Time has come for Meredith

BY Richard Summerfield

After a number of failed attempts to complete a deal for the company, American media conglomerate Meredith Corporation has announced that it is to acquire Time Inc. in an all cash deal worth $2.8bn, including the assumption of debt and net of cash acquired.

Under the terms of the deal, Meredith will pay around $18.50 per Time share to acquire the company. The $18.50 per share price represents a 46 percent premium over Meredith’s closing price on 15 November 2017, the day prior to media reports about the transaction, and a 66 percent premium over the company’s 10-day volume weighted average trading price ending on that day.

Meredith had made a number of attempts to acquire Time Inc over the last four years but was unable to complete the deal, until now. Pending the customary closing conditions and regulatory approval, the transaction is expected to complete during the first quarter of 2018.

"We are creating a premier media company serving nearly 200 million American consumers across industry-leading digital, television, print, video, mobile, and social platforms positioned for growth," said Meredith chairman and chief executive Stephen M. Lacy. "We are adding the rich content-creation capabilities of some of the media industry’s strongest national brands to a powerful local television business that is generating record earnings, offering advertisers and marketers unparalleled reach to American adults. We are also creating a powerful digital media business with 170 million monthly unique visitors in the US and over 10 billion annual video views, enhancing Meredith’s leadership position in reaching millennials."

John Fahey, chairman of Time, said, "Time Inc.’s board of directors has unanimously determined that this all-cash transaction, and the immediate, certain value it provides, is in the best interests of the company and its shareholders. On behalf of the entire board, I thank Rich Battista for his strong and exemplary leadership. We also thank the management team and all Time Inc. employees, who together have made significant progress transforming one of the world’s most iconic and historically significant publishing companies into a leading multiplatform media enterprise."

The deal will be partly financed by a $650m investment by Koch Equity Development. Meredith will also be using $3.55bn in financing commitments obtained from a variety of lenders, the company said in a statement.

News: Meredith to buy U.S. publisher Time in Koch-backed deal

Global deal activity set to increase in 2018

BY Richard Summerfield

Merger and acquisition activity will increase in 2018 as global dealmakers recover their appetite for investments, according to Baker McKenzie’s 'Global Transactions Forecast 2018'.

As economic and political concerns subside, global M&A activity is expected to climb to around $3.2 trillion next year, with an increase in both M&A and IPO activity. The momentum created in the second half of 2017, as economic growth began to pick up in certain key markets, will roll over into 2018.

M&A activity in the consumer goods and finance industries will continue to generate the highest total deal values in 2018, the report suggests. The pharmaceutical and healthcare and technology and telecom sectors are also expected to rebound from a disappointing 2017 in which M&A activity is on course to slip to $2.5 trillion from $2.8 trillion last year.

“After a few soft patches in 2017 we have a more optimistic outlook for the global economy and dealmaking in 2018, as long as the brakes are not put any further on global free trade. We see an uplift in both M&A and IPO activity as dealmakers and investors gain greater confidence in the business prospects of acquisition targets and newly-listed businesses,” said Paul Rawlinson, global chair of Baker McKenzie. “However it’s not a done deal, with the threat of a Hard Brexit and a NAFTA collapse both still very real. Business will need to continue to make the case for liberal trade and investment frameworks.”

Global head of M&A at Baker McKenzie, Michael DeFranco, said, “2017 played out as we predicted and there have been a number of positive developments in the global economy that have led to the forecast for global M&A values in 2018 to be increased from our previous forecast of US$3 trillion to US$3.2 trillion. This would represent the 3rd highest yearly deal value since 2001 and the 2nd highest since the financial crisis in 2008.”

China's predicted GDP growth for 2018 has been revised from 5.9 to 6.2 percent.  The European GDP growth forecast has also been revised for 2018, up to 1.9 percent from 1.6 percent.

Beyond 2018, the report predicts that M&A values will drop to $2.9 trillion in 2019 and $2.4 trillion in 2020.

Report: Global Transactions Forecast 2018

Broadcom proposes Qualcomm acquisition in $130bn transaction

BY Fraser Tennant

In what would be the biggest tech deal ever seen, Broadcom Limited has announced a proposal to acquire fellow semiconductor company Qualcomm Incorporated in a deal valued at $130bn.

The acquisition would see Broadcom acquire all of the outstanding shares of Qualcomm for a per share consideration of $70.00 in cash and stock ($60.00 in cash and $10.00 per share in Broadcom shares). Broadcom's proposal represents a 28 percent premium over the closing price of Qualcomm common stock on 2 November 2017.

"Broadcom's proposal is compelling for stockholders and stakeholders in both companies,” said Hock Tan, president and chief executive of Broadcom. “Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company.”

Broadcom has also stated that its proposal to acquire Qualcomm stands whether the pending acquisition of NXP Semiconductors by Qualcomm (the currently disclosed terms of $110 per share) is completed or terminated. Many commentators believe there is a serious possibility that Qualcomm's NXP acquisition will collapse in the wake of a Qualcomm-Broadcom deal.

Unanimously approved by Broadcom’s board of directors, the combination of Broadcom and Qualcomm will lead to a strong, global company with an impressive portfolio of technologies and products, according to Thomas Krause, Broadcom’s chief financial officer. “Given the complementary nature of our products, we are confident that any regulatory requirements necessary to complete a combination with Qualcomm will be met in a timely manner,” he said. “We look forward to engaging immediately in discussions with Qualcomm so that we can sign a definitive agreement and complete this transaction expeditiously."

