Humana sells majority stake in hospice business in $3.4bn deal

BY Fraser Tennant

In a transaction which gives it a strategic minority interest, US health insurance company Humana Inc. is to sell a majority stake in the hospice and personal care divisions of its Kindred at Home (KAH) unit to private investment firm Clayton, Dubilier & Rice (CD&R).

Under the terms of the definitive agreement, Humana will divest a 60 percent interest in KAH Hospice and receive cash proceeds of approximately $2.8bn, reflecting an enterprise valuation of $3.4bn. Humana intends to use proceeds from the transaction for the repayment of debt and share repurchases.

Upon closing of the transaction, Humana’s hospice and personal care divisions will be restructured into a standalone operation. These divisions include patient-centred services for hospice, palliative, community and personal care. The company had previously indicated its intent to divest a majority stake in these non-core businesses when it acquired the remaining interest in Kindred at Home in April 2021.

“While palliative and hospice services are important components in the continuum of care that Humana offers patients, we are confident that we can deliver desired patient outcomes and improved customer experiences through partnership models rather than fully owning KAH Hospice,” said Susan Diamond, chief financial officer of Humana. “We explored a broad range of alternatives and believe this transaction best allows Humana to divest majority ownership of these non-core businesses today, while still maintaining a strategic minority interest through our remaining stake.”

The transaction is expected to close in the third quarter of 2022 and is subject to customary state and federal regulatory approvals.

Ms Diamond continued: “With CD&R’s established physician relationships, value-based care expertise, and record of providing strategic capital to a wide range of businesses, we are certain that these divisions are well-positioned for success under the joint ownership of Humana and CD&R.”

A private investment firm with a strategy predicated on building stronger, more profitable businesses, since its inception CD&R has managed the investment of approximately $40bn in more than 100 companies with an aggregate transaction value of more than $175bn.

David Causby, president and chief executive of KAH’s hospice and personal care divisions, concluded: “We are excited by the new strategic partnership structure with Humana and look forward to working closely with CD&R to pursue growth that is centred on improved access, equity and quality of care across an expanded group of patients.”

News: Humana to sell majority stake in hospice business to CD&R for $2.8 billion

Elon Musk acquires Twitter in $44bn transaction

BY Fraser Tennant

In a deal that shifts control of the social media platform to the world's richest man, Twitter, Inc. has been acquired by entrepreneur, investor, media proprietor and business magnate Elon Musk for $44bn.

Under the terms of the definitive agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. Upon completion of the transaction, Twitter will become a privately held company.

Mr Musk has secured $25.5bn of fully committed debt and margin loan financing and is providing an approximately $21bn equity commitment. There are no financing conditions to the closing of the transaction.

The world's richest person according to Forbes magazine, Mr Musk has an estimated net worth of $273.6bn, mostly due to his shareholding in electric vehicle maker Tesla and his aerospace firm SpaceX.

"Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated," said Mr Musk. "I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans.”

The transaction, which has been unanimously approved by the Twitter board of directors, is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions.

"The Twitter board conducted a thoughtful and comprehensive process to assess Elon's proposal with a deliberate focus on value, certainty, and financing,” said Bret Taylor, independent board chair at Twitter. “The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter's stockholders."

Mr Musk concluded: “Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it."

News: Musk gets Twitter for $44 billion, to cheers and fears of 'free speech' plan

Blackstone acquires ACC in $12.8bn transaction

BY Fraser Tennant

In a transaction valued at $12.8bn, global investment business Blackstone Inc. is to acquire American Campus Communities (ACC), the largest developer, owner and manager of high-quality student housing communities in the US.

Under the terms of the definitive agreement, Blackstone will acquire all outstanding shares of common stock of ACC for $65.47 per fully diluted share in an all-cash transaction, including the assumption of debt.

ACC’s portfolio comprises 166 owned properties in 71 leading university markets, including Arizona State University, the University of Texas, Florida State University and the University of California, among many others. Moreover, ACC’s properties are high-quality, purpose-built student housing assets located within walking distance of their respective university campuses, with approximately 24 percent of ACC’s communities located on campus.

“Through our initial public offering (IPO), 18 years ago, we began our pioneering quest to transform the student housing sector into a mainstream, institutional asset class within the commercial real estate sector,” said Bill Bayless, co-founder and chief executive of American Campus Communities. “We have certainly accomplished that mission and are proud and excited to have our best-in-class company join Blackstone, the world’s largest alternative asset manager.”

A global leader in real estate investing, Blackstone’s real estate business was founded in 1991 and has $279bn of investor capital under management. The firm is the largest owner of commercial real estate globally, owning and operating assets across every major geography and sector, including logistics, residential, office, hospitality and retail.  

“ACC has a best-in-class portfolio and platform, built on longstanding relationships with some of the most distinguished and fastest growing universities in the country,” said Jacob Werner, co-head of Americas Acquisitions for Blackstone Real Estate. “Our capital will enable ACC to invest in its existing assets and create much-needed new housing in university markets.”

Unanimously approved by ACC’s board of directors and the independent special committee of ACC’s board, the transaction is expected to close in the third quarter of 2022, subject to approval by ACC’s shareholders and other customary closing conditions.

