TCF to buy ECN Capital’s Service Finance business

BY Richard Summerfield

Truist Financial Corp has agreed to acquire the Service Finance business of ECN Capital Corp in a deal worth $2bn.

Following the closing of the transaction, which is expected in the fourth quarter of 2021, subject to standard licensing and regulatory approvals, as well as compliance with customary closing conditions, ECN Capital intends to pay a special dividend of C$7.50 per common share or approximately US$1.5bn from the net proceeds to its common shareholders.

Service Finance, which provides home improvement loans, operates solely in the US and has underwritten more than US$7bn in loans since it was founded in 2004. ECN acquired the company in 2017 for US$304m.

“The acquisition of Service Finance expands the scale and capabilities of our wholesale payments businesses, enabling Truist to deliver innovative financing solutions to Service Finance’s nationwide network of dealers and serve homeowners across the country,” said Mike Maguire, head of national consumer finance and payments at Truist. “This acquisition significantly strengthens Truist’s leadership position in the rapidly growing POS industry, and we’re excited to partner with Mark Berch and the entire Service Finance team.”

“Service Finance’s client-centric model, coupled with Truist’s financial strength and commitment to POS lending, perfectly position us to continue to provide distinctive, secure and successful client experiences,” said Jeff McKay, head of Truist’s POS lending unit. “Just like Sheffield, Service Finance partners with leading brand names in their industry and has earned a reputation for unparalleled client service and delivering innovative solutions.”

“As a former home improvement contractor, I know how important it is to help contractors and their customers get access to convenient and attractive financing so our end-customers can spend more time enjoying the moments that matter, in the place that matters the most – their homes,” said Mark Berch, president and founder of Service Finance. “This is a dynamic market with tremendous potential, and joining Truist only improves our outlook for growth.”

As a result of the deal that was entered into with Truist, ECN received fully subscribed agreements from its senior lenders for the modification of its existing senior credit facility following the closing of the transaction. ECN Capital’s existing senior credit facility will be modified and restated to provide a total of US$700m in revolving financing for a period of four years from the closing date of the transaction. The Canadian Imperial Bank of Commerce will act as the managing agent and syndication agent, and the Bank of Montreal will act as the collateral agent.

Truist, the eighth-largest bank in the US, was formed in 2019 from the merger of BB&T and SunTrust.

News: TCF buys ECN Capital's service finance business for $2 billion

Cornerstone taken private in $5.2bn deal

BY Richard Summerfield

Private equity firm Clearlake Capital is to take cloud computing and management software provider Cornerstone OnDemand private in a deal worth $5.2bn.

Under the terms of the deal, Cornerstone shareholders will receive $57.50 per share in cash, a 15 percent premium over the stock’s closing price on the day before the deal was announced last week.  The transaction is expected to close in the second half of 2021, subject to customary closing conditions, including the receipt of regulatory approvals and approval by a majority of Cornerstone stockholders. Certain stockholders, including Clearlake, representing 15.65 percent of the company’s outstanding shares, have agreed to vote their shares in favour of the transaction.

“Clearlake’s investment reflects their confidence in our talented people, the power of our SaaS solutions and our value proposition for our customers,” said Phil Saunders, chief executive of Cornerstone. “With this transaction, we plan to continue to pursue new software capabilities that advance our customers’ efforts to optimize workforce agility, transform skill development, deliver personalized, engaging growth experiences, and align their organizations around a shared definition of success. We’re thrilled to welcome Clearlake as a partner that appreciates the impact our SaaS solutions have on the lives of people at work and our customer-centric philosophy as we accelerate our innovation.”

“We have long admired Cornerstone’s leading talent management SaaS solutions and the Company’s mission to help customers modernize the learning and development experience for their employees,” said Behdad Eghbali, co-founder and managing partner at Clearlake. “We believe there is a significant opportunity to strategically position Cornerstone in the market as a buy-and-build platform and industry consolidator, and we look forward to partnering with the management team to drive value through both organic growth acceleration and inorganic transformation.”

Cornerstone also reported its second-quarter earnings last week, recording $214.3m in revenue, with 97 percent coming from subscriptions, and representing a 16.3 percent year-over-year increase. The company has more than 6000 customers and 75 million users, and its software is available in 180 countries and 50 languages. Cornerstone went public in 2011.

News: Clearlake Capital to take Cornerstone OnDemand private for $3.8 billion

Sanofi acquires US biotech Translate Bio in $3.2bn transaction

BY Fraser Tennant

As part of its endeavour to accelerate the application of messenger RNA (mRNA) to develop therapeutics and vaccines, French multinational pharmaceutical company Sanofi is to acquire clinical-stage mRNA therapeutics company Translate Bio.

Under the terms of the definitive agreement, Sanofi will acquire all outstanding shares of Translate Bio for $38.00 per share in cash, reflecting a total equity value of $3.2bn.

Already partners, in June 2018 Sanofi and Translate Bio entered into a collaboration and exclusive licence agreement to develop mRNA vaccines, which was further expanded in 2020 to broadly address current and future infectious diseases.

Under the collaboration, there are two ongoing mRNA vaccine clinical trials: the COVID-19 vaccine Phase 1/2 study (with results expected in Q3 2021) and the mRNA seasonal influenza vaccine Phase 1 trial (with results due in Q4 2021).

