NEC Corp to acquire Avaloq for $2.2bn

BY Richard Summerfield

NEC Corp has agreed to acquire software company Avaloq Group AG in a deal worth $2.2bn. The parties expect the deal to close in April 2021.

The sale of Avaloq ends a three-year investment by private equity firm Warburg Pincus, which owns 45 percent of the company. The rest of Avaloq is held by its founder Francisco Fernández and its employees. 

Avaloq has about 2300 employees and serves more than 150 banks and wealth managers in key financial centres including London, Frankfurt and Paris. In a statement announcing the deal, Juerg Hunziker, Avaloq’s chief executive, said the deal would help the company expand its geographical footprint beyond Europe.

“The Avaloq team is delighted to be joining NEC Group, a highly trusted and well-respected company with a long heritage, which will help further enlarge our geographical footprint across the globe,” said Mr Hunziker. “Due to very similar values of professionalism, reliability, quality and excellent service for clients with a focus on precision, we firmly believe that this partnership will be a successful one for employees, clients as well as other stakeholders.”

He added: “The whole Group Executive Board at Avaloq is committed to driving forward our growth strategy and we are very glad to have a strong partner on our side who supports our long-term vision. With NEC, Avaloq found a perfect new home to continue our success story of serving our clients with solutions that make their lives simpler in an ever more complex world. The Avaloq team would like to thank Warburg Pincus for its valuable strategic advice and continued support during our successful partnership.”

“NEC strongly believes in the importance of safety and security around financial institutions, which is absolutely crucial for sustainable prosperity and digital inclusion,” said Takashi Niino, president and chief executive of NEC. “Avaloq is a recognised global leader in their field, and their compelling offering is expected to complement our current solutions. NEC aims to further expand its business in the digital government and digital finance areas, by globally developing SaaS and BPaaS business models that utilise software and technologies from throughout the NEC Group, including Avaloq’s.”

“We have enjoyed a rewarding and successful partnership with Avaloq’s chairman and founder, Francisco Fernandez and Juerg Hunziker, Group CEO,” said Adarsh Sarma, partner and co-head of Warburg Pincus Europe. “Avaloq has grown quickly to establish itself as a global leader in banking software and is one of the most strategic FinTech companies in its space. Together with management, we have transitioned Avaloq from an on-premise business model into software-as-a-service provider, launched new innovative cloud native digital products and expanded into multiple new geographies. With strong leadership and governance in place, we are confident that Avaloq will have great future success under new ownership and wish them the very best.”

The deal follows NEC’s 2018 acquisition of British IT services company Northgate Public Services and its 2019 purchase of Danish e-government services firm KMD for more than $1bn.

News: NEC to buy Swiss software firm Avaloq for $2.2 billion

Caesars bets on William Hill

BY Richard Summerfield

US casino operator Caesars Entertainment has agreed to acquire UK gambling group William Hill for $3.7bn.

The deal will see William Hill shareholders receive 272 pence in cash for each share held, a 25 percent premium to last Thursday’s closing share price of 217.60 pence, the day before William Hill said it had received the offer. Caesars will partly fund the transaction via a $1.7bn issue of new stock.

The deal, which must be agreed by 75 percent of William Hill shareholders, was unanimously recommended by the company’s directors. It came after two rival bids by US private equity firm Apollo were turned down.

Caesars is believed to be considering selling William Hill’s UK assets to Apollo, however, as the company is more focused on the fast-growing US sports-betting market. Caesars and William Hill are already engaged in a US sports-betting joint venture, which is currently 80 percent-owned by William Hill.

“The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect,” said Tom Reeg, chief executive of Caesars Entertainment. “William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to serve our customers in the fast-growing US sports betting and online market. We look forward to working with William Hill to support future growth in the US by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment.”

“The William Hill Board believes this is the best option for William Hill at an attractive price for shareholders,” said Roger Devlin, chairman of William Hill. “It recognises the significant progress the William Hill Group has made over the last 18 months, as well as the risk and significant investment required to maximise the US opportunity given intense competition in the US and the potential for regulatory disruption in the UK and Europe."

News: Caesars to buy William Hill for $3.7 billion in sports-betting drive

NVIDIA agrees Arm acquisition

BY Richard Summerfield

UK-based computer chip designer Arm Ltd. is to be sold to American graphics chip specialist NVIDIA in a deal worth $40bn.

Arm is one of Britain’s most successful tech companies, and the decision by its Japanese owner SoftBank to sell the company could reshape the semiconductor landscape.

Under the terms of the deal, NVIDIA will pay SoftBank $21.5bn in shares and $12bn in cash for company, although the deal is still subject to regulatory approval in the UK, China, the European Union and the US. Completion of the deal is expected to take place in approximately 18 months. The deal is expected to attract opposition from its new owners’ rivals and British politicians concerned about foreign takeovers.

SoftBank acquired Arm in 2016 for $32bn and pledged to keep the company headquartered in Cambridge. NVIDIA has made a similar pledge, stating it would build additional research and support facilities at Arm’s campus in the city.

“AI is the most powerful technology force of our time and has launched a new wave of computing,” said Jensen Huang, founder and chief executive of NVIDIA. “In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”

“NVIDIA is the perfect partner for Arm,” said Masayoshi Son, chairman and chief executive of SoftBank Group. “Since acquiring Arm, we have honored our commitments and invested heavily in people, technology and R&D, thereby expanding the business into new areas with high growth potential. Joining forces with a world leader in technology innovation creates new and exciting opportunities for Arm.”