“This transaction represents the culmination of the passion and dedicated service of the ACC team to our student residents and university partners, while creating significant value for our shareholders,” concluded Mr Bayless. “Moving forward together, the combined synergies of our organisations will enable us to better serve our current and future residents and university partners.”

News: Blackstone to buy American Campus Communities for nearly $13 billion

Fight for Twitter intensifies amid ‘poison pill’ tactics

BY Richard Summerfield

The fight for control of social media giant Twitter has intensified in recent days as the company responds to the $43.3bn takeover offer from entrepreneur Elon Musk.

In early April, Mr Musk, the chairman of Tesla, announced that he had become Twitter’s largest stakeholder after quietly acquiring a 9.2 percent stake in the company in recent months. He was then offered a seat on the board, a move that was abruptly reversed after Mr Musk declined. He then made the offer to acquire the company outright.

Mr Musk informed Twitter last week that his $54.20-per-share all-cash bid for the company was his “best and final offer”, and that he would reconsider his position as a Twitter shareholder if it was rejected. He has claimed his offer would help “unlock” the company’s “extraordinary potential”. He also noted that he had made the offer because he believes it is important to have an “inclusive arena for free speech.” Furthermore, he said that if Twitter’s board of directors chose to reject the offer, it would be “utterly indefensible not to put this offer to a shareholder vote”.

In response to the offer, Twitter’s board unanimously approved a plan that would allow existing shareholders to buy stocks at a substantial discount in order to dilute the holdings of new investors. The ‘poison pill’ tactic is the clearest evidence so far that Twitter intends to fight the takeover. It would go into effect if a shareholder were to acquire more than 15 percent of the company in a deal not approved by the board and expires 14 April 2023. Every other shareholder aside from Mr Musk would be allowed to purchase new shares at half the market price, which stood at $45.08 at the end of trading on Thursday last week.

“The Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal if the Board believes that it is in the best interests of Twitter and its shareholders,” Twitter said in a statement.

In addition to Mr Musk’s takeover offer, Thoma Bravo, a technology-focused private equity firm that had more than $103bn in assets under management as of the end of December, is also believed to be exploring the possibility of putting together a bid for the company.                

Asset manager Vanguard Group said in a filing submitted recently to the Securities and Exchange Commission (SEC) that, as of 8 April, its funds now own a 10.3 percent stake in Twitter, making it the company’s largest shareholder.

Mr Musk is facing legal action over his Twitter share purchases, with one investor launching a potential class action lawsuit against him for failing to disclose his buy-up of shares before the required deadline to do so. Mr Musk is also facing several investigations by the SEC for his investment activities, including insider trading allegations related to his own tweets.

News: Twitter adopts 'poison pill' as challenger to Musk emerges

KKR agrees Barracuda deal

BY Richard Summerfield

KKR & Co has agreed to acquire cyber security firm Barracuda Networks from its private equity owner Thoma Bravo. While no financial terms were disclosed, the transaction is believed to be worth around $4bn, including debt.

The deal, which is expected to close by the end of the year, subject to customary conditions, is the latest in the increasingly active cyber security space. Dealmaking in the market has intensified over the last two years as remote working became the norm following the outbreak of the coronavirus (COVID-19) pandemic. Russia’s invasion of Ukraine has also caused companies to redouble their efforts on the cyber security front amid a rise in cyber attacks.

Founded in 2003, Barracuda is a developer of cyber security solutions, including email protection, app and cloud defences, data management and network security. The company caters to approximately 200,000 customers worldwide across a variety of industries, including education, government, financial services, health care, retail, consumer goods and manufacturing. Barracuda tends to focus on small to medium-sized businesses.

Thoma Bravo acquired Barracuda in 2017 for $1.6bn. Since that time, the company has enjoyed growth of over $500m in revenue.

“We believe that with the support of KKR, we will continue to invest in growth and foster a culture that gives our team the resources and inspiration to continue to create and deliver the next generation of leading cybersecurity solutions for our customers and partners,” said Hatem Naguib, chief executive of Barracuda. “We are very appreciative of Thoma Bravo’s support and very excited to be working with KKR on this next phase of Barracuda’s journey.”

“We continue to see cybersecurity as a highly attractive sector and are excited to back a clear leader in the space,” said John Park, head of Americas technology private equity at KKR. “Given its proven track record of growth and innovation, we believe that Barracuda has the right team and model to capture business in this growing market.”

“Barracuda has built an impressive portfolio of solutions that are helping SMEs around the world protect their data and address critical security challenges,” said Bradley Brown, managing director at KKR. ”We see a tremendous opportunity for long-term growth as these businesses continue to invest more in cybersecurity and we look forward to helping Barracuda scale and deliver next generation products that meet this growing need.”

The investment in Barracuda builds upon KKR’s experience investing in the cyber security sector globally, with investments including Ping, Cylance, DarkTrace, ForgeRock, NetSPI and Optiv, among others.

News: KKR to buy cybersecurity firm Barracuda from Thoma Bravo in deal worth about $4 bln