Hertz chooses Chapter 11 exit plan

BY Richard Summerfield

Hertz Global Holdings Inc has selected an ‘enhanced’ restructuring offer from a consortium of company bondholders and private equity (PE) investors that have agreed to supply the billions of dollars in equity capital the company requires to exit Chapter 11 bankruptcy protection.

A consortium made up of Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners LLC has been chosen to sponsor Hertz’s exit from Chapter 11 along with bondholders that agreed to take control of the reorganised company. Hertz remains on track to exit bankruptcy protection in June.

The offer from the PE consortium was chosen ahead of a rival offer from Knighthead Capital Management LLC and Certares Management LLC, according to papers filed in the US Bankruptcy Court in Wilmington, Delaware.

Under the terms of the restructuring deal, the supporting noteholders have given approval for the exchange of their unsecured funded debt claims against the company for approximately 48.2 percent of the equity in the reorganised company, and the right to purchase an additional $1.6bn of equity in the future.

Hertz’s restructuring plan requires the approval of the bankruptcy court and will be subjected to a creditor vote. Hertz said Saturday that more than 85 percent of its unsecured bondholders, the biggest voting class in the bankruptcy, support the proposal backed by Centerbridge, Warburg and Dundon.

“We are pleased to be moving forward with an enhanced proposal supported by our largest creditor constituency and that delivers excellent value to all our stakeholders,” said Paul Stone, president and chief executive of Hertz. “This plan accomplishes all the goals we set out to achieve through our financial restructuring. Our new sponsors combined with our strong leadership team will bring significant operational experience across fleet financing and management, which will benefit all of our stakeholders. We look forward to emerging from Chapter 11 in the second quarter financially and operationally stronger, and well-positioned to achieve the opportunities in the rebounding travel market.”

Last week, Hertz Global Holdings completed the $850m sale of Donlen Corp, which it operated as a wholly-owned subsidiary for nearly a decade. Under the terms of that deal, Athene Holding Ltd paid $891m in cash for Donlen, a business which Hertz acquired for $250m in September 2011.

Hertz filed for bankruptcy protection in May 2020 amid the dramatic downturn in travel during the early stages of the COVID-19 pandemic, which had a significant impact on the car rental business. The company had planned to raise funds by selling stock, but the US Securities and Exchange Commission took issue with that plan.

News: Hertz selects Chapter 11 exit plan backed by Centerbridge, Warburg, Dundon

Hitachi goes GlobalLogic

BY Richard Summerfield

Hitachi Ltd has agreed to acquire US software company GlobalLogic Inc in a deal worth $9.6bn, including debt. The acquisition, which is being funded with cash and bank loans, is expected to close by the end of July 2021.

Hitachi, the Japanese electronics and construction giant, will acquire GlobalLogic, which was founded in 2000, from current owners Canada Pension Plan Investment Board (CPPIB) and Swiss investment firm Partners Group. CPPIB and Partners Group each hold 45 percent of the company and GlobalLogic’s management owns the remaining stake.

“The acquisition of GlobalLogic creates an exciting new opportunity for Hitachi to expand our offerings of Lumada solutions and services, provide value to customers in their digital transformation journey, and grow our Lumada business globally,” said Toshiaki Higashihara, president and chief executive of Hitachi. “The synergy of GlobalLogic’s leading experience design and innovation with Hitachi’s expertise in IT, operational technology, and products, will help us realize our goal to be the leading digital transformation innovator in social infrastructure worldwide.”

He added: “Together, we will create new social, environmental and economic value for our globally expanding client companies and elevate QoL (quality of life) for people through contributions to realize sustainable society.”

“Companies in every industry are transforming with digital technology – to better engage customers, create new revenue streams and drive a higher quality of life,” said Shashank Samant, president and chief executive of GlobalLogic. “We have a tremendous opportunity ahead and we are excited to embark on this journey with Hitachi, combining our collective skills, technologies, and market presence to deliver greater value to our clients as they transform their businesses.”

The acquisition of GlobalLogic is part of Hitachi’s 2021 plan to invest one trillion yen to strengthen the digital capabilities of its businesses.

Partners Group acquired a joint lead ownership equity stake in GlobalLogic alongside equity partner Canada Pension Plan Investment Board in 2018 at an enterprise value of $2bn.

