Cypress Semiconductors sold in $10bn deal

BY Richard Summerfield

Cypress Semiconductors is to be acquired by Infineon in a $10bn deal, including debt, the companies have announced.

The cash offer of $23.85 per share represents a 46 percent premium to Cypress’ share price over the last month. The deal, which is subject to regulatory approval, is expected to close by the end of 2019 or in early 2020. The companies expect the merger to generate around $180m in cost synergies.

The combined company will be the world’s eighth largest chipmaker and the largest suppler of chips to car and vehicle companies. The purchase has been underwritten by a bank consortium. Infineon expects that approximately 30 percent of the $10bn price tag will be financed through equity, while the rest will be managed through debt and cash on hand reserves.

“The planned acquisition of Cypress is a landmark step in Infineon’s strategic development,” said Reinhard Ploss, chief executive of Infineon. “We will strengthen and accelerate our profitable growth and put our business on a broader basis. With this transaction, we will be able to offer our customers the most comprehensive portfolio for linking the real with the digital world. This will open up additional growth potential in the automotive, industrial and Internet of Things sectors. This transaction also makes our business model even more resilient. We look forward to welcoming our new colleagues from Cypress to Infineon. Together, we will continue our shared commitments to innovation and focused R&D investments to accelerate technology advancements.”

“The Cypress team is excited to join forces with Infineon to capitalize on the multi-billion dollar opportunities from the massive rise in connectivity and computing requirements of the next technology waves,” said Hassane El-Khoury, president and chief executive of Cypress. “This announcement is not only a testament to the strength of our team in delivering industry-leading solutions worldwide, but also to what can be realized from uniting our two great companies. Jointly, we will enable more secure, seamless connections, and provide more complete hardware and software sets to strengthen our customers’ products and technologies in their end markets. In addition, the strong fit of our two companies will bring enhanced opportunities for our customers and employees.”

News: Infineon revs up auto business with $10 billion Cypress deal

TSYS goes Global

BY Richard Summerfield

Global Payments Inc is to acquire rival Total System Services Inc (TSYS) for around $21.5bn in stock, the companies have announced.

The deal is Global Payment’s largest ever acquisition and the third ‘mega merger’ announced in the increasingly active payments industry this year. The all-stock deal values TSYS at $119.86 per share, an increase of 20 percent on the company’s stock price since before news of the talks between the companies began to emerge.

Once completed, the deal will see Global Payments shareholders own 52 percent of the combined company, while TSYS investors will own the remaining 48 percent. TSYS chief executive Troy Woods will become the combined company’s chairman. The company will have a total equity value of around $40bn.

“The combination of Global Payments and TSYS establishes the leading pure play payments technology company with unparalleled vertical market and payment software capabilities and ecommerce and omnichannel solutions, operating at scale in fast growing markets globally,” said Jeff Sloan, chief executive of Global Payments. “This transformative partnership accelerates our technology-enabled, software-driven payments strategy and provides exposure into attractive and complementary businesses, while enhancing our financial strength and flexibility.”

He continued: “We could not be more excited about the future as we bring together two industry leaders with strong businesses and cultures that will generate significant opportunities for our employees, customers, partners and shareholders worldwide.”

“In this exciting merger of equals, our new company will truly be a payments powerhouse that is perfectly poised to lead the industry in delivering merchant, issuer and consumer payments technology, solutions and service to our customers,” said Mr Woods, chairman, president and chief executive of TSYS. “Our companies share common values, a strong culture of putting people first, and a relentless commitment to doing the right thing, making this combination the perfect fit. The entire TSYS team is proud to link arms with Global Payments, and we look forward to leading the market as the preeminent payment solutions provider.”

Upon closing, Global Payments will process in excess of 50 billion transactions annually in 38 countries physically and over 100 countries virtually, employing over 3500 sales and sales support professionals worldwide.

News: Global Payments to buy TSYS for $21.5 billion in latest fintech deal

Bouncing back

BY Richard Summerfield

M&A activity across a number of regions is expected to bounce back in the third quarter of 2019, according to the Q3 2019 issue of the Intralinks Deal Flow Predictor report.

The report forecasts the number of M&A announcements by tracking early-stage M&A activity, defined as new sell-side M&A transactions that are in preparation or have begun their due diligence stage. On average, early-stage deals are six months away from public announcement.

Undoubtedly, the year got off to a disappointing start. The worldwide number of announced M&A deals fell by 17 percent year-over-year in Q1 2019, according to Intralinks — the biggest such decline since 2002 and the sixth largest decline in any quarter for the past 30 years.

However, the outlook for Q3 appears to be much brighter. In North America, for example, M&A deals announced in Q1 2019 fell by 29 percent year-over-year. Yet looking forward, Intralinks’ predictive model anticipates that the number of announced M&A deals is expected to increase by around 3 percent year-on-year over the next six months. Europe, the Middle East and Africa are expected to see growth of around 1 percent. The strongest growth contributions are expected in the real estate, healthcare and technology, media and telecoms (TMT) sectors. France, Germany, Italy and Spain are expected to see the largest increase in M&A announcements.

