Ericsson’s $6.2bn Vonage deal

BY Richard Summerfield

Ericsson has agreed to acquire cloud-based services group Vonage in an all-cash, $6.2bn deal, which is expected to close in the first half of 2022, subject to Vonage shareholder approval, regulatory approvals and other conditions.

Under the terms of the deal, Ericsson will pay $21 for each outstanding Vonage share, a 28 percent premium to Friday’s closing price and a 34 percent premium to the average of the last three months.

The deal, Ericsson’s biggest ever, marks the company’s latest attempt to diversify away from its core mobile infrastructure business following a failed attempt to move into media in the 2010s.

Vonage, which had sales of $1.4bn in the year to the end of September, tried to sell its legacy consumer business but abandoned the sale in February. The company had a market value of about $3.6bn in September before activist investor Jana Partners started agitating for it to sell itself or break up. Vonage operates across sectors such as healthcare, finance, education and transportation.

“The core of our strategy is to build leading mobile networks through technology leadership,” said Börje Ekholm, president and chief executive of Ericsson. “This provides the foundation to build an enterprise business. The acquisition of Vonage is the next step in delivering on that strategic priority. Vonage gives us a platform to help our customers monetize the investments in the network, benefitting developers and businesses. Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers. Then back it with Vonage’s advanced capabilities, in a world of 8 billion connected devices. Today we are making that possible.”

“Ericsson and Vonage have a shared ambition to accelerate our long-term growth strategy,” said Rory Read, chief executive of Vonage. “The convergence of the internet, mobility, the cloud and powerful 5G networks are forming the digital transformation and intelligent communications wave, which is driving a secular change in the way businesses operate. The combination of our two companies offers exciting opportunities for customers, partners, developers and team members to capture this next wave. We believe joining Ericsson is in the best interests of our shareholders and is a testament to Vonage’s leadership position in business cloud communications, our innovative product portfolio, and outstanding team.”

Ericsson said the deal would be financed through its existing cash pool. The company also noted that it expected revenue synergies of about $400m and some cost efficiencies from the transaction, which should be accretive to adjusted earnings per share and free cash flow by 2024.

News: Sweden's Ericsson snaps up cloud firm Vonage in $6.2 bln deal

Tech woes: Riverbed files for Chapter 11

BY Fraser Tennant

As a result of pandemic headwinds, closure of factories, labour shortages and continued slowdown in network optimisation sales, US information technology company Riverbed Technology has filed for Chapter 11 bankruptcy in order to implement a pre-packaged restructuring support agreement (RSA).

The RSA will allow Riverbed to reduce its debt by more than $1bn,  add a total of $100m of investment capital and significantly simplify its balance sheet – fuelling its next phase of growth, and positioning the company for long-term success.

Riverbed entered into the RSA with its equity sponsors and an ad hoc group of lenders holding a super-majority of its funded secured debt. Once the restructuring transactions, which are subject to customary closing conditions,  are complete, the ad hoc group of institutional investors – which includes Apollo Global Management – will become the majority owners of Riverbed.  

“We are continuing to move forward with our accelerated recapitalisation,” said Dan Smoot, president and chief executive of Riverbed Technology. “After thoroughly evaluating the different mechanisms through which to implement the recapitalisation, our analysis made it clear that Riverbed could achieve a cleaner, more financially beneficial outcome by utilizing the court-supervised process, setting our company up for even greater growth and innovation opportunities in the future.”

Riverbed expects to successfully complete its financial restructuring process and emerge in from Chapter 11 bankruptcy in mid-December. In the meantime, Riverbed’s operations and the acceleration of its strategy will continue as normal.

“We are pleased to continue our long-term support of Riverbed in this next chapter as they strengthen their financial position to deliver leading performance and visibility solutions to companies around the world,” said Chris Lahoud, a partner at Apollo Global Management. “Riverbed has an exceptional team and strong market opportunities, and we are confident in their strategy to deliver innovative customer solutions and long-term profitable growth.”

Founded in 2002, Riverbed solutions enable organisations to visualise, optimise, remediate and accelerate the performance of any network for any application, while supporting business objectives to mitigate cyber security risk and enhance the digital experience for all end-users.

Mr Smoot concluded: “The overwhelming support we have received from our investors is a testament to their confidence in our growth prospects and in Riverbed following the recapitalisation. Furthermore, since we announced this development, many of our customers and business partners have voiced their support and confidence in Riverbed.”

News: Riverbed Technologies files for Chapter 11 bankruptcy protection following pandemic headwinds

Record breaker: VC investment in Canada hits $11.8bn, reveals new report

BY Fraser Tennant

Canadian venture capital (VC) investment has hit record levels in 2021, with a year-to-date (YTD) total of CA$11.8bn, according to a new report by the Canadian Venture Capital & Private Equity Association (CVCA).

The YTD total, which includes $3.5bn invested across 174 deals in the third quarter (Q3), propelled 2021 beyond the previous highest annual VC investment of $6.2bn recorded in 2019.

In its report, ‘Q3 2021 Canadian Venture Capital Market Overview’, the CVCA reveals that the average deal size is a record-setting $20.7m – approximately double the $11m recorded in 2019 and the previous highest year on record. Moreover, the average growth-stage investment YTD in Q3 2021 was $129m, which has more than tripled over the last three years.

In addition, investments into later and growth-stage companies have received 63 percent of total VC dollars invested in Q3 2021, a significant increase from prior years (50 percent in 2019 and 49 percent in 2020).