He added: “This is a compelling combination that projects Arm, Cambridge and the U.K. to the forefront of some of the most exciting technological innovations of our time and is why SoftBank is excited to invest in Arm’s long-term success as a major shareholder in NVIDIA. We look forward to supporting the continued success of the combined business.”

“Arm and NVIDIA share a vision and passion that ubiquitous, energy-efficient computing will help address the world’s most pressing issues from climate change to healthcare, from agriculture to education,” said Simon Segars, chief executive of Arm. “Delivering on this vision requires new approaches to hardware and software and a long-term commitment to research and development. By bringing together the technical strengths of our two companies we can accelerate our progress and create new solutions that will enable a global ecosystem of innovators. My management team and I are excited to be joining NVIDIA so we can write this next chapter together.”

News: Nvidia acquisition of Arm throws company into tech spat between U.S. and China

Kimberly-Clark to acquire Softex Indonesia in $1.2bn deal

BY Fraser Tennant

In a $1.2bn deal which highlights its commitment to emerging markets, US multinational personal care  company Kimberly-Clark Corporation is to acquire diaper maker Softex Indonesia, a leader in the fast-growing Indonesian personal care market.

A large, growing market with attractive future prospects, approximately 80 percent of Softex Indonesia’s sales come from diapers – an estimated at $1.6bn market and the sixth largest in the world. The remaining sales are mostly in the feminine care and adult care categories.

Kimberly-Clark’s all-cash acquisition of Softex immediately improves its currently limited position in the country to one with strong market share in key personal care categories across Southeast Asia's largest economy.

"This acquisition represents a compelling strategic fit and demonstrates our commitment to accelerate growth in developing and emerging markets," said Mike Hsu, chairman and chief executive of Kimberly-Clark. "Moreover, adding Softex Indonesia and its brands to Kimberly-Clark will enhance our company's underlying growth prospects and help us create even more long-term shareholder value."

The acquisition is another demonstration of Kimberly-Clark's commitment to generate improved, sustainable top-line growth and create long-term shareholder value. Moreover, the transaction will be financed primarily through incremental debt and secondarily, cash on hand.

"Softex Indonesia has a strong, growing and profitable business with a portfolio of brands loved by Indonesian consumers," said Aaron Powell, president of Kimberly-Clark's Asia-Pacific consumer business. "This acquisition provides an opportunity for Kimberly-Clark to accelerate our growth in Southeast Asia, and we look forward to combining our strengths in innovation and brand building to expand on Softex Indonesia's continued success."

Since 1976, Softex Indonesia has built a successful personal care business with strong market positions and has consistently delivered double-digit growth. The company has excellent manufacturing capabilities and a strong go-to-market distribution network. Softex Indonesia generated net sales of approximately $420m in 2019.

The transaction is subject to customary closing conditions and expected to close in the fourth quarter of 2020.

News: Kimberly-Clark to buy Indonesian diaper maker Softex for $1.2 billion

Aveva agrees to acquire OSIsoft for $5bn

BY Richard Summerfield

Aveva has agreed to acquire OSIsoft, its SoftBank-backed US rival, for $5bn. The deal is expected to close by the end of 2020.

Aveva intends to fund the acquisition through a combination of a $3.5bn rights issue (to be launched in the autumn), cash and new debt facilities.

The OSIsoft acquisition is one of the largest deals ever attempted by a listed UK technology company. The combined company is expected to have annual revenue of £1.2bn, with adjusted earnings before interest and taxes predicted to be about £330m.

“Combining Aveva and OSIsoft is yet another significant milestone in our journey to achieving the ambitious growth goals that we have set,” said Craig Hayman, chief executive of Aveva. “This will not only help us serve existing customers better but also open the flood gates to new opportunities which will accelerate the delivery of our digitisation vision.

“Data has been enabling organisations to more effectively determine the cause of problems by allowing them to visualise what is happening in different locations, departments and systems,” he continued. “This agreement will enable our customers to improve business processes as well as eliminate inefficiencies. We are extremely proud to be moving into the next chapter with an even stronger solutions portfolio as well as an ever-increasing and robust customer base which continues to make us leaders in our sector.”

“Joining forces with Aveva enhances and extends our ability to deliver on our key commitments to our customers, partners and employees,” said Dr. J. Patrick Kennedy, chief executive and founder of OSIsoft. “Together we will be better able to service the largest digital transformation projects in history, including across industry 4.0+ and IIoT. Aveva’s interest in OSIsoft is a testament to our talented team, and the extraordinary value of the PI System as the real-time streaming data infrastructure that powers the industrial world.”

He added: “Today’s announcement is the culmination of a thoughtful search for a respected organisation that would mesh with our own strong mission- and customer-driven culture.  The next chapter in PI’s fifth decade will be exciting for our employees and customers, and I look forward to my continued involvement in my new role as the largest individual shareholder in the combined company and as Chairman Emeritus to ensure we realise the full benefits of this transaction.”

Osisoft is jointly owned by SoftBank’s Vision Fund and founder and Mr Kennedy’s family. SoftBank acquired a holding in Osisoft in 2017 and owns a 44.7 percent stake in the company.

News: UK software provider Aveva buys OSIsoft for $5 billion as Softbank cashes out