Cypress Semiconductors sold in $10bn deal

BY Richard Summerfield

Cypress Semiconductors is to be acquired by Infineon in a $10bn deal, including debt, the companies have announced.

The cash offer of $23.85 per share represents a 46 percent premium to Cypress’ share price over the last month. The deal, which is subject to regulatory approval, is expected to close by the end of 2019 or in early 2020. The companies expect the merger to generate around $180m in cost synergies.

The combined company will be the world’s eighth largest chipmaker and the largest suppler of chips to car and vehicle companies. The purchase has been underwritten by a bank consortium. Infineon expects that approximately 30 percent of the $10bn price tag will be financed through equity, while the rest will be managed through debt and cash on hand reserves.

“The planned acquisition of Cypress is a landmark step in Infineon’s strategic development,” said Reinhard Ploss, chief executive of Infineon. “We will strengthen and accelerate our profitable growth and put our business on a broader basis. With this transaction, we will be able to offer our customers the most comprehensive portfolio for linking the real with the digital world. This will open up additional growth potential in the automotive, industrial and Internet of Things sectors. This transaction also makes our business model even more resilient. We look forward to welcoming our new colleagues from Cypress to Infineon. Together, we will continue our shared commitments to innovation and focused R&D investments to accelerate technology advancements.”

“The Cypress team is excited to join forces with Infineon to capitalize on the multi-billion dollar opportunities from the massive rise in connectivity and computing requirements of the next technology waves,” said Hassane El-Khoury, president and chief executive of Cypress. “This announcement is not only a testament to the strength of our team in delivering industry-leading solutions worldwide, but also to what can be realized from uniting our two great companies. Jointly, we will enable more secure, seamless connections, and provide more complete hardware and software sets to strengthen our customers’ products and technologies in their end markets. In addition, the strong fit of our two companies will bring enhanced opportunities for our customers and employees.”

News: Infineon revs up auto business with $10 billion Cypress deal

TSYS goes Global

BY Richard Summerfield

Global Payments Inc is to acquire rival Total System Services Inc (TSYS) for around $21.5bn in stock, the companies have announced.

The deal is Global Payment’s largest ever acquisition and the third ‘mega merger’ announced in the increasingly active payments industry this year. The all-stock deal values TSYS at $119.86 per share, an increase of 20 percent on the company’s stock price since before news of the talks between the companies began to emerge.

Once completed, the deal will see Global Payments shareholders own 52 percent of the combined company, while TSYS investors will own the remaining 48 percent. TSYS chief executive Troy Woods will become the combined company’s chairman. The company will have a total equity value of around $40bn.

“The combination of Global Payments and TSYS establishes the leading pure play payments technology company with unparalleled vertical market and payment software capabilities and ecommerce and omnichannel solutions, operating at scale in fast growing markets globally,” said Jeff Sloan, chief executive of Global Payments. “This transformative partnership accelerates our technology-enabled, software-driven payments strategy and provides exposure into attractive and complementary businesses, while enhancing our financial strength and flexibility.”

He continued: “We could not be more excited about the future as we bring together two industry leaders with strong businesses and cultures that will generate significant opportunities for our employees, customers, partners and shareholders worldwide.”

“In this exciting merger of equals, our new company will truly be a payments powerhouse that is perfectly poised to lead the industry in delivering merchant, issuer and consumer payments technology, solutions and service to our customers,” said Mr Woods, chairman, president and chief executive of TSYS. “Our companies share common values, a strong culture of putting people first, and a relentless commitment to doing the right thing, making this combination the perfect fit. The entire TSYS team is proud to link arms with Global Payments, and we look forward to leading the market as the preeminent payment solutions provider.”

Upon closing, Global Payments will process in excess of 50 billion transactions annually in 38 countries physically and over 100 countries virtually, employing over 3500 sales and sales support professionals worldwide.

News: Global Payments to buy TSYS for $21.5 billion in latest fintech deal

Global energy investment stabilises, says new report

BY Fraser Tennant

Global energy investment stabilised in 2018 following three consecutive years of decline – spending on oil, gas and coal supply revived, while energy efficiency and renewables investment stalled – according to a new International Energy Agency (IEA) report.

In its ‘World Energy Investment 2019’ report, the IEA notes that energy investment totalled more than $1.8 trillion in 2018, a level similar to 2017. Furthermore, for the third year in a row, the power sector attracted more investment than the oil and gas industry.

The biggest jump in overall energy investment was in the US, where it was boosted by higher spending in upstream supply, particularly shale, but also electricity networks. The increase narrowed the gap between the US and China, which remained the world’s largest investment destination.

“Energy investments now face unprecedented uncertainties, with shifts in markets, policies and technologies,” said Dr Fatih Birol, executive director at IEA. “But the bottom line is that the world is not investing enough in traditional elements of supply to maintain today’s consumption patterns, nor is it investing enough in cleaner energy technologies to change course. Whichever way you look, we are storing up risks for the future.”