In terms of deal size, there were 55 megadeals ($50m-plus) YTD, accounting for 74 percent of investment in 2021 so far. Notable megadeals in Q3 included Vancouver-based Dapper Labs’ $319m closing, Toronto-based Clearco’s $270m funding and the $265m investment in Montréal-based Blockstream.

“Investment in Canada’s startups has never been stronger,” said Kim Furlong, chief executive of the CVCA. ​“With the recent crop up of new continuation funds and the average growth stage investment rising, we are seeing a willingness to hold with investors as they stay the course in their investments — a testament to the maturing Canadian venture ecosystem.”

Concurrent with its 2021 VC investment analysis, the CVCA has also published a report into private equity investment in Canada over the same period – ‘Q3 2021 Canadian Private Equity Market Overview’ – which reveals a YTD total of $13.2bn invested across 584 deals.

“We are on the journey through post-pandemic recovery,” concluded Ms Furlong. ​“Some of the performance figures we are seeing in Q3 are trending towards pre-covid levels. The consumer and retail sector, for example, has seen some significant investment growth, at almost five times the levels experienced since a low in 2018.”

Report: Q3 2021 Canadian Venture Capital Market Overview

Heineken agrees Distell deal

BY Richard Summerfield

Dutch brewer Heineken has agreed a deal to acquire South Africa’s Distell Group Holdings and Namibia Breweries Ltd (NBL) to form a southern Africa drinks group worth $4.6bn.

Heineken will pay around 40.1bn rand or $2.62bn for Distell. Finalisation of the deal, expected in 2022, is subject to regulatory and shareholder approvals. Upon completion, Heineken will contribute the acquired Distell assets plus its 75 percent directly-owned shareholding in Heineken South Africa and other fully-owned export operations in Africa, into an unlisted public holding company. Heineken will own a minimum of 65 percent of the new company, with the remainder held by Distell shareholders who elect to reinvest.

“We are very excited to bring together three strong businesses to create a regional beverage champion, perfectly positioned to capture significant growth opportunities in Southern Africa,” said Dolf van den Brink, chairman of the executive board and chief executive of Heineken. “Distell is a highly regarded, resilient business with leading brands, a talented workforce and a strong track record of innovation and growth in Africa. With NBL, there are exciting opportunities to expand premium beer and cider in Namibia and grow the iconic Windhoek brand beyond its home market.

“Together we will be able to better serve our consumers and customers through a unique combination of multi-category leading brands and a strengthened route-to-market,” he continued. “The businesses share common values derived from their family heritage, long-term perspectives, entrepreneurial spirit, and care for people and planet.”

“Together, this partnership has the potential to leverage the strength of Heineken’s global footprint with our leading brands to create a formidable, diverse beverage company for Africa,” said Richard Rushton, chief executive of Distell. “I am excited for what lies ahead as we look to combine our strong and popular brands and highly complementary geographical footprints to create a world class African company in the alcohol beverage sector. Our combined entity will grow our local expertise and insights to better serve consumers across the region.”

“What we have achieved with NBL is truly amazing, but the time has come to unleash its full potential, by giving NBL access to the world,” said Sven Thieme, chief executive of NBL. “Having worked with Heineken for many years and knowing that they too are passionate about beer and share similar family values and culture to that of O&L, we are confident that Heineken is best placed to do just that.”

The deal is the first since Mr van den Brink took charge at Heineken in June 2020. The company has announced plans to restore profit margins, partly through terminating 8000 jobs.

News: Heineken to buy S.Africa's Distell and Namibian Breweries

Newcrest to acquire Pretium Resources in $2.8bn deal

BY Richard Summerfield

Newcrest Mining Ltd has agreed to acquire all of the issued and outstanding common shares of Pretium Resources Inc. that it does not already own, in a deal worth $2.8bn.

Under the terms of the deal, Newcrest has offered Pretium’s shareholders the right to receive C$18.50 in cash or 0.8084 of a Newcrest share for each Pretium share held. The cash offer represents a 22.5 percent premium to Pretium’s last close on Monday.

The deal is subject to the approval of Pretium shareholders, as well as approval under the Investment Canada Act and other standard requirements. The companies said they expect the deal to close in the first quarter of 2022.

The agreement between the companies includes a C$125m break fee that Pretium would be required to pay Newcrest if it breaks away in favour of another deal.

Pretium is the owner of the Brucejack operation in the highly prospective Golden Triangle region of British Columbia, Canada. Brucejack began commercial production in July 2017 and is one of the highest-grade operating gold mines in the world. The Pretium Technical Report of 9 March 2020 estimated gold production of 311,000oz/y at an AISC of US$743/oz of gold over a projected 13-year mine life.

“We are delighted to be expanding our presence in this highly prospective region in British Columbia,” said Sandeep Biswas, managing director and chief executive of Newcrest. “Brucejack is a Tier 1 mine in a Tier 1 jurisdiction and will deliver immediate production, free cash flow and earnings diversification to Newcrest and will fit seamlessly into our long life, low cost portfolio.

“Following this transaction Newcrest will have exposure to six Tier 1 orebodies and a portfolio of organic growth options of unrivalled quality,” he continued. “The transaction will also drive a material increase in mineral resources, ore reserves and annual gold production.”

“The acquisition of Pretium by Newcrest is an outstanding opportunity for Pretium and its shareholders, employees, First Nations partners and the local communities in northwest British Columbia,” said Jacques Perron, president and chief executive of Pretium. “The transaction delivers an immediate and compelling premium for Pretium shareholders that reflects the excellent work of our employees and contractors in developing and operating the Brucejack gold mine, while also offering an opportunity to benefit from potential upside as Newcrest shareholders.”

News: Australia's Newcrest to buy Canadian gold miner Pretium in $2.8 billion deal