Crown turns down Blackstone bid

BY Richard Summerfield

Private equity giant Blackstone has had a $6.5bn offer for troubled Australian casino operator Crown Resorts rejected.

“The board has unanimously concluded that the revised (Blackstone) proposal undervalues Crown, and is not in the best interests of Crown’s shareholders,” Crown said in a statement.

The company noted that Blackstone’s offer of A$12.35 per share, or A$8.4bn, did not consider the full value of its assets, a potential jump in earnings once the COVID-19 pandemic eases and plans to pay down a significant amount of debt. The Blackstone offer also created some uncertainty about the timing of any deal, Crown noted.

Star Entertainment Group, which owns and operates casinos and hotels across Australia, most notably in New South Wales and Queensland, has also made an all-stock offer for Crown. In a separate statement, Crown said it had not yet formed a view on the merits of the Star merger proposal but had requested certain information to better understand preliminary matters. The Star proposal is expected to attract antitrust scrutiny, which could create difficulties going forward.

Crown has endured a considerable adversity of late. In addition to a slump in profits due to the coronavirus pandemic, the company has also faced increased regulatory scrutiny, lost its licence to operate a flagship new casino on Sydney’s waterfront amid allegations of money laundering and links to organised crime, and also faces inquiries in the other two Australian states where it is licensed to operate. Furthermore, the company is facing two civil lawsuits accusing it of failing to disclose risks which led to share price declines.

Blackstone initially offered $11.85 a share for Crown, representing a 19 percent premium to the volume-weighted average price of Crown shares since the release of its first half results for the financial year 2021. Blackstone, which owns around 10 percent of Crown shares, increased its previous offer in April. The modified deal included conditions designed to safeguard Blackstone against an adverse recommendation like the cancellation or suspension of Crown’s Western Australia or Victorian licences by either inquiry before the deal is approved by courts.

Rival private equity firm Oaktree Capital Group has also expressed an interest in Crown, offering a “structured instrument” to help Crown buy back the 37 percent stake held in the company by founder James Packer.

News: Crown Resorts rejects Blackstone’s proposal and keeps Star under review

Verizon Media sold for $5bn

BY Richard Summerfield

Verizon Communications has sold its Verizon Media assets, including AOL and Yahoo, to private equity giant Apollo Global Management in a deal worth $5bn.

Under the terms of the deal, Verizon will receive $4.25bn in cash from Apollo, along with preferred interests of $750m and a 10 percent stake in the unit. Verizon originally paid nearly $9bn for the pair. The divested unit, which was previously named Oath and renamed Verizon Media in 2018 when Verizon wrote off around half of the unit’s value, will now be called Yahoo when the deal closes, which is expected to be in the second half of 2021.

Verizon has been making moves to refocus its attention on its wireless networks and other internet provider businesses of late and has been selling off its media properties. Last year, the company sold HuffPost to BuzzFeed. It also recently sold off or shut down other media properties like Tumblr and Yahoo Answers.

“We are excited to be joining forces with Apollo,” said Guru Gowrappan, chief executive of Verizon Media. “The past two quarters of double-digit growth have demonstrated our ability to transform our media ecosystem. With Apollo’s sector expertise and strategic insight, Yahoo will be well positioned to capitalize on market opportunities, media and transaction experience and continue to grow our full stack digital advertising platform. This transition will help to accelerate our growth for the long- term success of the company.”

“We are big believers in the growth prospects of Yahoo and the macro tailwinds driving growth in digital media, advertising technology and consumer internet platforms,” said David Sambur, senior partner and co-head of private equity at Apollo. “Apollo has a long track record of investing in technology and media companies and we look forward to drawing on that experience to help Yahoo continue to thrive.”

“Verizon Media has done an incredible job turning the business around over the past two and a half years and the growth potential is enormous,” said Hans Vestberg, chief executive of Verizon. “The next iteration requires full investment and the right resources. During the strategic review process, Apollo delivered the strongest vision and strategy for the next phase of Verizon Media. I have full confidence that Yahoo will take off in its new home.”

Apollo has engaged in a number of transactions in recent months, announcing deals to acquire Michaels, a chain of crafting stores in the US, and the Venetian Resort in Las Vegas.

News: Verizon to offload Yahoo, AOL for $5 billion

Blackstone Group sells portfolio for $2.9bn

BY Richard Summerfield

Blackstone Group has agreed to sell its portfolio of warehouse and logistics assets in Australia to ESR Cayman Ltd in a deal worth $2.9bn.

ESR, a Hong Kong-listed property manager, has partnered with Singaporean sovereign wealth fund GIC Pte Ltd to acquire the portfolio. GIC will contribute 80 percent of the required equity for the deal, with ESR providing the rest. The portfolio consists of 45 assets held by Blackstone’s Milestone Logistics across major cities including Adelaide, Brisbane, Melbourne, Perth and Sydney, covering a total land area of 3.6 million square metres.

The deal, which is expected to provide an initial yield of 4.5 percent with a 6.9-year weighted average lease expiry, is the largest logistics and general property portfolio transaction in Australia to date. Upon completion, ESR will be the third-biggest logistics landlord in the country with assets under management increasing to A$7.9bn.

