Safety first for Magna

BY Richard Summerfield

Car parts giant Magna International has agreed to acquire Swedish rival Veoneer Inc. in an all-cash deal worth $3.8bn.

Under the terms of the deal, Magna will acquire all the issued and outstanding shares of Veoneer for $31.25 per share in cash, representing an equity value of $3.8bn, and an enterprise value of $3.3bn, inclusive of Veoneer’s cash, net of debt and other debt-like items as of 31 March 2021. The price represents a 57 percent premium to Veoneer’s closing price on Thursday, the day the deal was announced.

The acquisition will help Magna achieve about $100m in annual cost savings by 2024, according to a joint statement released by the two companies. The deal, which has been approved by the boards of both companies, is expected to close by the end of this year.

For Magna, the acquisition of Veoneer will provide a boost to the company’s efforts to build driver assistance technology geared toward autonomous vehicles. Veoneer manufactures advanced driver assistance systems, such as collision warning and parking assist systems.

Global automotive suppliers are increasingly positioning themselves to benefit from the growth in advanced safety features in passenger cars. Semi-autonomous features like hands-free driving and crash-avoidance technology are becoming ever more prevalent.

Veoneer was spun off by auto-safety supplier Autoliv Inc. in 2018.

“Veoneer’s complementary technology offerings, customer base, and geographic footprint make it an excellent fit with our ADAS business, and the acquisition strengthens our global engineering and software development talent base,” said Swamy Kotagiri, chief executive of Magna. “We expect the combined entity to be an industry leader in active safety solutions, to enhance its position in complete ADAS systems, and to be well-positioned for the transition towards higher levels of autonomy. The acquisition is also consistent with our go-forward strategy to accelerate investment in high-growth areas.”

“This is a compelling transaction for all stakeholders,” said Jan Carlson, chairman, president and chief executive of Veoneer. “It will deliver significant and immediate value to Veoneer stockholders through an attractive premium to our trading price, and provide new opportunities for our employees to join one of the most capable suppliers in the mobility space. In addition, combining forces with Magna will allow the combined business to elevate its status as a full-systems ADAS supplier, which should benefit our customers, supplier partners and ultimately consumers.”

News: Magna's $3.8 billion Veoneer buy to drive car safety business

Zoom to acquire Five9 in $14.7bn all-stock deal

BY Richard Summerfield

Zoom Video Communications Inc is to buy cloud-based call centre operator Five9 Inc in an all-stock deal worth $14.7bn. The transaction is expected to close in the first half of 2022.

Under the terms of the deal, Five9 stockholders will receive 0.5533 shares of Class A common stock of Zoom for each share of Five9. Based on the closing share price of Zoom Class A common stock on 16 July 2021, this represents a per share price for Five9 common stock of $200.28 and an implied transaction value of approximately $14.7bn.

Zoom has risen to prominence over the last 18 months thanks to the role it has played in keeping businesses and schools operating during the pandemic. But as economies begin to open up thanks to the COVID-19 vaccine roll out, the company has been under pressure to diversify its product offering.

“The acquisition is expected to help enhance Zoom’s presence with enterprise customers and allow it to accelerate its long-term growth opportunity by adding the $24-billion contact center market,” Zoom said in a statement.

Five9 is a cloud-based call centre operator whose facilities are used by more than 2000 clients globally.

“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” said Eric S. Yuan, chief executive and founder of Zoom. “Zoom is built on a core belief that robust and reliable communications technology enables interactions that build greater empathy and trust, and we believe that holds particularly true for customer engagement.

“Enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers,” he added. “We are thrilled to join forces with the Five9 team, and I look forward to welcoming them to the Zoom family.”

“Businesses spend significant resources annually on their contact centers, but still struggle to deliver a seamless experience for their customers,” said Rowan Trollope, chief executive of Five9. “It has always been Five9’s mission to make it easy for businesses to fix that problem and engage with their customers in a more meaningful and efficient way.

“Joining forces with Zoom will provide Five9’s business customers access to best-of-breed solutions, particularly Zoom Phone, that will enable them to realize more value and deliver real results for their business,” he continued. “This, combined with Zoom’s ‘ease-of use’ philosophy and broad communication portfolio, will truly enable customers to engage via their preferred channel of choice.”

News: Zoom to buy cloud-based call center operator Five9 in $15 bln deal

US Virgin Islands refinery Limetree Bay files for Chapter 11

BY Fraser Tennant

Following a series of operational setbacks which shuttered its St. Croix facility, US Virgins Islands refinery Limetree Bay Refining, LLC, as well as several of its affiliates, has filed for Chapter 11 bankruptcy.  

Through the Chapter 11 process, Limetree Bay intends to engage in discussions with its lenders, creditors, equity owners and others to evaluate options to maximise the value of the estate and recoveries for stakeholders, including exploring a potential sale of its assets.

Furthermore, the company has received commitments for up to $25m in new debtor-in-possession (DIP) financing that, upon court approval, is expected to provide sufficient liquidity to meet ongoing business obligations related to the maintenance of the refinery during the Chapter 11 process.

The Chapter 11 filing was necessitated in part by the temporary suspension of Limetree Bay’s petroleum refining and processing operations in May 2021 and the indefinite suspension of its plans to restart the refinery due to severe regulatory and financial constraints. The refinery had only restarted in February this year after being idle for nearly a decade.

