, is moving out of the luxury fashion market and is exploring dealmaking opportunities in other industries, including the food and beverage sector. Jimmy Choo has only been publicly owned for a little over three years.

John D. Idol, chairman and chief executive of Michael Kors, said, “We are pleased to announce the acquisition of Jimmy Choo, an iconic brand with a rich history as a leading global luxury house. Jimmy Choo is known worldwide for its glamorous and fashion-forward footwear. The company is a leader in setting fashion trends. Its innovative designs and exceptional craftsmanship resonate with trendsetters globally. We believe that Jimmy Choo is poised for meaningful growth in the future and our company is committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years.”

Pierre Denis, chief executive of Jimmy Choo, said, “It is a privilege for our management team to lead Jimmy Choo and to preside over such an exciting period for our company. We are convinced that there is so much more that can be delivered in the years ahead. We look forward to working closely with the leadership and team at Michael Kors Holdings Limited to further develop our iconic brand. Our two companies share the same vision of style and trend leadership. Our luxury heritage is the foundation of Jimmy Choo and we will continue to bring our brand vision to consumers globally.”

News: Michael Kors to buy luxury shoemaker Jimmy Choo for $1.2 bln

Mega deals boost H1 global M&A activity, reveals new report

BY Fraser Tennant

Mega deals across the globe boosted the value of mergers & acquisitions (M&A) activity to bumper levels in H1 2017, with Europe a particular hotspot, according to a report released by Mergermarket this week.

The report, ‘Global and regional M&A: H1 2017’, reveals that although deal volume has remained low, aggregate deal value so far this year has been the opposite – due largely to the significant number of mega deals struck.

The key data in the Mergermarket report shows that: (i) 17 mega deals have been announced since the beginning of the year (including Amazon’s recent takeover of Whole Foods), as companies look to ‘future-proof’ in the wake of rapid change to technology and politics to keep ahead of rivals; (ii) the consumer sector has seen six megadeals in H1 2017, in comparison to just one during the entirety of 2016; (iii) European M&A has surged ahead, securing 32.3 percent share of global value, while both the US and Asia Pacific have seen their share drop; and (iv) the energy, mining & utilities sector has been the most targeted industry, partially fuelled by some stabilisation of oil prices.

 “The first six months of 2017, and particularly the second quarter, has seen a clear resurgence in European M&A activity,” said Jonathan Klonowski, Europe, the Middle East and Africa (EMEA) research editor at Mergermarket. “The year started with worry over potential populist shocks but there now appears to be greater confidence in the market.

“M&A activity in the first six months of 2017 has seen firms look to adapt to changes, both in terms of politics and technology. The result has seen values increase to $1.49 trillion, an increase of 8.4 percent despite there being 1117 fewer deals in comparison to H1 2016. A key driver of this has been the increase in megadeals (with a value of $10bn) – with 17 in the first half of this year in comparison to 14 in H1 2016.”

Additional findings in the report are that the US and Asia have stagnated slightly, and despite the year starting with worry over potential populist shocks, there now appears to be greater confidence in the market following elections in France and the Netherlands.

Mr Klonowski concluded: “While volumes remain relatively low, values have continued to soar and there is no obvious reason why this should not continue for the rest of the year.”

Report: Global and regional M&A: H1 2017

Consulting sector M&A deals peak amid global turbulence

BY Fraser Tennant

Mergers & acquisitions (M&A) activity in the consulting sector has reached a nine-year high (up 1 percent) despite the impact of ongoing geopolitical turbulence, according to Equiteq’s ‘Global Consulting Mergers & Acquisitions Report 2017’. 

Now in its 10th year, the Equiteq report provides data such as deal sizes and structures, valuation multiples, equity share price performance, regional activity and strategic and private equity buyer trends. For example, it reveals that 44 percent of all consulting sector deals took place in North America (which enjoyed the highest M&A value), although Europe, with 38 percent of deals, and Asia-Pacific, with 9 percent, enjoyed stronger M&A growth. The report also notes that deal activity was particularly robust in the UK, with the number of completed transactions increasing by 20 percent over the course of the year.

Additional findings include: (i) the top consulting segments for deal activity were the rapidly evolving management consulting, IT services and media segments, with management consulting seeing a 2 percent growth in deal volumes and a 32 percent increase in the share-price index; and (ii) traditional boundaries between consulting segments continue to blur, leading to a strong convergence at the intersection of management consulting, media & marketing and technology.

Furthermore, highlighting the global nature of M&A activity in the consulting sector, the report confirms that despite some major political upheavals, cross-border deal activity remained strong – accounting for 28 percent of all deal volumes (up 27 percent from the year before).

“We are seeing unprecedented diversification amongst acquirers of knowledge-led businesses such as management consultants, media agencies, engineering consultants and HR consulting,” said David Jorgenson, chief executive of Equiteq. “As a result this is driving convergence between consulting sectors and creating hybrid business models with creative, technology consulting and managed services. This convergence trend – driven by digital disruption, changing client demands and the search for growth – is blurring traditional boundaries.”

Commenting on the prospects for the consulting sector in the second half of 2017 and beyond, Mr Jorgenson concluded: “Having already seen high-profile deals across segments of the consulting market, as well as strong deal activity amongst high-profile PE investors, we expect that this robust demand for M&A will continue over the next twelve months.”

Report: Global Consulting M&A Report