RBC acquires HSBC Canada in $13.5bn transaction

BY Fraser Tennant

In a deal designed to position it as the bank of choice for globally connected clients, multinational financial services company Royal Bank of Canada (RBC) is to acquire personal and commercial bank HSBC Bank Canada.   

Under the terms of the agreement, RBC will acquire 100 percent of the common shares of HSBC Canada for an all-cash purchase price of $13.5bn.

The acquisition will see HSBC Canada’s strength in international products combine with RBC’s breadth of capabilities, providing a best-in-class set of solutions to help clients meet their financial goals, build their wealth and grow their businesses.

HSBC’s exit from Canada marks the first major banking deal in Canada since ING sold its local operations to Bank of Nova Scotia for C$3.1bn in 2012.

“This acquisition builds on our core domestic retail business and expands our international product capabilities,” said Neil McLaughlin, group head of personal & commercial banking at RBC. "We look forward to welcoming HSBC Canada's talented employees after the transaction closes and supporting them as they continue to serve their clients. With strong cultural and risk alignment and a shared focus on client service, we can build together on HSBC Canada's leading international products.”

As Canada’s biggest bank and one of the largest in the world, based on market capitalisation, RCB has a diversified business model with a focus on innovation and providing exceptional experiences to its 17 million clients in Canada, the US and 27 other countries.

“I am pleased that we have reached an agreement with RBC,” said Noel Quinn, chief executive of HSBC Group. “The deal makes strategic sense for both parties, and RBC will take the business to the next level. We look forward to working closely with RBC's leadership team to ensure a smooth transition for our clients and colleagues.”

The transaction is expected to close by late 2023, subject to customary closing conditions including regulatory approvals, obtained in the ordinary course.

“This acquisition positions us as the bank of choice for commercial clients with international needs, newcomers to Canada and affluent clients who need global banking and wealth management capabilities,” concluded said Dave McKay, president and chief executive of RBC. “It will also help us better serve global clients looking to invest and grow in Canada.”

News: HSBC eyes bumper dividend from $10 billion sale of Canada unit to RBC

Yahoo takes stake in Taboola

BY Richard Summerfield

Yahoo Inc has agreed to acquire a near 25 percent stake in advertising tech firm Taboola Inc, becoming the company’s largest shareholder in the process.

As part of the deal, the companies have agreed to a 30-year, exclusive commercial agreement which will see Taboola exclusively power native advertising across all of Yahoo’s digital properties and will be available to buy through the Yahoo demand side platform (DSP), establishing Taboola as a leading native advertising offering for advertisers, publishers and merchants on the open web. In exchange, Yahoo will take a 24.99 percent stake in the company which provides content recommendation widgets on popular news websites. Yahoo will also get a seat on Taboola’s board of directors. Both companies expect to generate $1bn in annual revenue from this newly formed partnership if integrations go well.

Yahoo currently reaches nearly 900 million monthly active users, Taboola partners with 9000 publishers and reaches 500 million users every day.

“Yahoo is an internet pioneer, representing one of the largest, most trusted and most sophisticated publishers in the world,” said Adam Singolda, founder and chief executive of Taboola. “Everywhere I look, I see a rocket ship growth opportunity for both of us – native, eCommerce, Video, header bidding (display) and more. This win-win partnership will meaningfully accelerate our growth flywheel, expanding our reach to more users on the open web with high-intent traffic to provide world-class solutions for advertisers, publishers, merchants and users in a cookie-less world.

“For publishers in the open web, we’ll be able to invest even more in driving revenue, engagement and audience growth moving forward, empowering performance, brand advertisers, merchants as well as agencies with an immense reach to users in a premium, trusted environment,” he continued. “This partnership is a big step toward achieving our goal of generating $1 billion in ex-TAC by 2025.”

“Partnering with Taboola enables Yahoo to further enhance the contextual and native offerings within our unified advertising stack,” said Jim Lanzone, chief executive of Yahoo. “The partnership also allows Yahoo and Taboola to continue to differentiate in market, improving user, advertiser and publisher experiences across properties, while benefiting from the long-term tailwinds in digital native advertising. Together with Taboola, we will maximize reach and campaign performance for advertisers, enhance monetization opportunities for publishers, and drive improved, privacy-forward experiences for users. As we continue to build the next era of Yahoo, we are thrilled to have strong partners by our side.”

News: Yahoo to buy minority stake in Taboola in advertising deal

Penguin Random House’s $2.2bn Simon & Schuster deal off

BY Richard Summerfield

Paramount Global, the owner of Simon & Schuster, has abandoned its plan to sell the unit to Bertelsmann, the German media group which owns Penguin Random House.

The deal, initially announced in November 2020, had been called into question by the 31 October ruling of Judge Florence Pan of the US District Court for the District of Columbia, which noted that the US Department of Justice (DOJ) had shown that the deal could substantially lessen competition “in the market for the U.S. publishing rights to anticipated top-selling books”.

Initially, Bertelsmann announced its intention to appeal the decision, however that appeal has now been scrapped, a move welcomed by the DOJ. Jonathan Kanter, assistant attorney general, said the department “is pleased that Penguin Random House and Simon & Schuster have opted not to appeal”. As a result of the deal’s collapse, Penguin Random House will have to pay a $200m termination fee to Paramount.

