Intel and Tower terminate $5.4bn deal

BY Richard Summerfield

Intel Corporation and Tower Semiconductor have announced the mutual termination of the previously announced $5.4bn deal which would have seen Intel acquire Tower. The termination is due to the companies’ inability to obtain the regulatory approvals required under the terms of the deal.

As per the terms of the previously agreed deal, Intel will now be required to pay a termination fee of $353m to Tower.

Intel announced its intentions to buy Tower – a contract chipmaker that manufactures semiconductors for other companies – in February 2022 for $5.4bn. However, the company was unable to secure approval for the deal from the Chinese antitrust authorities before the deadline passed. The deadline for the deal was midnight California time on 15 August.

“Tower was very excited to join Intel to enable Pat Gelsinger’s vision for Intel’s foundry business,” said Russell Ellwanger, chief executive of Tower. “We appreciate the efforts by all parties. During the past 18 months, we’ve made significant technological, operational, and business advancements. We are well positioned to continue to drive our strategic priorities and short-, mid- and long-term tactics with a continued focus on top and bottom-line growth.”

“Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy,” said Pat Gelsinger, chief executive of Intel. “We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs. Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future.”

“Since its launch in 2021, Intel Foundry Services has gained traction with customers and partners, and we have made significant advancements toward our goal of becoming the second-largest global external foundry by the end of the decade,” said Stuart Pann, senior vice president and general manager of Intel Foundry Services. “We are building a differentiated customer value proposition as the world’s first open system foundry, with the technology portfolio and manufacturing expertise that includes packaging, chiplet standards and software, going beyond traditional wafer manufacturing.”​

Intel’s acquisition of Tower was a move designed to bolster its own contract chip-making business with enhanced manufacturing capacity and intellectual property, while also giving it a wider global reach. And while there was a possibility that the deal could have been completed without Chinese approval, since China represents a major part of Intel’s business and strategy, regulatory approval in China was deemed essential. The deal was approved by antitrust bodies in the US and Europe, however it ran into significant delays and obstacles in China, which is indicative of the challenges faced by US companies with ties to China in the current geopolitical climate. It is becoming increasingly difficult for companies to conduct business amid tensions between the two countries.

News: Intel scraps $5.4 bln Tower deal after China review delay

Tapestry acquires fellow fashion group Capri for $8.5bn

BY Fraser Tennant

In a deal that establishes a powerful global house of iconic luxury and fashion brands, multinational luxury fashion holding company Tapestry, Inc. is to acquire fellow luxury fashion company Capri Holdings.

Under the terms of the definitive agreement, which is expected to close by the end of 2024, Capri shareholders will receive $57 per share in cash for a total enterprise value of approximately $8.5bn.

The acquisition brings together six highly complementary brands with global reach – Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo and Michael Kors – powered by Tapestry’s data-rich customer engagement platform and diversified, direct-to-consumer operating model.

The boards of directors of Tapestry and Capri have unanimously approved the transaction, subject to approval by Capri shareholders, as well as the receipt of required regulatory approvals, and other customary closing conditions.

“We are excited to announce the acquisition of Capri Holdings – uniting six iconic brands and exceptional global teams,” said Joanne Crevoiserat, chief executive of Tapestry. “Tapestry is an organisation with a passion for building enduring brands through superior design and craftsmanship and an unwavering focus on our customers.

To that end, the acquisition of Capri builds on Tapestry’s core tenets as consumer-centric brand-builders and disciplined operators, accelerating its strategic and financial growth agenda.

“We are confident this combination will deliver immediate value to our shareholders,” said John D. Idol, chairman and chief executive of Capri. “It will also provide new opportunities for our dedicated employees around the world as Capri becomes part of a larger and more diversified company. By joining with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands.”

The combined company is also well-positioned to advance a comprehensive and impactful environmental, social and governance (ESG) strategy focused on a shared mission to drive progress toward a more sustainable, equitable and inclusive future.

Ms Crevoiserat concluded: “This combination of iconic brands creates a new powerful global luxury house, unlocking a unique opportunity to drive enhanced value for our consumers, employees, communities and shareholders around the world.”

News: Coach owner's Michael Kors deal creates US giant to take on European luxury rivals

GTCR acquires security provider ADTC in $1.6bn deal

BY Fraser Tennant

In an acquisition expected to fortify its position in the market, commercial security, fire and life safety solutions provider ADTC has been sold to private equity firm GTCR in a deal valued at approximately $1.6bn.

Headquartered in Texas, ADTC has built a robust national footprint with more than 5300 colleagues across over 100 locations servicing more than 300,000 customer sites.

GTCR’s investment will strengthen ADTC’s position as one of the largest and fastest growing providers in the space. Together, GTCR and ADTC will implement a strategy to drive continued growth and innovation, with additional capital available to help fund strategic M&A opportunities.

As an independent company, ADTC will continue to focus on delivering reliable service, strong technical expertise and unique solutions to protect its customers’ people and assets.

“We are excited to again partner with the incredible team at ADTC,” said David Donnini, managing director and head of business & consumer services at GTCR. “This is a unique opportunity to invest in a successful business that we know well and helped develop, alongside partners that we have worked with for two decades.”