Among major jurisdictions, India had the second largest jump in energy investment in 2018 after the US. At the other end of the scale, the poorest regions of the world, such as sub-Saharan Africa, face persistent financing risks. Such regions only received around 15 percent of investment in 2018 according to the IEA, even though they account for 40 percent of the global population.

The IEA report also found that public spending on energy research, development and demonstration (RD&D) falls far short of what is needed. And while public energy RD&D spending rose modestly in 2018, led by the US and China, its share of gross domestic product remained flat and most countries are not spending more of their economic output on energy research.

“Current investment trends show the need for bolder decisions required to make the energy system more sustainable,” concludes Dr Birol. “Government leadership is critical to reduce risks for investors in the emerging sectors that urgently need more capital to get the world on the right track.”

Report: World Energy Investment 2019

Jones Energy emerges from Chapter 11 – 33 days after filing

BY Fraser Tennant

In what is a remarkable turnaround given the precarious state of the industry, oil and natural gas company Jones is emerging from Chapter 11 bankruptcy – 33 days after filing.

Jones Energy’s pre-packaged Chapter 11 plan – which fully equitises its funded debt, authorises an exit facility and satisfies all trade, customer, employee, royalty and working claims – was confirmed by the United States Bankruptcy Court for the Southern District of Texas on 6 May. The company believes that it has emerged from bankruptcy stronger, well-capitalised and strategically positioned to maximise the value of its asset portfolio.

A family business which dates back three generations to the 1920s, Jones Energy engages in the exploration and development of oil and natural gas properties in the Anadarko basin of Oklahoma and Texas.

“Our successful record-pace emergence from Chapter 11 reflects extraordinary effort by all parties involved,” said Carl Giesler, director and chief executive of Jones Energy. “We thank our employees for their persistence, patience and professionalism throughout this process. We also thank our mineral interest holders, vendors and suppliers for their steadfastness and cooperation, as well as the various legal and financial advisers for their judgments and guidance.”

Jones Energy has also entered into a new reserve-based credit facility with a group of banks led by TD Securities and an initial borrowing base of $225m. The company has initially elected an aggregate commitment of $150m and will have no outstanding borrowings upon emergence.

“The substantial capital commitment from our bank group highlights the operating momentum achieved by our team and the significant progress made to position the company to enhance the value of our assets,” added Mr Giesler. “Our ongoing optimisation initiatives have yielded strong well results that continue to outpace expectations and have already effected substantial reductions to our cost structure. We recognise the efforts to secure this liquidity, particularly given the current challenging financing environment.”

Mr Giesler concluded: “Jones Energy emerges from Chapter 11 in a strong financial position with the flexibility to optimise the value of its assets for all our stakeholders.”

News: Jones Energy Emerges from Bankruptcy with $225 Million Borrowing Base Agreement

Bouncing back

BY Richard Summerfield

M&A activity across a number of regions is expected to bounce back in the third quarter of 2019, according to the Q3 2019 issue of the Intralinks Deal Flow Predictor report.

The report forecasts the number of M&A announcements by tracking early-stage M&A activity, defined as new sell-side M&A transactions that are in preparation or have begun their due diligence stage. On average, early-stage deals are six months away from public announcement.

Undoubtedly, the year got off to a disappointing start. The worldwide number of announced M&A deals fell by 17 percent year-over-year in Q1 2019, according to Intralinks — the biggest such decline since 2002 and the sixth largest decline in any quarter for the past 30 years.

However, the outlook for Q3 appears to be much brighter. In North America, for example, M&A deals announced in Q1 2019 fell by 29 percent year-over-year. Yet looking forward, Intralinks’ predictive model anticipates that the number of announced M&A deals is expected to increase by around 3 percent year-on-year over the next six months. Europe, the Middle East and Africa are expected to see growth of around 1 percent. The strongest growth contributions are expected in the real estate, healthcare and technology, media and telecoms (TMT) sectors. France, Germany, Italy and Spain are expected to see the largest increase in M&A announcements.

The Asia-Pacific (APAC) region is forecast to see growth of around 4 percent. Within APAC, all regions except Southeast Asia and South Korea are demonstrating growth in their volumes of early-stage M&A activity. Looking forward, North Asia (China, Hong Kong), India, Japan and Australasia are expected to make the strongest contributions to APAC’s growth.

In Latin America, however, announced M&A deals are expected to fall by around 6 percent year-on-year. Any growth there is anticipated to occur in the materials, energy and power and TMT sectors. Brazil, Chile, Mexico and Peru, the largest economies in the Latin American region, are predicted to show year-on-year increases in M&A announcements.

The strongest growth in worldwide deal announcements is expected to come from the real estate, energy & power and financials sectors.

Report: Intralinks Deal Flow Predictor for Q3 2019