Going private: KAZ Minerals acquired by Nova Resources in £3bn deal

BY Fraser Tennant

In a £3bn deal designed to take it private once again, copper miner KAZ Minerals has been acquired by Nova Resources, a company owned by a consortium comprised of KAZ chairman Oleg Novachuk and Kazakh billionaire Vladimir Kim.

An all-cash-deal, under the terms of the acquisition, Nova Resources will pay the shareholders of London-listed KAZ Minerals 640 pence per share. It is It is intended that the acquisition will be implemented by way of a court-sanctioned scheme of arrangement.

A high-growth copper company focused on large scale, low cost open pit mining in the Commonwealth of Independent States (CIS) region, KAZ Minerals has a track record for the successful delivery of greenfield mining projects. The company employs around 15,000 people, principally in Kazakhstan.

"We are pleased to announce this recommended cash offer for KAZ Minerals,” said Oleg Novachuk, chairman of Nova Resources. “Mr Kim and I believe that KAZ Minerals has made notable progress as a public company since listing on the London Stock Exchange in 2005. However, driven by the current market uncertainty and the corporate circumstances of sequential development projects, we believe that KAZ Minerals' long term interests would be best served as a private company.”

Mr Novachuk is confident that the execution of a higher risk, capital intensive strategy remains the optimal long-term path for KAZ Minerals but recognises that the company’s risk appetite may be misaligned with the preference of many investors in the mining sector.

"Following extensive negotiations, the independent committee of KAZ Minerals intends to unanimously recommend the acquisition to its shareholders as representing an opportunity to realise their investment at a premium in cash in the near term,” said Michael Lynch-Bell, senior independent director and chair of the independent committee at KAZ Minerals. “We believe the offer provides a fair value for KAZ Minerals.”

The acquisition is expected  to be completed in the first half of 2021, subject to the approval of KAZ Minerals’ shareholders, receipt of the relevant antitrust clearances, regulatory approvals and the sanction of the scheme of arrangement by the court.

Mr Novachuk concluded: “In taking this important step, we wanted to ensure that KAZ Minerals’ shareholders were provided with the opportunity to crystallise the value of their investment at a premium valuation. We are confident that this acquisition will deliver an attractive return.”

News: KAZ bosses sign 3 bln pound deal to take miner private again

US denim retailer True Religion exits Chapter 11

BY Fraser Tennant

For the second time in three years, upmarket US denim brand True Religion has successfully emerged from Chapter 11 bankruptcy protection.

The emergence was achieved under a court-approved plan of reorganisation that significantly reduced the company’s debt as well as providing liquidity to execute its growth plans over the next several years.

Founded in 2002, True Religion first filed for Chapter 11 protection in July 2017 during a period when it struggled to adapt to a generational shift in shopping habits, and again in April 2020 when the full impact of the coronavirus (COVID-19) pandemic on retailers became clear.

However, even amid a global pandemic, True Religion’s strong brand identity has enabled the development and confirmation of a plan of reorganisation that paves the way for its continued success.

“We want to thank our loyal and diverse customer base, which remained faithful to the brand both prior to and during the pandemic,” said Michael Buckley, chief executive of True Religion. “We are incredibly thankful and completely indebted to our customers who have showed us consistent support during a period that was challenging in so many ways.”

Mr Buckley, who rejoined True Religion in November 2019 to execute the necessary changes to achieve the company’s full potential across its various channels, previously served as president from 2006 to 2010 during a phase of rapid growth.

“Although we had to make the very difficult decision to lower our overall store count and employee base, our successful emergence from bankruptcy as a stronger company is a testament to the contribution of all of our employees throughout the brand’s history,” added Mr Buckley.

Additionally, collaboration from lenders and other vendor partners in the bankruptcy case also proved pivotal in helping True Religion to emerge from Chapter 11.

Mr Buckley concluded: “The reorganisation has allowed True Religion to reduce its operating costs and lower its debt load, and emerge a profitable, lean operating company with a healthy balance sheet. The path is now clear to continue the reinvigoration of an iconic American brand.”

News: Retailer True Religion emerges from speedy Chapter 11 bankruptcy

Two thirds of UK PE firms embrace ESG, claims new report

BY Fraser Tennant

Almost two thirds of UK private equity (PE) firms now embrace environmental, social and governance (ESG) principles as part of their investments, according to research published this week by BDO LLP.

Increasingly, says BDO, PE firms have to prove that their policies at least match what can be demanding ESG criteria set out by limited partners (LPs), some of whom have been at the forefront of ESG investment for several years.

However, with many PE firms failing to make their full ESG policy publicly available, some risk falling behind, and more work is needed to bring those firms into line with expectations of a broader group of stakeholders.

According to the BDO research: (i) 57 percent of PE firms clearly set out the changes they have implemented to make their investments more ESG-focused; (ii) 49 percent of PE firms are signatories of the United Nations Principles for Responsible Investment (UNPRI), the world’s most-recognised set of ESG principles; (iii) 48 percent of PE firms report in detail on the ESG impact of their investments; and (iv) 25 percent of PE firms have a dedicated individual or team responsible for embedding ESG into the investment process.