The acquisition of ADTC marks GTCR’s fourth investment in the security and fire industry, which includes the acquisition of Cambridge Protection Industries, the carveout of Honeywell Security Monitoring and the taking private of security company P1.

“As a firm, we have a long history of investment in the security and fire sector and have always viewed the commercial market as an attractive area for growth,” said Tom Ehrhart, principal at GTCR. “We look forward to building upon ADTC’s position as a premier provider of critical services and continuing to invest in its expansion and innovation.”

The transaction is expected to close in the fourth quarter of 2023 subject to customary regulatory approvals.

Mr Donnini concluded: “We believe making ADTC a standalone company strengthens its competitive positioning, sets up ADTC for future growth and builds upon GTCR’s history of successfully transforming businesses in the sector.”

News: Security firm ADT's commercial unit to be taken private by GTCR for $1.6 bln

Yellow Corporation files for Chapter 11 bankruptcy protection

BY Richard Summerfield

As it begins to wind down its near 100-year business, Yellow Corporation and a number of its subsidiaries have filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware.

“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” said Darren Hawkins, chief executive of Yellow, in a statement regarding the filing. “Today, it is not common for someone to work at one company for 20, 30, or even 40 years, yet many at Yellow did. For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”

“All workers and employers should take note of our experience with the International Brotherhood of Teamsters (“IBT”) and worry,” he added. “We faced nine months of union intransigence, bullying and deliberately destructive tactics. A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”

At the end of July, the company halted operations and announced it was laying off all 30,000 of its workers. It expects to reach an agreement with its creditors, pending approval from the court, that will allow it to pay certain wages and benefits, as well as some obligations to vendors and suppliers. The company disclosed a long list of creditors in its court filing, with Amazon, Home Depot and Goodyear Tire & Rubber Company among the top 30 with unsecured claims.

Yellow has been a significant actor in the shipping space. Indeed, it was one of the dominant carriers in a segment of trucking known as ‘less-than-truckload’ (LTL) - moving pallet-sized shipments of freight. However, by 2022 the company handled only about 7 percent of the 720,000 daily LTL shipments in the US, according to trucking consultant SJ Consulting Group.

While Yellow’s bankruptcy and closure is detrimental to the shipping industry, it also has a negative impact on the American taxpayer. During the coronavirus (COVID-19) pandemic, the company received a $700m loan from the federal government, a loan that resulted in taxpayers holding 30 percent of the company’s outstanding stock. And the company still owed the Treasury department more than $700m according to its most recently quarterly report, nearly half of the long-term debt on its books. The company had about $1.5bn in long-term debt on its balance sheet in its most recent financial report. The government loan is due in September 2024. But the company was in financial trouble long before the pandemic, with poor management and strategic decisions dating back decades often cited as causes for its difficulties.

News: Trucking giant Yellow Corp. declares bankruptcy after years of financial struggles

Cineworld exits Chapter 11 bankruptcy protection

BY Richard Summerfield

After nearly 11 months, Cineworld Group has exited Chapter 11 bankruptcy protection in the US. The company is emerging with a greatly reduced debt load, a new board of directors and a number of new executives.

The company has reduced its debt by $4.53bn, raising about $800m in new equity capital and securing new debt financing of around $1.71bn. As a result, it feels it is “well-positioned to pursue future strategic initiatives and continue providing leading cinematic experiences for customers globally, including through investments in new screen formats and enhancements to its flagship theatres”, according to a statement.

“With a transformed balance sheet and a right-sized capital structure, Cineworld is ready and fully able to succeed in this dynamic and constantly changing movie theatre industry,” said Eric Foss, the new chairman of the board of Cineworld. “I am truly excited to introduce the impressive group of directors who will be joining our new Board and whose expertise and leadership in various fields will help us to grow Cineworld’s business and ensure that our theatres continue to be moviegoers’ first choice for memorable cinema experiences.”

“I am honored to join Cineworld and work alongside the experienced management team to unlock the company’s great potential,” said Eduardo Acuna, the new chief executive of Cineworld. “With its talented group of employees, significant number of distinguished business partners and devoted customers around the world, Cineworld has what it needs to reach new levels of success. We will continue to put our guests at the center of everything we do and look forward to continuing to break new ground in our industry.”

In addition to Mr Foss and Mr Acuna, Cineworld has also appointed Ann Sarnoff, former chair and chief executive of Warner Bros, to its board, as well as four other new board members.

Cineworld is the world’s second largest cinema chain, and is the operator and owner of brands such as Regal, Cinema City, Picturehouse and Planet. The company and 104 of its affiliated debtors filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the Southern District of Texas in early September 2022 to restructure its massive debt. The company’s existing shareholders have been wiped out as part of the financial restructuring, with a new, incorporated company controlled by lenders now controlling Cineworld.

On Monday, Cineworld Group named an administrator in the UK and had its shares delisted from the London Stock Exchange as the company prepared its Chapter 11 exit.

News: Cineworld emerges from Chapter 11 bankruptcy