Broadcom has stated its expectation that the proposed transaction would be completed within approximately 12 months following the signing of a definitive agreement.

Moelis & Company LLC, Citi, Deutsche Bank, J.P. Morgan, BofA Merrill Lynch and Morgan Stanley are acting as financial advisers to Broadcom. Wachtell, Lipton, Rosen & Katz and Latham & Watkins LLP are acting as legal counsel.

Mr Tan concluded: “Given the common strengths of our businesses and our shared heritage of, and continued focus on, technology innovation, we are confident we can quickly realise the benefits of this complementary transaction for all stakeholders. Importantly, we believe that Qualcomm and Broadcom employees will benefit from substantial opportunities for growth and development as part of a larger company."

News: Broadcom offers $103 billion for Qualcomm, sets up takeover battle

Optimism returns to M&A market with 2018 the year of small and middle-sized deals, says new survey

BY Fraser Tennant

Optimism is returning to the M&A landscape with smaller and middle market deals expected to lead activity in 2018, according to a new survey from Dykema.

The survey – the law firm’s 13th annual M&A outlook – reveals that 39 percent of respondents expect the M&A market to strengthen over the next 12 months, up from 33 percent last year and 37 percent in 2015. Furthermore, 60 percent predict a strong US economy in the year to come – double the result of last year’s survey.

In terms of the US, 55 percent of respondents indicated an expectation that president Trump will be a positive force on both the US economy and M&A market in 2018. Among the factors playing a role in this optimistic sentiment are the expected reduction in corporate tax rates, more favourable business regulations and the Trump administration’s perceived business-friendly positive economic policies.

“With the uncertainty around the presidential election in the rearview, our survey respondents are abandoning the ‘wait and see’ mantra, with an increasing number predicting that deal activity is back on the rise,” said Thomas Vaughn, co-leader of Dykema’s M&A practice. “However, we are still hearing that uncertainty around the Trump administration’s priorities and regulations will have the greatest impact on M&A from a global perspective.”

Additional key findings include: (i) the majority of respondents (70 percent) expect the volume of small deals (under $50m) will increase over the next 12 months, with 53 percent predicting an uptick in deals valued between $50m and $100m; (ii) for the fourth consecutive year, respondents expect technology and healthcare to see the most M&A activity over the coming year; (iii) 59 percent of respondents predict an increase in M&A activity between FinTech startups and established financial services organisations in 2018; and (iv) 68 percent of respondents said they would be involved in an acquisition in the next 12 months, sentiment consistent with 2016’s 70 percent.

Survey respondents also stated their belief that the leading driver of cross-border deals in 2018 will be companies seeking growth via entrance into foreign markets. More companies in Asia are also expected to pursue deals in the US, and outbound M&A activity from the US to Mexico and Canada is expected to increase in the next year, despite ongoing public statements by the Trump administration around the renegotiation of the North American Fair Trade Act (NAFTA).

With a high level of optimism not seen across the M&A landscape for several years, bullish dealmakers are heading back to the negotiating table intent on pursuing strategic transactions.

Report: Mergers & Acquisitions Outlook Survey 2017

GIP makes $5bn renewables bet on Equis

BY Richard Summerfield

US investment fund Global Infrastructure Partners (GIP) and a number of partners, including Canada's Public Sector Pension Investment Board and the Chinese sovereign fund China Investment Corp, have agreed to acquire Equis Energy in a $5bn deal, including $1.3bn in debt. The deal is expected to close in the first quarter of 2018.

Equis is the largest renewable energy independent power producer operator in the Asia‐Pacific region, with over 180 assets in operation, construction and development across Australia, Japan, India, Indonesia, the Philippines and Thailand with a capacity in excess of 11 gigawatts.

The deal is the largest ever transaction in the renewable energy space, an industry which has begun to see increased activity in recent years. As governments, particularly in Asia, continue to seek out alternatives to fossil fuels to meet rising energy demand and combat pollution, the renewables industry will likely see increased dealmaking activity.

David Russell, chief executive of Equis and chairman of Equis Energy, said: “The investment by GIP and its partners is exciting news for the development of renewable energy in the Asia‐Pacific. GIP has a strong track record of managing and growing utility‐scale infrastructure businesses, and the combination of experience and knowledge across GIP and the existing management team will allow Equis Energy to continue expanding competitively across its target markets.”

Adebayo Ogunlesi, chairman and managing partner of GIP, said: “We are excited by the new investment in Equis Energy, which is a strong fit with GIP’s global renewable investment strategy. Equis Energy is a unique success story in the APAC region as it has systematically executed its growth strategy since its founding 5 years ago. In that period, Equis Energy has become one of the leading renewable energy platforms in the region, with a best‐in‐class business model, a high‐ quality asset portfolio and an outstanding management team. We look forward to continuing the Equis Energy success story in the years to come and to supporting new growth opportunities in one of the most promising renewable energy markets in the world.”

There was reportedly considerable interest in Equis. GIP and partners are believed to have beaten a number of rivals, including global pension funds and several buyout firms, in order to acquire the company.

News: U.S. fund, CIC snap up Equis Energy for $3.7 billion in bet on renewables