“A manager’s ESG approach is becoming an important consideration for LPs looking to deploy capital into PE,” said Jamie Austin, a partner at BDO. “PE firms have made a lot of progress in a short space of time in developing ESG principles and using them to guide their investments. But there is still a way to go and some firms may look increasingly isolated by making no reference whatsoever to ESG.”

Furthermore, the BDO research reveals that investors are looking for PE firms to strengthen the presence of ESG criteria in due diligence processes, with ESG credentials needing to be a fundamental focus of these risk assessments, if firms are to gain the support of investors. 

Mr Austin concluded: “We suspect the next stage is that investors will not just want a commitment to ESG – they will also want tangible proof of how the PE fund has actually delivered on that commitment. The idea that private assets mean little or no public disclosure on important issues like ESG is increasingly being challenged.”

News: Two thirds of private equity houses now take ESG into account, but more progress remains to be made

First Citizens and CIT agree $2.2bn merger

BY Richard Summerfield

First Citizens BancShares and CIT Group have announced an agreement to merge in a deal worth $2.2bn.

The deal is being billed as a merger of equals, though First Citizens would be the surviving company and its investors would own 61 percent of its outstanding shares. First Citizens will pay $2.2bn in stock for CIT, with CIT shareholders receiving 0.062 shares of First Citizens’ stock for each share they own. The deal is expected to close in the first half of 2021.

Frank Holding, Jr, chairman and chief executive of First Citizens, will retain the same roles at the combined company. Ellen R. Alemany, chairwoman and chief executive of CIT, will assume the role of vice chairwoman and play a key role in the merger integration. In addition, she will serve on the board of directors of the combined company.

The deal will create the 19th-largest bank holding company in the US, with roughly $110bn of assets and a nationwide network of branches.

“This is a transformational partnership for First Citizens and CIT designed to create long-term value for all of our constituents including our stockholders, our customers, our associates and our communities,” said Mr Holding, Jr.  “We have long admired CIT’s market-leading commercial business, including their strong market position across multiple asset classes. Under Ellen’s leadership, CIT has made tremendous progress in reducing its cost of funds, enhancing risk management processes and retaining key talent.”

He continued: “First Citizens has a long history of delivering strong returns to our stockholders, gathering low-cost deposits and driving strong earnings, which are all supported by an exceptional credit culture, strong capital and excellent risk management. Together, First Citizens and CIT will be able to leverage both companies’ unique attributes to create the 19th largest bank in the country, well-positioned to compete across the United States.”

“Frank and I have long respected each other’s companies and believe this transaction will accelerate our strategic goals by bringing together the expertise of both banks to create scale, strength and value,” said Ms Alemany. “I’m proud of the work we have done to transform CIT in recent years to a leading, national commercial bank. This transaction will build on those efforts and more fully unlock the potential in our core franchises. In addition, the strength that is created as a larger US bank will enable greater opportunities for our team, our customers and our communities.”

News: Regional lender First Citizens to buy CIT in $2.2 billion deal

Twilio clinches data deal

BY Richard Summerfield

Cloud computing firm Twilio Inc has agreed to acquire customer data company Segment Inc for around $3.2bn in stock, after a boom in demand for online communications tools during the COVID-19 pandemic.

The all-stock deal, specifically “in Twilio Class A common stock, on a fully diluted and cash free, debt free basis” is expected to close in Q4 2020. Upon completion, Segment will become a division of Twilio, the companies said in a statement.

The deal will accelerate Twilio’s efforts to build the leading global customer engagement platform and offers a combined total addressable market of $79bn.

“Data silos destroy great customer experiences,” said Jeff Lawson, co-founder and chief executive of Twilio. “Segment lets developers and companies break down those silos and build a complete picture of their customer. Combined with Twilio’s Customer Engagement Platform, we can create more personalized, timely and impactful engagement across customer service, marketing, analytics, product and sales. We are thrilled to welcome Segment to the Twilio team.”

“Together, Twilio and Segment have an incredible opportunity to build the customer engagement platform of the future,” said Peter Reinhardt, co-founder and chief executive of Segment. “We created Segment to help businesses set themselves apart in the digital age and deliver rich, connected customer experiences built on high-quality data. By joining forces and applying our customer data platform to Twilio’s engagement cloud, we’ll be able to make the entire customer experience seamless from end-to-end.”

The deal is Twilio’s biggest acquisition since it acquired SendGrid for $2bn in 2018 to add email to its range of communications tools.

Segment, founded in 2012, raised $175m in a Series D round in April 2019 that was led by existing investors Accel & GV. New investors at the time included Meritech Capital, Thrive Capital, Y Combinator Continuity, and e.ventures. That round reportedly valued Segment at $1.5bn.

Twilio went public in June 2016 and has a market capitalisation of more than $45bn.

News: Twilio to buy cloud customer data startup Segment for $3.2 billion