Paramount intended to divest itself of Simon & Schuster as it was a non-core asset, and use the funds raised from the deal to pay down debt. However, the proposed sale attracted scrutiny from the Biden administration, which sued to block it in November 2021 on the grounds it would lead to less competition for blockbuster books and lower advances for authors who earn $250,000 or more. “Penguin Random House and Simon & Schuster are frequently invited by agents to bid in auctions for the rights to these books, and they are often the final two bidders. Competition between Penguin Random House and Simon & Schuster has resulted in higher advances, better services, and more favorable contract terms for authors,” the DOJ said.

“The book business has been part of Bertelsmann’s identity for 187 years, and this will not change: Penguin Random House is part of the Global Content Strategy, one of our five strategic priorities,” said Thomas Rabe, chairman and chief executive of Bertelsmann. “Bertelsmann plans to achieve annual growth of five to ten percent in this area – organically, but also through acquisitions. In total, Bertelsmann will invest between five and seven billion euros in the growth of its businesses in the years ahead as part of its Boost Plan. Significant investment funds will be available to Penguin Random House as well.”

The future of Simon & Schuster remains uncertain. In a statement, Paramount Global noted that: “Simon & Schuster remains a non-core asset to Paramount, as was determined in early 2020 when Paramount conducted a strategic review of its assets. Simon & Schuster is a highly valuable business with a recent record of strong performance; however, it is not video-based and therefore does not fit strategically within Paramount’s broader portfolio.”

News: Penguin Random House scraps $2.2 bln deal to merge with Simon & Schuster

PTC to acquire peer ServiceMax in $1.5bn transaction

BY Fraser Tennant

With the aim of expanding its portfolio of product lifecycle management offerings, US computer software firm PTC is to acquire its peer, cloud-based software platform company ServiceMax, in a transaction valued at approximately $1.5bn.

Under the terms of the definitive agreement, the transaction will be funded in two stages, with $808m paid upon closing and $650m paid in October 2023. The transaction will be funded with cash on hand, borrowings under PTC’s existing credit facility, and a new $500m committed term loan.

The acquisition is expected to strengthen PTC’s closed-loop product lifecycle management offerings by extending the digital thread of product information into downstream enterprise asset management and field service management capabilities.

“The addition of ServiceMax will realise a key part of PTC’s closed-loop PLM strategy,” said Jim Heppelmann, president and chief executive of PTC. “The PLM capabilities PTC has long offered to engineering and manufacturing departments provide the system of record for the digital definition of any product configuration. ServiceMax will complement this by providing the system of record for monitoring and servicing product instances after they leave the factory and move into customer use.

Partners since 2015, PTC and ServiceMax both support manufacturers of complex, highly configured products for the medical device, industrial products, aerospace and related verticals. These manufacturers view field service as a strategic part of their businesses to maintain product performance, extend their products’ lifecycles, increase customer satisfaction, drive revenue growth and expand profitability.

“ServiceMax and PTC have a longstanding relationship rooted in the common profile of our customers, the natural synergies of our products and a shared understanding of the importance of product data at different stages of the lifecycle,” said Neil Barua chief executive of ServiceMax. “PTC has a strong and consistent track record of success, and now following the growth and innovation we have achieved during our partnership with Silver Lake, we are excited for the ServiceMax team to strengthen the service offerings of PTC’s digital thread and closed-loop PLM portfolio.”

Global private equity firm Silver Lake had bought a majority stake in ServiceMax in 2019.

Subject to the satisfaction of regulatory approval and other applicable closing conditions, the transaction is expected to close in early January 2023.

News: Software firm PTC to buy peer ServiceMax for about $1.5 bln

United Rentals to acquire Ahern Rentals for $2bn

 BY Fraser Tennant

In a combination that will add significant branch capacity and expertise to serve customers in strategic US geographies, equipment rental company United Rentals, Inc. is to buy its smaller rival Ahern Rentals, Inc.  

Under the terms of the definitive agreement, United will acquire the assets of Ahern for approximately $2bn in cash – the latest in a series of acquisitions by the Stamford, Connecticut-based company in recent years.

The board of directors of United Rentals has unanimously approved the agreement.

The largest equipment rental company in the world, United Rentals has an integrated network of 1343 rental locations in North America, 13 in Europe, 27 in Australia and 19 in New Zealand. In North America, the company operates in 49 states and every Canadian province. The company’s approximately 22,100 employees serve construction and industrial customers, utilities, municipalities, homeowners and others.

“Our acquisition of Ahern Rentals supports our strategy to deploy capital to grow the core business and drive shareholder value,” said Matthew Flannery, chief executive of United Rentals. “We view ourselves as the ideal owner of these assets within our network, as customers will benefit from the combination of the two organisations moving forward together. We are leveraging our competencies in larger-scale M&A to augment both our near- and long-term earnings power.”

Founded in 1953 and based in Las Vegas, family-owned Ahern Rentals is the eighth largest equipment rental company in North America, with approximately 2100 employees and 106 locations in 30 states serving approximately 44,000 customers in the construction and industrial sectors.

“I am proud of what we’ve built at Ahern Rentals over nearly seven decades, and I am extremely pleased that the combination with United Rentals will take the business forward in this next chapter of growth,” said Don Ahern, chief executive of Ahern Rentals. “I want to thank our employees for driving the results that make this transaction possible. This is a strong outcome for both organisations and our customers.”

The transaction is expected to close before the end of 2022, subject to customary conditions.

“Our integration playbook is underway so we can prepare the acquired branches to take full advantage of our systems and operational capabilities and gain from our employee and customer-centric culture,” concluded Mr Flannery. “I look forward to welcoming our new team members upon the closing of the acquisition.”

News: United Rentals to buy Ahern Rentals for $2 bln as tools demand jumps