“GlobalLogic is serving clients on the front line of the digital transition, helping them reimagine their offering, adapt their business models and change how they engage with consumers,” said Dr Marcel Erni, co-founder and member of the board of directors of Partners Group. “Digitization is one of the three investment giga themes that Partners Group is focused on that is driving change across industries worldwide. GlobalLogic is an exciting success story demonstrating how Partners Group delivers sustainable returns to our clients through transformational investing.”

News: Hitachi to buy U.S. software developer GlobalLogic for $9.6 billion

WeWork goes public via $9bn SPAC merger with BowX

BY Fraser Tennant

In a transaction with an enterprise value of approximately $9bn, flexible space provider WeWork is to become a publicly listed company via a merger with special purpose acquisition company (SPAC) BowX Acquisition Corp.

Under the terms of the definitive merger agreement, WeWork will be provided with approximately $1.3bn of cash which will enable it to fund its growth plans into the future. The transaction will be funded with BowX’s $483m of cash in trust in addition to a fully committed $800m private placement investment at $10 per share.

Since 2019, WeWork has made significant progress on a strategic plan that included robust expense management efforts, exits of non-core businesses and material portfolio optimisation, which contributed to a dramatically improved cost structure.

“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn,” said Sandeep Mathrani, chief executive of WeWork. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”

Upon closing, it is expected that WeWork will have approximately $1.9bn of cash on the balance sheet and total liquidity of $2.4bn, even after exiting non-core businesses and despite significant headwinds from the coronavirus (COVID-19) pandemic.

“I am thrilled to partner with  WeWork team as they continue to transform this business and the real estate industry at large,” said Vivek Ranadivé, chairman and co-chief executive of BowX. “With a fantastic core business, I see WeWork as a company at an inflection point, with an incredible roster of key members coupled with the vision and leadership to digitalise an enormous industry.”

Going forward, WeWork intends to expand beyond its core business through its On Demand, All Access and Platform offerings, enabling users to choose from their WeWork mobile app when, where, and how they work. Furthermore, demand from landlords and members remains strong, with a $4bn total sales pipeline and an estimated $1.5bn in committed 2021 revenue.

Marcelo Claure, executive chairman of WeWork, concluded: “WeWork is incredibly well positioned to springboard into a future propelled by digital technology and a new appreciation of the value of flexible workspace. We look forward to having BowX as our partner as we look to the next chapter.”

News: WeWork takes SPAC route to go public in $9 billion deal

Carrefour reinforces Brazilian status with $1.3bn BIG acquisition

BY Fraser Tennant

In a move that reinforces its leading position in Brazil, multinational retail corporation Carrefour has acquired Brazil’s third-biggest food retailer Grupo BIG in a transaction valued at €1.3bn.

The acquisition strengthens Carrefour Brazil’s presence in a high growth potential market, allowing it to offer Brazilian consumers a broader range of products and services.

The two companies offer strong geographic complementarity, and the transaction will expand Carrefour Brazil’s presence in regions where it has limited penetration, such as the northeast and south of the country, and that offer strong growth potential.

Carrefour is purchasing Grupo BIG, which operates 387 stores and generated sales of $4.51bn (24.9bn reals) in 2020, from Walmart and investment firm Advent International. The transaction will be realised 70 percent in cash and 30 percent through newly issued Carrefour Brazil shares.

“The acquisition of the BIG Group is a major transformation movement for Carrefour Brazil,” said Alexandre Bompard, chairman and chief executive of the Carrefour Group. “In this continental country with immense development prospects, we have accentuated our leadership in the food distribution market over the past three years, and BIG will further strengthen it with very complementary formats and locations.”

Present in Brazil since 1995, Grupo BIG has locations in 19 states, with a larger footprint in the southern and northeastern regions of Brazil.

“Our group is on the offensive,” continued Mr Bompard. “The significant synergies generated by this transaction are a lever for creating additional value and a powerful addition to the profitable growth model that we have established across our group.”

The transaction is subject to the authorisation of the Brazilian antitrust authority (CADE) and the approval of Carrefour Brazil’s shareholders, as well as other customary closing conditions. It is expected to complete in 2022.

Mr Bompard concluded: “The transaction fits perfectly into the Carrefour Brazil ecosystem and into the group's acquisition strategy, centred on the consolidation of our key markets.”

News: French retailer Carrefour buys BIG in Brazil, lifting shares

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