SoFi to acquire Galileo for $1.2bn

BY Richard Summerfield

Despite the scarcity of deals given the COVID-19 outbreak, some M&A activity is still occurring. On Tuesday, non-profit online student lender Social Finance Inc (SoFi) announced it had agreed to acquire payments and banking technology provider Galileo Financial Technologies for $1.2bn in cash and stock, subject to regulatory approval.

The deal will see Salt Lake City-based Galileo continue to operate as an independent subsidiary of SoFi Inc, with current chief executive, Clay Wilkes, remaining in charge of the company.

“SoFi has established itself as a leader in the fintech sector, providing our more than one million members a full array of financial products to help them get their money right,” said Anthony Noto, chief executive of SoFi. “The response by our members to our innovation across borrowing, saving, spending, and investing has motivated us to think bigger, bolder and more expansively given the insatiable consumer appetite for financial services innovation.

He added: “Together with Galileo, we will partner to build on our companies’ strengths to drive even greater financial technology innovation, making those products and services available to both current and future partners. While we march forward on our mission to help people achieve financial independence through our own direct efforts, with Galileo, we can enable a broader ecosystem of companies to join us in helping the world achieve financial independence.”

“SoFi has built a very strong diversified financial services company focusing on a full suite of financial services,” said Mr Wilkes. “These are products that many of our leading fintech clients are asking for. Distributing products through our enterprise class API is the vision behind this combination. I think it’s very powerful.

He continued: “We’re excited to work with SoFi to build on the services that have made Galileo the leading supplier of infrastructure services to leading financial, technology, and fintech companies. With the help of SoFi, we intend to continue to grow with and support all of our existing clients and the product roadmaps that they have defined.”

News: SoFi To Acquire Galileo Financial Technologies

Costco acquires Innovel from Transformco for $1bn

BY Fraser Tennant

In a $1bn deal which significantly bolsters its distribution, logistics and delivery capabilities, US multinational Costco has acquired third-party delivery and logistics provider Innovel Solutions from  integrated retailer Transform Holdco (TFCO) LLC, the operator of Sears and Kmart stores.

Under the terms of the acquisition agreement, Costco will provide TFCO warehousing, delivery and installation services to Sears and Kmart members on a long-term commercial arrangement. Costco will also retain over 1500 Innovel employees on a go-forward basis.

A provider of warehousing, transportation, installation and home delivery services to retail, manufacturing and commercial clients, Innovel’s network covers nearly 90 percent of the US and Puerto Rico. The company also regularly ranks in the top quartile of customer satisfaction scores. Costco has been a customer of Innovel since 2015.

As part of its acquisition of Innovel, Costco will enter into a long-term commercial agreement in which it will leverage TFCO’s Service Live platform to source technicians for complex installations across the country.

“We have had a great relationship with Innovel and share a philosophy of taking care of our members,” said Craig Jelinek, chief executive of Costco. “We believe the acquisition will allow us to grow our e-commerce sales of big and bulky items at a faster rate.”

Costco’s acquisition of Innovel comes as other large retailers, such as Walmart, Amazon, Target, The Kroger Cos., Albertsons Cos., Ahold Delhaize USA and Dollar General, boost their distribution, logistics and delivery capabilities to meet demand for fast-growing product categories and adapt to an emerging omnichannel business model. These efforts include the construction of new distribution centres, automated facilities to fulfill online orders and dedicated space in stores for e-commerce orders.

For TFCO, Costco’s acquisition of Innovel allows it to focus on its core assets and capabilities to deliver service excellence for its members and customers. TFCO believes this programme will give it the best chance to grow value and to maintain a meaningful retail presence in the US to support the expansion of its core businesses.

News: Costco buys logistics firm Innovel for $1 billion

Veritas to acquire DXC unit for $5bn

BY Richard Summerfield

DXC Technology announced it has agreed to sell its state and local health and human services business to private equity firm Veritas Capital for $5bn in cash. The deal is expected to close in December, subject to customary closing conditions and the receipt of third-party consent and regulatory approvals. The deal is not subject to any financing condition or shareholder approval.

The deal is the outcome of a process announced by DXC in November 2019 to explore strategic alternatives for three of its non-core assets. The company will use proceeds from the sale to pay down existing debt, which is consistent with DXC’s policy of maintaining a strong balance sheet and an investment grade credit profile.

