KKR agrees Barracuda deal

BY Richard Summerfield

KKR & Co has agreed to acquire cyber security firm Barracuda Networks from its private equity owner Thoma Bravo. While no financial terms were disclosed, the transaction is believed to be worth around $4bn, including debt.

The deal, which is expected to close by the end of the year, subject to customary conditions, is the latest in the increasingly active cyber security space. Dealmaking in the market has intensified over the last two years as remote working became the norm following the outbreak of the coronavirus (COVID-19) pandemic. Russia’s invasion of Ukraine has also caused companies to redouble their efforts on the cyber security front amid a rise in cyber attacks.

Founded in 2003, Barracuda is a developer of cyber security solutions, including email protection, app and cloud defences, data management and network security. The company caters to approximately 200,000 customers worldwide across a variety of industries, including education, government, financial services, health care, retail, consumer goods and manufacturing. Barracuda tends to focus on small to medium-sized businesses.

Thoma Bravo acquired Barracuda in 2017 for $1.6bn. Since that time, the company has enjoyed growth of over $500m in revenue.

“We believe that with the support of KKR, we will continue to invest in growth and foster a culture that gives our team the resources and inspiration to continue to create and deliver the next generation of leading cybersecurity solutions for our customers and partners,” said Hatem Naguib, chief executive of Barracuda. “We are very appreciative of Thoma Bravo’s support and very excited to be working with KKR on this next phase of Barracuda’s journey.”

“We continue to see cybersecurity as a highly attractive sector and are excited to back a clear leader in the space,” said John Park, head of Americas technology private equity at KKR. “Given its proven track record of growth and innovation, we believe that Barracuda has the right team and model to capture business in this growing market.”

“Barracuda has built an impressive portfolio of solutions that are helping SMEs around the world protect their data and address critical security challenges,” said Bradley Brown, managing director at KKR. ”We see a tremendous opportunity for long-term growth as these businesses continue to invest more in cybersecurity and we look forward to helping Barracuda scale and deliver next generation products that meet this growing need.”

The investment in Barracuda builds upon KKR’s experience investing in the cyber security sector globally, with investments including Ping, Cylance, DarkTrace, ForgeRock, NetSPI and Optiv, among others.

News: KKR to buy cybersecurity firm Barracuda from Thoma Bravo in deal worth about $4 bln

Goldman Sachs acquires NN Investment Partners in €1.7bn deal

BY Fraser Tennant

In a €1.7bn transaction that “advances it commitment to sustainability”, US multinational investment bank and financial services company Goldman Sachs has acquired Dutch-based asset manager NN Investment Partners.

Upon completion, NN Investment Partners will be integrated into Goldman Sachs Asset Management, with the company’s more than 900 employees joining the Goldman Sachs family and the Netherlands becoming an important location in Goldman Sachs’ European business.

Moreover, the acquisition brings Goldman Sachs’ assets under supervision to approximately $2.8 trillion and affirms its position as a top five active asset manager globally, with leading franchises in fixed income, liquidity, equities, alternatives and insurance asset management.

Headquartered in The Hague, NN Partners manages approximately $340bn in assets for institutions and individual investors worldwide, with offices in 15 countries across Europe, North America, Latin America, Asia and the Middle East.

Highly complementary to Goldman Sachs Asset Management’s existing European footprint, NN Investment Partners adds new capabilities and accelerating growth in products such as European equity and investment grade credit, sustainable and impact equity, and green bonds.

In addition, the firm has been successful in incorporating environmental, social and governance (ESG) factors across its product range, with ESG criteria integrated into approximately 90 percent of assets under supervision. Goldman Sachs Asset Management intends to leverage this expertise to complement its existing investment processes, helping to deepen ESG integration across its product range and deliver on sustainable investing priorities.

“This acquisition advances our commitment to put sustainability at the heart of our investment platform,” said David Solomon, chairman and chief executive of Goldman Sachs. “It adds scale to our European client franchise and extends our leadership in insurance asset management.”

As part of the transaction, Goldman Sachs Asset Management has entered into a long-term strategic partnership agreement with NN Group, the parent company of NN Investment Partners, to manage an approximately $180bn portfolio of assets, reflecting the strength of the business’ global insurance asset management capabilities and alternatives franchise.

Mr Solomon concluded: “We are excited to welcome the talented team at NN Investment Partners, a centre of excellence in sustainable investing, to Goldman Sachs and together we will focus on delivering long-term value to our clients and shareholders.”

News: Goldman pays 1.7 billion euros for Dutch-based asset manager

Berkshire Hathaway agrees $11.6bn Alleghany acquisition

BY Richard Summerfield

Berkshire Hathaway has agreed to acquire insurance firm Alleghany Inc in a deal worth $11.6bn. The acquisition, upon completion, would be one of the five largest deals in Berkshire’s history and will put some of the firm’s $146.7bn of cash and equivalents to work after a nearly six year wait for a large deal.

The all-cash acquisition of Alleghany will expand Berkshire’s already considerable insurance holdings, including brands like Geico auto insurance. Alleghany’s core businesses are property and casualty reinsurance and insurance.

Under the terms of the deal, Berkshire will pay $848.02 in cash for each outstanding share of Alleghany. The price represents a 25 percent premium over Friday’s closing price, the last day of trading before the deal was announced.

Upon completion, which is expected in the fourth quarter of 2022, pending regulatory and Alleghany shareholder approvals, Alleghany will operate as an independent unit of Berkshire. The company has 25 days to actively solicit and consider alternative acquisition proposals under a ‘go-shop’ provision.

“Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years,” said Warren Buffett, chairman and chief executive of Berkshire Hathaway. “Throughout 85 years the Kirby family has created a business that has many similarities to Berkshire Hathaway. I am particularly delighted that I will once again work together with my long-time friend, Joe Brandon.”

“My family and I have been significant shareholders of Alleghany for over 85 years and are proud that our ownership will culminate through this compelling transaction with Berkshire Hathaway,” said Jefferson W. Kirby, chair of the Alleghany board of directors. “Not only does this deal provide substantial and certain value to stockholders, but it provides a rare opportunity to join forces with a like-minded and highly respected investor and business leader. Berkshire Hathaway’s support, resources, and expertise will provide added benefits and opportunities for Alleghany and its operating businesses for many years to come.”

“This is a terrific transaction for Alleghany’s owners, businesses, customers, and employees,” said Joseph P. Brandon, president and chief executive of Alleghany. “The value of this transaction reflects the quality of our franchises and is the product of the hard work, persistence, and determination of the Alleghany team over decades. As part of Berkshire Hathaway, which epitomizes our long-term management philosophy, each of Alleghany’s businesses will be exceptionally well positioned to serve its clients and achieve its full potential.”

News: Buffett ends drought with $11.6 bln Alleghany purchase

Amazon’s $8.5bn MGM deal inches closer with EU antitrust approval

BY Richard Summerfield

The European Union’s (EU’s) antitrust regulator unconditionally approved Amazon’s proposed $8.5bn acquisition of US movie studio MGM, in part because “MGM’s content cannot be considered as must-have”. The deal is still pending approval by the US Federal Trade Commission (FTC), which has a mid-March deadline to decide on the deal. If the FTC does not file a legal challenge before the deadline, Amazon can move forward with the acquisition.

The EU competition regulator, the European Commission (EC), said it had looked into overlaps between Amazon and MGM in audio-visual content and found that the combined market shares are low and that they have strong rivals. “The addition of MGM’s content into Amazon’s Prime Video offer would not have a significant impact on Amazon’s position as provider of marketplace services,” the Commission said in a statement.

“The parties are primarily active in different parts of the AV content value chain and where both parties are active, their combined market shares are low,” the EC added. It also found that MGM’s upstream activities as a producer and licensor of film and TV content “are limited compared to other market players’ activities”.

“We’re pleased with the Commission’s decision and, with MGM, look forward to providing more choice of quality entertainment for viewers,” said an Amazon spokesperson. Interestingly, the EC has previously filed charges against Amazon for its use of vendor data to compete with third-party sellers on its online retail platform.

The deal for MGM, which was founded in 1924, was announced in May 2021. It stands to bring Amazon a catalogue of more than 4000 movies, including James Bond, one of the most lucrative franchises in film history with nearly $7bn in global box office earnings, and 17,000 TV programmes. The EC said the “addition of MGM’s content into Amazon’s Prime Video offer would not have a significant impact on Amazon’s position as provider of marketplace services”.

The competition in the global streaming market is intensifying. Amazon Prime passed 200 million subscribers last year, and the company said 175 million of those paying members also streamed Prime Video content. Market leader Netflix has 222 million subscribers, while the soon to be combined Discovery+ and HBO Max will have around 96 million subscribers.

News: Amazon wins EU antitrust nod for $8.5 bln MGM deal

Rio Tinto proposes $2.7m bid to acquire Turquoise Hill

BY Fraser Tennant

In a move that would significantly strengthen its copper portfolio, Anglo-Australian mining group Rio Tinto has offered to buy the 49 percent of Canadian mineral exploration and development company Turquoise Hill it does not already own – a proposal that values the shares at $2.7bn

Under the terms of the non-binding proposal, Turquoise Hill minority shareholders would receive $34 in cash per Turquoise Hill share, representing a premium of 32 percent to Turquoise Hill’s last closing share price on the Toronto Stock Exchange.

Founded in 1995, Turquoise Hill is an international mining company focused on the operation and continued development of the Oyu Tolgoi copper-gold mine in Mongolia, the company's principal and only material mineral resource property.

The proposed transaction follows the recent comprehensive agreement reached between Rio Tinto, Turquoise Hill and the government of Mongolia to move the Oyu Tolgoi project forward – resetting the relationship between the partners and approving commencement of underground operations.

If the acquisition proves successful, Rio Tinto will hold a 66 percent interest in Oyu Tolgoi, with the remaining 34 percent owned by Mongolia.

“Rio Tinto strongly believes in the long term success of Oyu Tolgoi and Mongolia, and delivering for all stakeholders over the long-term,” said Jakob Stausholm, chief executive of Rio Tinto. “That is why we want to increase our interest in Oyu Tolgoi, simplify the ownership structure and further strengthen Rio Tinto’s copper portfolio.

“Furthermore, an acquisition would enable Rio Tinto to work directly with the government of Mongolia to move the Oyu Tolgoi project forward with a simpler and more efficient ownership and governance structure,” he continued. “We believe the terms of proposal are compelling for Turquoise Hill shareholders.”

To progress the proposal, Turquoise Hill’s board of directors will be establishing a special committee of independent directors to review and consider Rio Tinto's offer. Turquoise Hill shareholders are not required to take any action at this time.

Mr Stausholm concluded: “With our relationship reset and underground operations commenced, this transaction demonstrates our clear and unequivocal long-term commitment to Mongolia.”

News: Rio Tinto offers $2.7 bln to buy rest of Turquoise Hill stake