The potential sale of the portfolio has been under discussion for some time. In January, Blackstone received more than 10 first-round bids for Milestone Logistics. The firm also considered an initial public offering (IPO) for the portfolio.

“The opportunity to secure such a large portfolio with extremely well-located assets across Adelaide, Brisbane, Melbourne, Perth and Sydney, strategically positions EMP to benefit from the continued growth in demand for warehouse space, particularly as the robust demand for logistics real estate is expected to remain strong due to sustained growth in e-commerce,” said Phil Pearce, chief executive of ESR Australia.

“We are extremely pleased to deepen our partnership with GIC with this momentous transaction,” said Jeffrey Shen and Stuart Gibson, co-founders and group co-chief executives of ESG. “The acquisition of the Milestone portfolio is a significant leap forward for ESR. This tremendous expansion not only adds immediate scale to our presence in Australia and the region, but also extends our footprint and reaffirms our commitment to one of our highest conviction markets in Asia Pacific.”

GIC and ESR are no strangers to one another. In December 2020, the firms announced a strategic partnership to establish a $750m joint venture to develop and acquire industrial and logistics assets in India.

News: ESR, GIC to buy Australian logistics property portfolio from Blackstone for $2.9 bln

Synnex seals $7.2bn Tech Data deal

BY Richard Summerfield

IT solutions firm Synnex Corp is to acquire Tech Data for $7.2bn, including debt. The deal will create a combined operation with revenues in the region of $57bn and a headcount of around 22,000 staff.

The terms of the deal will see Tech Data’s owner, Apollo Global Management, take ownership of 45 percent of the combined entity and use it as an opportunity to refinance the distributor’s existing net debt. The companies expect the deal to close in the second half of 2021.

Synnex shareholders will own about 55 percent of the combined company. Tech Data has indicated that it expected net optimisation and synergy benefits of $100m in the first year after closing, with a minimum of $200m by the end of the second year.

“We are excited to partner with a world-class industry leader like Tech Data and believe that this combination will benefit all our stakeholders,” said Dennis Polk, president and chief executive of Synnex. “This transaction allows for accelerated revenue and earnings growth, an expanded global footprint, and the ability to drive significant operating improvements while continuing to create shareholder value.”

"This is transformational for Tech Data, Synnex and the entire technology ecosystem,” said Rich Hume, chief executive of Tech Data. “Together, we will be able to offer our customers and vendors exceptional reach, efficiency, and expertise, redefining the experience and value they receive. The combined company will also benefit from significant financial strength to invest in its core growth platform as well as next generation cybersecurity, cloud, data, and IoT technologies, which are experiencing explosive growth due to work from home and return to office trends.”

Apollo, which wholly owns and manages Tech Data through its funds, will also enjoy certain merger benefits. As per the agreement, Apollo will receive an aggregate of 44 million shares of Synnex common stock plus the refinancing of existing Tech Data net debt and redeemable preferred shares of approximately $2.7bn.

News: Synnex Corp to merge with Tech Data in $7.2 billion deal

Apollo Global and Athene agree $11bn all-stock deal

BY Richard Summerfield

Apollo Global Management Inc has agreed to acquire Athene Holding Ltd in an all-stock deal that values the annuity business at around $11bn.

The deal is expected to close in January 2022, the companies said in a statement on Monday. Apollo was already the annuity seller’s biggest shareholder, with the firm and related entities owning a 35 percent stake in the company.

Under the terms of the deal, each Athene common share will be exchanged for 1.149 shares of Apollo common stock, with Apollo shareholders owning about 76 percent of the combined company once the transaction is completed.

By merging with Athene, the life insurance company Apollo established at the height of the financial crisis, the alternative asset manager will be transformed into a financial conglomerate with a market capitalisation worth almost $30bn.

“This merger is all about alignment between Apollo and Athene, amongst Apollo’s stockholders and with our limited partners,” said Marc Rowan, co-founder and incoming chief executive of Apollo. “For Apollo and Athene, we will have total alignment to optimize our strategy and allocate capital efficiently, which will include rapidly scaling our capability to originate attractive risk/reward assets, which are the limiter of growth for both firms. We have also created alignment among all our stockholders who will share in the upside of a larger, more liquid company with leading corporate governance. And it further aligns interests with our fund investors, giving us a bigger balance sheet to invest alongside clients in our various fund products.”

“Today’s announcement reflects the strength and strategic nature of our longstanding mutually beneficial relationship with Apollo – one which has already created enormous value for each other and our respective constituents,” said Jim Belardi, chairman and chief executive of Athene. “After carefully reviewing Athene’s options to unlock value for shareholders, Athene and Apollo determined that the potential of a fully aligned business would be significantly greater than a sum-of-the-parts.

“Coming together in this merger is a logical and exciting next step that will simplify our relationship while driving significant strategic and financial benefits in both the immediate and long-term future,” he added.

News: Apollo Global to buy annuities provider Athene in $11 billion deal