“I’m pleased that we continue to execute the plan that we outlined in November, especially in this volatile environment,” said Mike Salvino, chief executive of DXC, in a statement announcing the deal. “The transaction is an important first step in our business and focusing on the enterprise technology stack. The transaction progressed much faster than we originally anticipated, but we are absolutely delighted to partner with Veritas Capital, the leading investor in health care and government sector.”

“DXC’s US State and Local Health and Human Services business is a leading player in a highly complex market that continues to benefit from technological innovation,” said Ramzi Musallam, chief executive and managing partner of Veritas. “The intersection of government, technology and healthcare is a key focus area for Veritas. By combining the business’ talented employees with our extensive industry experience, we plan to build on the business’ unwavering commitment to its customers and leadership in mission critical healthcare technology to drive continued improvement in the quality of healthcare for citizens nationwide. We look forward to welcoming the business and its employees into the Veritas portfolio.”

News: DXC Technology to sell healthcare unit for $5 billion to Veritas Capital

Tesco sells Malaysian and Thai assets to Charoen for $10.6bn

BY Fraser Tennant

In a deal which will see the return of $6.6bn to its shareholders, supermarket giant Tesco is to sell its businesses in Thailand and Malaysia to Bangkok-based conglomerate Charoen Pokphand Group for $10.6bn, including debt.

The sale of its Malaysian and Thai assets will simplify the Tesco Group, enabling a stronger focus on its retail businesses in the UK, Ireland and Central Europe. The transaction also generates substantial  value for Tesco’s shareholders and allows the Group to further de-risk by reducing indebtedness through a pension contribution of £2.5bn.

Over the last four years Tesco’s performance has significantly improved – particularly within the UK, its largest and most important market – but also across the wider Tesco Group. It is from this strengthened position that the Tesco board decided to respond to the expressions of interest it received for its businesses in Thailand and Malaysia and unanimously concluded that the offer by Charoen should be recommended to shareholders.

Operating across many industries ranging from industrial to service sectors, which are categorised into eight business lines covering 13 business groups, Charoen currently has investments in 21 countries and economies.

"Following inbound interest and a detailed strategic review of all options, we are announcing the proposed sale of Tesco Thailand and Tesco Malaysia,” said Dave Lewis, chief executive of Tesco. “This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders. I would like to thank all of our Tesco Thailand and Tesco Malaysia colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of such a strong business.”

Subject to customary regulatory approvals in Thailand and Malaysia, the transaction is expected to be completed during the second half of 2020.

Mr Lewis concluded: “I am confident that the agreement we have reached with Charoen presents an exciting opportunity for their continued success."

News: Tesco plans $6.6 bln shareholder return from Thai, Malaysia sale

Thyssenkrupp sells elevator business for $18.7bn

BY Richard Summerfield

Thyssenkrupp AG has agreed to sell its elevator business to a consortium of Advent, Cinven and Germany’s RAG foundation for $18.7bn.

Once completed, the deal will be the biggest private equity acquisition in Europe since 2007, when KKR took Alliance Boots Plc private in a deal valued at more than $23bn including debt.

Thyssenkrupp will use cash from the elevator unit sale to pay down borrowings and fund some of its pension obligations. The company is heavily indebted and in its most recent earnings statement, net debt jumped to €7.1bn.

“With the sale, we are paving the way for Thyssenkrupp to become successful,” said Martina Merz, chief executive of Thyssenkrupp. “Not only have we obtained a very good selling price, we will also be able to complete the transaction quickly. It is now crucial for us to find the best possible balance for the use of the funds. We will reduce Thyssenkrupp’s debt as far as is necessary and at the same time invest as much as is reasonable in developing the company. With this, Thyssenkrupp can pick up speed again.”

“Cinven is delighted to invest in and accelerate the growth of Thyssenkrupp Elevator both organically and through further acquisitions,” said Bruno Schick, partner and head of DACH and Emerging Europe at Cinven. “Further investment in product development, R&D and international expansion will enable us to grow the business sustainably over the long-term. Alongside Advent and RAG-Stiftung, we look forward to partnering with management to shape the next phase of this outstanding business.”

“Thyssenkrupp Elevator has established itself as an international market leader, with a strong and innovative product portfolio,” said Ranjan Sen, managing partner and head of Germany at Advent. “We look forward to working alongside Cinven and RAG-Stiftung to leverage our collective expertise and capital resources and to build on this excellent platform for further growth, thereby creating a strong, independent industrial company.”

The deal is expected to close by the end of the third quarter of 2020, subject to customary closing conditions and regulatory approvals.

News: Thyssenkrupp sells elevator unit for $18.7 billion to Advent, Cinven consortium