The Asia-Pacific (APAC) region is forecast to see growth of around 4 percent. Within APAC, all regions except Southeast Asia and South Korea are demonstrating growth in their volumes of early-stage M&A activity. Looking forward, North Asia (China, Hong Kong), India, Japan and Australasia are expected to make the strongest contributions to APAC’s growth.

In Latin America, however, announced M&A deals are expected to fall by around 6 percent year-on-year. Any growth there is anticipated to occur in the materials, energy and power and TMT sectors. Brazil, Chile, Mexico and Peru, the largest economies in the Latin American region, are predicted to show year-on-year increases in M&A announcements.

The strongest growth in worldwide deal announcements is expected to come from the real estate, energy & power and financials sectors.

Report: Intralinks Deal Flow Predictor for Q3 2019

Occidental has the edge in potential Anadarko merger

BY Richard Summerfield

A merger between Anadarko Petroleum Corporation and Occidental Petroleum Corporation is inching closer as Anadarko announced that Occidental’s revised $38bn offer for the company constitutes a “superior proposal” to the company’s previously announced deal with Chevron Corporation.

Under the terms of the revised Occidental proposal, the company would acquire Anadarko for $76 per share, comprised of $59 in cash and 0.2934 of a share of Occidental common stock per share of Anadarko common stock. The revised Occidental offer represents a premium of approximately 23.3 percent to the $61.62 per share value of Chevron’s pending offer.

Occidental’s offer would also remove a requirement for any deal to receive the approval of Occidental’s shareholders. The cash element of Occidental’s bid has increased $18.8bn, a move which allows the company to avoid a vote by its shareholders on the deal. Some of the Occidental’s investors are opposed to the decision to bypass a shareholder vote of approval, however.

Chevron’s previously agreed merger, which was worth $33bn, is now in jeopardy. The company has until 10 May to revamp its own offer, or walk away from the deal. Chevron’s merger agreement with Anadarko is structured as 75 percent stock and 25 percent cash. Chevron has previously noted that it is not likely to engage in a bidding war for Anadarko, however. If Anadarko terminates the Chevron merger agreement, which it indicated it will do in a statement released on Monday, in order to enter into a definitive agreement with Occidental, Anadarko will pay Chevron a $1bn termination fee.

The decision is a victory for Occidental chief executive Vicki Hollub, who pressed Anadarko’s board to reject the Chevron agreement and pulled in support from billionaire Warren Buffett for the deal. Mr Buffett’s Berkshire Hathaway has pledged to invest $10bn into the deal.

“We firmly believe that Occidental is uniquely positioned to drive significant value and growth from Anadarko’s highly complementary asset portfolio,” said Ms Hollub. “This combination will create a global energy leader with the scale and geographic diversification to drive compelling returns to the shareholders of both companies. The financial support of Berkshire Hathaway as well as the agreement we announced with Total allows us to delever our balance sheet while focusing our integration efforts on the assets that will provide the most value for us.”

The battle for control of Anadarko has gone on for some time. In April, the company rebuffed an offer from Occidental and chose to favour Chevron’s lower bid.

News: Anadarko backs Occidental's revised bid, pressuring Chevron to respond

ConocoPhillips sells North Sea assets

BY Richard Summerfield

ConocoPhillips, has agreed to sell two UK subsidiaries to Chrysaor Holdings Limited for $2.7bn.

The assets being acquired produced approximately 72,000 BOE in 2018. This acquisition increases Chrysaor's pro forma 2018 production to 177,000 BOE, making it one of the largest oil and gas producers in the UK North Sea. The deal is expected to close in the second half of 2019, subject to regulatory approval and other closing conditions.

“We are extremely proud of the legacy we’ve built in the UK over the last 50 years and are pleased that Chrysaor recognises the value of this business,” said Ryan Lance, chairman and chief executive of ConocoPhillips. “This disposition is part of our ongoing effort to hone our portfolio and focus our investments across future low cost of supply opportunities.”

 “We are excited to play a role in the natural evolution of the North Sea and to enable the safe transfer of assets from major oil companies such as ConocoPhillips to new, well‐funded, privately‐owned operators,” said Linda Z. Cook, chairman of Chrysaor. “This process results in a good deal for both the seller and the buyer, with new asset owners such as Chrysaor bringing the strategy and capital required for reinvestment and growth. The outcome is a reinvigorated oil and gas sector, an extension of the producing life of existing fields and the maximisation of hydrocarbon resource recovery.”

The deal is the latest in a number of transactions which are reshaping the North Sea oil space. Chrysaor, which is backed by private equity firm EIG Global Partners, is already one of the biggest players in the region after acquiring assets from Royal Dutch Shell for $3.8bn in 2017. Chrysaor will fund the deal through existing cash resources and a debt facility underwritten by several banks – including the Bank of Montreal, BNP Paribas, DNB Bank and ING Bank. ConocoPhillips expects to use the proceeds from the sale for general corporate purposes.

News: Conoco sells UK North Sea oil assets to Chrysaor for $2.7 billion