It is expected that management will continue to be responsible for handling the care and maintenance of the refinery and all other necessary day-to-day operations throughout the Chapter 11 process. At the same time, Limetree Bay’s parent expects to continue operations at its oil storage terminal business.

“We are extremely grateful to our investors, employees and business partners for standing by us through the restart process and these uncertain times,” said Jeff Rinker, chief executive of Limetree Bay. “Severe financial and regulatory constraints have left us no choice but to pursue this path, after careful consideration of all alternatives.”

Capable of processing around 200,000 barrels per day, key restart work at Limetree Bay’s St. Croix site began in 2018, including the 62,000 barrels per day modern, delayed Coker unit, extensive desulfurisation capacity, and a reformer unit to produce clean, low-sulfur transportation fuels. The restart project provided much needed economic development in the US Virgin Islands and created more than 4000 construction jobs at its peak.

Mr Rinker concluded: “The Chapter 11 process provides Limetree Bay with the clearest path to maximise the value of our estate for our stakeholders while safely preparing the refinery for an extended shutdown.”

News: Investors balk as bankrupt St. Croix refinery needs $1 bln to be viable

Digital revolution: half of European customers want electronic banking, reveals new report

BY Fraser Tennant

The advent of the coronavirus (COVID-19) pandemic has shifted consumer demand for electronic banking, with over half of European customers willing to purchase products digitally, according to new analysis by Kearney.  

In its ‘European Retail Banking Radar 2021: Challenges and opportunities in a tumultuous year’, Kearney reveals that customers who were willing to purchase banking products digitally had increased to 50 percent from 33 percent in 2020. Conversely, those who said they would still visit their branch or seek advice from a contact centre dropped to 41 percent from 53 percent last year.  

Regionally, Sweden performed best in terms of highest adoption of digital channels, with 61 percent of customers saying they were willing to buy banking products online in 2021. Second was the UK, rising from 48 percent in 2020 to 58 percent this year.

“Retail banks will need to acknowledge that banking has changed – we have moved from total digitalisation and open banking being whispers about the near future to it swiftly becoming our present,” said Simon Kent, partner and global head of financial services at Kearney. “Customers are no longer loyal to high street bank branches, and retail banks will suffer if they do not evolve in line with this change in preferences.”

And while the pandemic has transformed behaviours across all markets, it particularly catalysed change in the ones that had been lagging. For example, in February 2020, only 24 percent of Germans would buy a new banking product online. By March 2021, this figure had almost doubled, with 47 percent stating a willingness to do so.

“Consumers’ demand for an online experience is not limited to simple products like current accounts – there is demand for complex products such as mortgage applications to be completed online,” continued Mr Kent. “To economise, improve profitability and remain competitive, banks must adopt even more digital and data-led practices.”

Furthermore, across all surveyed countries, disintermediation is growing. According to Kearney’s analysis, between 12 and 18 percent of customers research their next financial product through price comparison websites rather than a bank website or financial adviser. In the UK in particular, 16 percent use price comparison portals for consumer loans, a trend that is likely to grow over the next few years.

Mr Kent concluded: “Transformation is no easy feat, but the business environment of today is unrelenting.”

Report: European Retail Banking Radar 2021: Challenges and opportunities in a tumultuous year

Advent sells Allnex for $4.75bn

BY Richard Summerfield

US private equity firm Advent International has agreed to sell German coating resins manufacturer Allnex to PTT Global Chemical for $4.75bn. The deal is expected to close in Q4 2021, subject to regulatory approvals.

Allnex has around 4000 employees worldwide and manages a global production network of 33 state-of-the-art manufacturing sites and 23 research and technology facilities. The company has been pioneering sustainable innovations for the coatings industry for over 70 years and focuses on environmentally friendly technologies, such as waterborne industrial resins, powder resins, energy curable resins and high-solids technologies. The company has annual revenue of around €2bn.

Advent acquired Cytec Industries’ coating resins business in 2013, rebranded it Allnex and merged it with Nuplex in 2016.

“We are proud of the success we have had in building allnex into a global player and are very grateful to Advent for its strong support and excellent partnership over the past years,” said Miguel Mantas, chief executive of Allnex. “In order to build on our leading market position, we will continue to invest in innovative technologies and look to expand our presence in APAC. With its resources, industrial network and expertise, PTT Global Chemical will represent an extraordinary opportunity to take the next steps in the development of our business.”

“Over the past eight years, we have supported allnex’s management team in transforming the company from a corporate carve-out into the number one global producer of industrial coating resins,” said Ronald Ayles, managing partner and head of the global chemicals and materials practice at Advent. “Our significant investment in growth lead to an impressive track record – especially in green technologies. With PTTGC, we have now found the ideal partner to support allnex’s next phase of growth and to continue its success story.”

“In line with our vision to become a leading global chemical company while improving people’s quality of life, as well as our core strategies to drive new sustainable growth opportunities, we are pleased to announce PTTGC International (Netherlands) B.V., a PTTGC wholly owned subsidiary, invests in allnex, a business with outstanding innovation, history and promise, to establish a stronger position internationally,” said Dr Kongkrapan Intarajang, chief executive of PTTGC.

New: Advent sells coating resins maker Allnex to Thailand's PTTGC