LSEG sells Borsa Italiana to Euronext in $5bn deal

BY Fraser Tennant

In a transaction which creates a leading player in European capital markets infrastructure, London Stock Exchange Group (LSEG) is to sell Borsa Italiana, Italy's only stock market exchange, to pan-European stock exchange Euronext for $5bn in cash.

The combination significantly enhances the scale of Euronext, diversifies its business mix into new asset classes and strengthens its post-trade activities, as well as delivering on its ambition to build the leading pan-European market infrastructure.

“The acquisition of Borsa Italiana marks a significant achievement in our ‘Let’s Grow Together 2022’ strategic plan and a turning point in our history,” said Stéphane Boujnah, chief executive and chairman of the managing board of Euronext “Thanks to this transaction, we will significantly diversify our revenue mix and geographical footprint by welcoming the market infrastructure of Italy, a G7 country and the third largest economy in Europe.”

Euronext is financing the transaction via bridge loan financing and long-term financing to be implemented through a mix of existing available cash, new debt and new equity.

“We have enjoyed a long and successful relationship with LSEG, which has invested in and developed our business over the last 12 years,” said  Raffaele Jerusalmi, chief executive of Borsa Italiana. “We look forward to embarking on the next phase of our history, working in partnership with Euronext to further develop our business and to contribute to the development of European capital markets.”

The sale of Borsa Italiana to Euronext is supported by the board of LSEG who intend to recommend that shareholders vote in favour of the resolution to approve the transaction at a extraordinary general meeting on 20 November 2020.

“We believe the sale of Borsa Italiana will contribute significantly to addressing the EU’s competition concerns,” said David Schwimmer, chief executive of LSEG. “Borsa Italiana has played an important part in LSEG’s history. We are confident that it will continue to develop successfully and contribute to the Italian economy and to European capital markets under Euronext’s ownership.”

The completion of the transaction is expected in the first half of 2021 subject to Euronext’s and LSEG’s shareholder approvals, and regulatory approvals in Italy, the UK, the US, Belgium and France.

Mr Boujnah concluded: “The combination of Euronext and the Borsa Italiana delivers the ambition of building the leading pan-European market infrastructure, connecting local economies to global capital markets.”

News: LSE agrees to sell Borsa Italiana to Euronext for $5 billion

Oil sector supplier Utex Industries files for Chapter 11

BY Fraser Tennant

In yet another bankruptcy related to the impact of coronavirus (COVID-19) on oil producers and the companies that rely on them for business, sealing product manufacturer Utex Industries has filed for Chapter 11.

The filing will be followed by a balance sheet restructuring intended to reduce Utex's funded debt by approximately $700m and provide it with up to $42.5m in new financing. The process is expected to be completed in a matter of weeks.

Utex’s plan is supported by over 81.6 percent and 90.4 percent of its first and second lien lenders, respectively. Utex’s lenders have also agreed to provide Utex with debtor-in-possession (DIP) financing and the consensual use of cash collateral to enable the company to operate its business in the ordinary course.

“After an extensive analysis of strategic and financial options for the Company, and after months of negotiations, we are very pleased to have reached an agreement for a consensual restructuring with our secured lenders and other stakeholders,” said Mike Balas, chief executive of Utex. “We believe that the restructuring contemplated by the Agreement will provide us with the capital structure and liquidity to compete and grow in today's business environment.”

A market-leading manufacturing business headquartered in Houston, Texas, Utex operates manufacturing, distribution and technical sales facilities in the US and abroad and has approximately 500 employees. The company supports a diverse customer base in the oil & gas, industrial, mining, and water end markets.

Throughout the Chapter 11 restructuring process, Utex expects to continue to operate its business without disruption to its vendors, customers, employees or other partners, and, subject to customary approvals, will have access to substantial liquidity to meet its obligations. This includes funding employee wages and benefits, and paying vendors and suppliers for all goods and services.

Mr Balas concluded: “I am grateful to our dedicated employees who have continued to work hard in this challenging business environment, and this restructuring will position us and our partners for success in the years to come.”

News: Utex Industries to Shed $700 Million Debt Through Chapter 11 Bankruptcy

NEC Corp to acquire Avaloq for $2.2bn

BY Richard Summerfield

NEC Corp has agreed to acquire software company Avaloq Group AG in a deal worth $2.2bn. The parties expect the deal to close in April 2021.

The sale of Avaloq ends a three-year investment by private equity firm Warburg Pincus, which owns 45 percent of the company. The rest of Avaloq is held by its founder Francisco Fernández and its employees. 

Avaloq has about 2300 employees and serves more than 150 banks and wealth managers in key financial centres including London, Frankfurt and Paris. In a statement announcing the deal, Juerg Hunziker, Avaloq’s chief executive, said the deal would help the company expand its geographical footprint beyond Europe.

“The Avaloq team is delighted to be joining NEC Group, a highly trusted and well-respected company with a long heritage, which will help further enlarge our geographical footprint across the globe,” said Mr Hunziker. “Due to very similar values of professionalism, reliability, quality and excellent service for clients with a focus on precision, we firmly believe that this partnership will be a successful one for employees, clients as well as other stakeholders.”

He added: “The whole Group Executive Board at Avaloq is committed to driving forward our growth strategy and we are very glad to have a strong partner on our side who supports our long-term vision. With NEC, Avaloq found a perfect new home to continue our success story of serving our clients with solutions that make their lives simpler in an ever more complex world. The Avaloq team would like to thank Warburg Pincus for its valuable strategic advice and continued support during our successful partnership.”

“NEC strongly believes in the importance of safety and security around financial institutions, which is absolutely crucial for sustainable prosperity and digital inclusion,” said Takashi Niino, president and chief executive of NEC. “Avaloq is a recognised global leader in their field, and their compelling offering is expected to complement our current solutions. NEC aims to further expand its business in the digital government and digital finance areas, by globally developing SaaS and BPaaS business models that utilise software and technologies from throughout the NEC Group, including Avaloq’s.”

“We have enjoyed a rewarding and successful partnership with Avaloq’s chairman and founder, Francisco Fernandez and Juerg Hunziker, Group CEO,” said Adarsh Sarma, partner and co-head of Warburg Pincus Europe. “Avaloq has grown quickly to establish itself as a global leader in banking software and is one of the most strategic FinTech companies in its space. Together with management, we have transitioned Avaloq from an on-premise business model into software-as-a-service provider, launched new innovative cloud native digital products and expanded into multiple new geographies. With strong leadership and governance in place, we are confident that Avaloq will have great future success under new ownership and wish them the very best.”

The deal follows NEC’s 2018 acquisition of British IT services company Northgate Public Services and its 2019 purchase of Danish e-government services firm KMD for more than $1bn.

News: NEC to buy Swiss software firm Avaloq for $2.2 billion

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