Collaborative future: Adobe acquires Figma in $20bn deal

BY Fraser Tennant

In a combination that will usher in a new era of collaborative creativity, multinational computer software company Adobe is to buy software design start-up Figma in a transaction valued at $20bn.

Under the terms of the definitive merger agreement, Adobe’s acquisition of Figma will be comprised of approximately half cash and half stock, subject to customary adjustments. The cash consideration is expected to be financed through cash on hand and, if necessary, a term loan.

Drawing on Adobe’s and Figma’s expansive product portfolio, the combined company will have a rare opportunity to power the future of work by bringing together capabilities for brainstorming, sharing, creativity and collaboration and delivering these innovations to hundreds of millions of customers.

“Adobe’s greatness has been rooted in our ability to create new categories and deliver cutting-edge technologies through organic innovation and inorganic acquisitions,” said Shantanu Narayen, chairman and chief executive of Adobe. “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.”

Once combined, it is expected that Adobe and Figma will reimagine the future of creativity and productivity, accelerate creativity on the web, advance product design and inspire global communities of creators, designers and developers. The combined company will have a massive, fast-growing market opportunity and capabilities to drive significant value for customers, shareholders and the industry.

"With Adobe's amazing innovation and expertise, especially in 3D, video, vector, imaging and fonts, we can further reimagine end-to-end product design in the browser, while building new tools and spaces to empower customers to design products faster and more easily,” added Dylan Field, co-founder and chief executive of Figma.

The transaction is expected to close in 2023, subject to the receipt of required regulatory clearances and approvals and the satisfaction of other closing conditions, including the approval of Figma’s stockholders.

Following closing, Mr Field will continue to lead the Figma team, reporting to David Wadhwani, president of digital media business at Adobe. For the moment, each company will continue to operate independently.

“Figma has built a phenomenal product design platform on the web,” concluded Mr Wadhwani. “We look forward to partnering with their incredible team and vibrant community to accelerate our joint mission to reimagine the future of creativity and productivity.”

News: Adobe to buy Figma in $20 billion bid on future of work that spooks investors

EQT agrees $5.2bn THQ takeover

BY Richard Summerfield

EQT Corp, the largest natural gas producer in the US, has announced that it has agreed to acquire Quantum Energy and Tug Hill Operating-backed THQ Appalachia I LLC and associated pipeline infrastructure in a deal worth $5.2bn.

Under the terms of the deal, EQT will acquire Tug Hill’s XcL Midstream, a pipeline firm that moves gas in Appalachia to market. EQT will pay $2.6bn in cash and about $2.6bn in stock to THQ Appalachia, which has net production of around 760 million cubic feet per day. According to a statement announcing the deal, EQT believes the acquisition of the THQ assets will add an estimated 800 million cubic feet per day of gas equivalent production.

The transaction is expected to close in the fourth quarter of 2022, with an effective date of 1 July 2022. Subject to the transaction close and EQT’s board approval process, Wil VanLoh, founder and chief executive of Quantum Energy Partners, will join EQT’s board of directors.

“The acquisition of Tug Hill and XcL Midstream checks all the boxes of our guiding principles around M&A, including accretion on free cash flow per share, NAV per share, lowering our cost structure and reducing business risk, while maintaining an investment grade balance sheet,” said Toby Z. Rice, president and chief executive of EQT. “The valuation metrics are compelling and accretion from the deal should lower our NYMEX free cash flow breakeven price by approximately $0.15 per MMBtu, which gives us greater free cash flow durability through the cycle.

“As a result of even more confidence in the sustainability of our business, we are enhancing our shareholder returns framework by doubling our share repurchase authorization to $2.0 billion and increasing our year-end 2023 debt reduction goal from $2.5 billion to $4.0 billion,” he added.

“We are extremely pleased to have entered into this transaction and, in doing so, look forward to becoming a core shareholder in EQT and working closely with the EQT management team and board to enhance the long-term value of the company,” said Mr VanLoh. “We believe the company is in a uniquely strong position as the largest producer of natural gas in the country, with a differentiated track record of operational excellence, a deep core inventory base and a peer-leading commitment to ESG. The Tug Hill and XcL Midstream assets are complementary to EQT’s existing footprint, and we believe the company is now positioned to create even more value for its shareholders through this highly strategic combination.”

THQ Appalachia is an exploration and production company operating in West Virginia. Private equity firm Quantum Energy invested in Tug Hill in 2014 and also has an equity commitment in THQ Appalachia, which is operated by Tug Hill.

News: Gas producer EQT to buy peer THQ Appalachia for $5.2 bln

Roper Technologies to acquire Frontline Education

BY Fraser Tennant

In a move to reposition itself as a software firm, US diversified industrial company Roper Technologies, Inc. has acquired school administration software provider Frontline Education from private equity firm Thoma Bravo in an all-cash transaction valued at $3.7bn.

The sale follows a five-year partnership between Thoma Bravo and Frontline during which Thoma Bravo leveraged its specialised operating model and deep sector expertise to enable Frontline to drive profitable growth and expand its market leadership in the K-12 education sector.

Moreover, since its acquisition of Frontline in 2017, Thoma Bravo has completed six highly strategic acquisitions, significantly grown its revenue, expanded its market leading product portfolio from 16 to 30 products and increased headcount by over 70 percent – all while bringing increased value to school districts across the US.

“Thoma Bravo’s investment in Frontline is another clear example of our deep expertise across education, software and strategic M&A to accelerate growth and drive positive impacts – in this case promoting highly efficient and effective K-12 district operations,” said Brian Jaffee, a partner at Thoma Bravo. “We have enjoyed our close partnership with Mark and the Frontline management team and are excited to watch the business continue to thrive with a great new partner in Roper.”

