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

Retail giant Neiman Marcus emerges from Chapter 11

BY Fraser Tennant

Emerging from one of the highest-profile retail collapses during the coronavirus (COVID-19) pandemic, omnichannel fashion retailer Neiman Marcus Holding Company has completed its Chapter 11 protection process, having successfully implemented a plan of reorganisation.

Now operating with a strengthened capital structure that eliminated more than $4bn of existing debt and more than $200m of cash interest expense annually, Neiman Marcus emerges with the full support of its creditors and new equity shareholders.

“With the successful implementation of our restructuring, Neiman Marcus will continue to be the preeminent luxury shopping destinations for years to come,” said Geoffroy van Raemdonck, chief executive of Neiman Marcus Group. “While the unprecedented business disruption caused by coronavirus (COVID-19) has presented many challenges, it has also given us the opportunity to reimagine our platform and improve our business.”

The company’s new owners are funding a $750m exit financing package that fully refinances the debtor-in-possession (DIP) loan and provides significant additional liquidity for the business. Neiman Marcus has also secured a $125m ‘first-in, last-out’ (FILO) facility, the proceeds of which will refinance existing debt and provide liquidity to support the company's ongoing operations and strategic initiatives.

Furthermore, the exit term loan financing and FILO facility are in addition to liquidity provided by a $900m asset-based lending (ABL) loan. With the support of its new shareholders and funds available from the exit financing and FILO and ABL facilities, Neiman Marcus expects to be able to execute on the strategic initiatives to ensure a long and successful future.

“Our new owners understand the value of our brands and the opportunity for growth,” continued Mr van Raemdonck. “They are also strongly committed to supporting our company on sustainability issues – where we intend to be a leader within the industry. At the conclusion of this process, I remain profoundly impressed by the strength of Neiman Marcus, the commitment of our associates, the unwavering support of our brand partners, and the loyalty of our customers.”

Confident that Neiman Marcus is positioned to continue to transform the future of retail, Mr van Raemdonck concluded: “We emerge from Chapter 11 as a stronger, more innovative retailer, brand partner and employer.”

News: Department store chain Neiman Marcus emerges from bankruptcy

European FinTech resilient but slowdown is on the horizon, says new report

BY Fraser Tennant

Despite remaining resilient during months of coronavirus (COVID-19) lockdown, European FinTech companies are likely to see a fall out in 2021, according to a report published today by Finch Capital.

In its annual ‘State of European FinTech report for 2020’, Finch Capital analyses the key issues impacting the FinTech industry, such as the impact of COVID-19, the outlook for M&A activity and the trends that will shape FinTech in the months and years to come.

"Although the 2020 situation looks good at first glance, European governments have provided a huge amount of support for FinTech start-ups,” said Radboud Vlaar, managing partner at Finch Capital. “This support offset the decline in institutional funding, but this was a one-off initiative. In the next six to 12 months, start-ups and scale-ups will face a harsher market test for raising additional funding due as the government funding slows and venture capitalist (VC) funds get maxed out, consequently focusing remaining fund capacity on their winners."

The report’s key findings include: (i) the impact of the lockdown on FinTech sectors was in line with predictions, except for payments and mortgages that both went up, contrary to what was predicted; (ii) European FinTech M&A momentum is being hindered by a lack of big buyers and fragmentation, with Europe lacking big ticket M&A buyers for FinTechs, and challenger banks in particular; and (iii) big trends that will shape FinTech in 2021 range from cracking the exit path of the challenger banks to the rise of global privacy and consolidation of fragmented players.

“A shakeout of European FinTech is not necessarily bad,” said Mr Vlaar. “In the last five years, Europe has seen 100,000s of new companies raise massive amounts of capital, build and start selling new products to meet a market need. Sometimes hundreds of companies are trying to solve a similar problem in different countries.

“This creates an opportunity for investors to consolidate and back winners at attractive prices and make profitable companies,” he continued. “These companies then become acquisition targets for private equity (PE) firms and large industry incumbents”

The report concludes by noting that with fundraising becoming more selective and dropping in Q4 2020 and 2021, harsh reality is on the horizon for European FinTech.

Report: ‘State of European FinTech report for 2020’

Century 21 files for Chapter 11 blaming insurers

BY Fraser Tennant    

Pointing the blame at its insurers, US department store chain Century 21 has filed for Chapter 11 bankruptcy in order to commence a wind down of its retail operations and maximise its assets for the benefit of shareholders.

The company has 13 stores across New York, New Jersey, Pennsylvania and Florida, having served its customers for nearly 60 years.

Reportedly, the decision to file for bankruptcy follows nonpayment by the company's insurance providers of approximately $175m due under policies put in place to protect against losses stemming from business interruption, such as that experienced as a direct result of the coronavirus (COVID-19) pandemic.

Concurrently, Century 21 has filed a lawsuit against several of its insurance providers based on their decision not to compensate the company for losses under the policies.

"We have no viable alternative but to begin the closure of our beloved family business because our insurers, to whom we have paid significant premiums every year for protection against unforeseen circumstances, have turned their backs on us at this most critical time," said Raymond Gindi, co-chief executive of Century 21. "We are confident that had we received any meaningful portion of the insurance proceeds, we would have been able to save thousands of jobs and weather the storm, in hopes of another incredible recovery."

A pioneer and leader in high-end, off-price fashion retail since 1961, Century 21 offers men's, women's, and children's apparel, footwear, outerwear, lingerie and accessories, along with beauty and home goods,

"While we wish that Century 21 could continue to be a must-see shopping destination for so many, we are proud of the pioneering role it has played in off-price retail and the iconic brand it has become,” said IG Gindi, co-chief executive of Century 21. “It has been a true honour for us to be part of the vibrant New York City fashion scene and to serve millions of locals, tourists and celebrities, side by side."

Century 21 stores are currently open to serve customers, with going out of business sales commencing at all of its locations and at c21stores.com.

Mr Raymond Gindi concluded, "We will be forever grateful for the vital role our customers played in building the Century 21 legacy hand in hand with our family. Together, we hope we can help our loyal customers create some final memorable Century 21 stories."

News: Century 21 to close up shop, says insurers won't cover COVID losses

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