The acquisition of Massachusetts-based Translate Bio will also help fast track Sanofi’s plans for its recently announced mRNA Centre of Excellence.

“Translate Bio adds an mRNA technology platform and strong capabilities to our research, further advancing our ability to explore the promise of this technology to develop both best-in-class vaccines and therapeutics,” said Paul Hudson, chief executive of Sanofi. “A fully owned platform allows us to develop additional opportunities in the fast-evolving mRNA space.

“We will also be able to accelerate our existing partnered programmes already under development,” he continued. “Our goal is to unlock the potential of mRNA in other strategic areas, such as immunology, oncology and rare diseases, in addition to vaccines.”

The transaction has been unanimously approved by the Sanofi and Translate Bio boards of directors.

“Sanofi and Translate Bio have a shared commitment to innovation in the mRNA space,” said Ronald Renaud, chief executive of Translate Bio. “With Sanofi’s long-standing expertise in developing and commercialising vaccines and other innovative medicines on a global scale, Translate Bio’s mRNA technology is now even better positioned to reach more people, faster.”

Subject to the satisfaction or waiver of customary closing conditions, the transaction is expected to be completed in the third quarter of 2021.

Mr Renaud concluded: “Translate Bio’s expertise coupled with that of Sanofi has driven significant progress, and we believe that this acquisition will strengthen our ability to achieve the full potential of mRNA technology.”

News: Sanofi bets on mRNA vaccines beyond COVID in $3.2 bln Translate Bio deal

Payments giant Square acquires lending pioneer Afterpay in $29bn deal

BY Fraser Tennant

Bringing together two of the fastest growing global FinTech companies, US payments company Square is to acquire Australian ‘buy now, pay later’ lending provider Afterpay in a $29bn all-stock transaction.

Under the terms of the agreement, which has been approved by the boards of directors of both companies, Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay ordinary share.

Afterpay’s global merchant base will accelerate Square’s growth with larger sellers and expansion into new geographies, while helping to drive further acquisition of new Square sellers.

“Afterpay has built a trusted brand,” said Jack Dorsey, co-founder and chief executive of Square. “Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”

An industry leader with a best-in-class product and strong cultural alignment with Square, Afterpay serves more than 16 million consumers and nearly 100,000 merchants globally, including major retailers across key verticals such as fashion, homewares, beauty, and sporting goods.

“By combining with Square, we will further accelerate our growth in the US and globally, offer access to a new category of in-person merchants, and provide a broader platform of new services to our merchants and consumers,” said Anthony Eisen, co-founder and co-chief executive of Afterpay. “We are fully aligned with Square’s purpose and, together, we hope to continue redefining financial wellness and responsible spending for our customers.”

Afterpay's co-founders and co-chief executives will join Square upon completion of the transaction and help lead Afterpay’s respective merchant and consumer businesses, as part of Square’s Seller and Cash App ecosystems.

“The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world,” added Nick Molnar, co-founder and co-chief executive of Afterpay. “It also provides our shareholders with the opportunity to be a part of future growth of an innovative company aligned with our vision.”

The transaction is expected to close in the first quarter of 2022, subject to the satisfaction of certain closing conditions.

Mr Dorsey concluded: “Square and Afterpay have a shared purpose: building our business to make the financial system more fair, accessible and inclusive.

News: Twitter's Dorsey leads $29 bln buyout of lending pioneer Afterpay

Few FS firms ready for open banking deadline, reveals new report

BY Fraser Tennant

Despite being viewed as a key priority, few financial services (FS) firms are prepared for major open banking enforcement deadlines in September 2021, according to new research report by Delphix.

The report – ‘The Future of Banking is Open and Regulated, but Few are Prepared’ – reveals that only 3 percent of firms believe they are ready for the Second Payments Services Directive (PSD2) and Strong Customer Authentication (SCA), both of which were initially slated to take effect in September 2019, but then delayed by two years.

The report surveyed 100 tech leaders in the finance banking and insurance industry – all of whom are from Europe, the Middle East and Africa (EMEA) and Asia-Pacific (APAC) jurisdictions and work at companies with over 10,000 employees.

“The financial services sector is undergoing a massive transformation with data at the core,” said Daniel Graves, chief technology officer at Delphix. “For many banks that rely on legacy systems, however, data privacy and compliance are proving to be major obstacles.”

Drilling down, 62 percent of poll respondents cite protecting sensitive data across multiple systems and application programming interfaces (APIs) as the biggest data privacy and compliance challenge. Others are struggling with effectively protecting sensitive information without limiting timely access to data and ensuring that compliance measures preserve the quality and usability of data.    

When it comes to opening up APIs to third parties in order to drive innovation, the biggest challenge for 60 percent of respondents is the time and effort needed to maintain and preserve the integrity of data. At the same time, 52 percent of FS firms report limited capability to accelerate the development of quality APIs and API-driven features to market.

Overcoming these hurdles will be challenging, states the report, with the majority of respondents predicting their organisational operations will be disrupted as they roll out open banking APIs.

“Data privacy challenges and legacy technology stacks are impeding the Open Banking revolution,” added Mr Graves. “FS firms need to adopt DevOps data technologies that can deliver compliant data at speed via APIs to overcome these challenges.”

Mr Graves concluded: “Open banking APIs could open up a whole new world for FS firms, enabling them to use data to drive transformational services and power superior customer experiences.”

Report: The Future of Banking is Open and Regulated, but Few are Prepared