The transaction is expected to close in the fourth quarter of 2022, subject to regulatory approvals and customary closing conditions.

“Frontline has a proven track record of strong organic and inorganic growth, excellent cash conversion and an outstanding management team that will thrive as part of Roper,” said Neil Hunn, president and chief executive of Roper Technologies. “This acquisition demonstrates our disciplined capital deployment strategy that focuses on identifying high-quality, market-leading technology businesses.”

Frontline’s management team will continue to lead the business from its Malvern, Pennsylvania headquarters. The company’s name, brands and office locations will not change as a result of the transaction.

“We are deeply appreciative of Thoma Bravo’s partnership over the last five years, which have allowed us to deliver an expanded portfolio of mission-critical solutions,” concluded Mark Gruzin, chief executive of Frontline Education. “Roper’s acquisition of Frontline Education represents the next phase of our journey.”

News: Roper eyes U.S. teacher shortage in $3.7 billion deal for Frontline Education

Micro Focus sold for $6bn

BY Richard Summerfield

Canadian software company OpenText has agreed to acquire UK tech firm Micro Focus in a deal worth around $6bn. The all-cash acquisition, once completed, will make OpenText one of the world’s largest software and cloud businesses.

Under the terms of the acquisition, the total enterprise value of the deal is around $6bn or £5.1bn, with an equity value of around $2.1bn (£1.8bn). The companies calculated that the per-share price offered, some 532 pence, represents a 98.3 percent premium to the closing price of Micro Focus before the deal was announced.

Micro Focus has experienced financial difficulties in recent years, with declining revenue every year since 2018. Further, its stock price has dropped over 44 percent this year and more than 89 percent for the prior five years. Regardless of these difficulties, Micro Focus remains one of the world’s largest software companies and serves thousands of organisations globally, including many of the largest companies in the Fortune Global 500 and had approximately $2.7bn pro forma trailing 12 months revenue for the period ended 30 April 2022, according to a statement announcing the deal.

“We are pleased to announce our firm intention to acquire Micro Focus, and I look forward to welcoming Micro Focus customers, partners and employees to OpenText,” said Mark J. Barrenechea, chief executive and chief technology officer at OpenText. “Upon completion of the acquisition, OpenText will be one of the world’s largest software and cloud businesses with a tremendous marquee customer base, global scale and comprehensive go-to-market. Customers of OpenText and Micro Focus will benefit from a partner that can even more effectively help them accelerate their digital transformation efforts by unlocking the full value of their information assets and core systems.”

He continued: “Micro Focus brings meaningful revenue and operating scale to OpenText, with a combined total addressable market (TAM) of $170 billion. With this scale, we believe we have significant growth opportunities and ability to create upper quartile adjusted EBITDA and free cash flows. We expect Micro Focus to be immediately accretive to our adjusted EBITDA. Micro Focus will benefit from the OpenText Business System to create stronger operations and significant cash flows, and Micro Focus customers will benefit from the OpenText Private and Public Clouds.”

OpenText intends to fund the acquisition by raising $4.6bn in new debt, $1.3bn in cash and drawing $600m from its existing revolving credit facility. OpenText said it expects cost savings of $400m after the deal closes.

News: OpenText to Acquire Micro Focus International plc

Pfizer to acquire Global Blood Therapeutics in $5.4bn deal

BY Fraser Tennant

In a deal that enhances its presence in rare haematology, US multinational pharmaceutical and biotechnology corporation Pfizer Inc. is to acquire biopharmaceutical company Global Blood Therapeutics, Inc. (GBT).

Under the terms of the definitive agreement, Pfizer will acquire all the outstanding shares of GBT for $68.50 per share in cash, for a total enterprise value of approximately $5.4bn, including debt and net of cash acquired.

The acquisition complements and further enhances Pfizer’s more than 30-year heritage in rare haematology and reinforces the company’s commitment to sickle cell disease (SCD) by bringing expertise and a leading portfolio and pipeline with the potential to address the full spectrum of critical needs in this underserved community.

A lifelong, debilitating inherited blood disorder characterised by haemolytic anaemia, acute pain crises and progressive end organ damage, SCD impacts millions of people worldwide, predominantly in populations of African, Middle Eastern and South Asian descent.

“This transaction is an exciting milestone that accelerates GBT’s mission to discover, develop and deliver life-changing treatments that provide hope to underserved patient communities,” said Ted W. Love, president and chief executive of GBT. “Pfizer will broaden and amplify our impact for patients and further propel much-needed innovation and resources for the care of people with SCD and other rare diseases, including populations in limited-resource countries.”

Pfizer intends to continue to build on GBT’s shared commitment to and engagement with the SCD community by accelerating distribution of its innovative treatment – voxelotor tablets – to parts of the world most impacted by SCD.

“The deep market knowledge and scientific and clinical capabilities we have in rare hematology will enable us to accelerate innovation for the SCD community and bring treatments to patients as quickly as possible,” said Albert Bourla, chairman and chief executive of Pfizer. “We are excited to welcome GBT colleagues into Pfizer and to work together to transform the lives of patients, as we have long sought to address the needs of this underserved community.”

The boards of both companies have unanimously approved the transaction, which is subject to customary closing conditions, including receipt of regulatory approvals and approval by GBT’s stockholders.

Mr Love concluded: “We look forward to working together with Pfizer to serve our communities and advance our shared goal of improving health equity and expanding access to life-changing treatments to create a healthier future for all.”

News: Flush with cash, Pfizer buys Global Blood Therapeutics in $5.4 billion deal