Carlyle exits Cogentrix for $3bn

BY Richard Summerfield

The Carlyle Group has agreed to sell US independent power producer Cogentrix Energy in a deal worth around $3bn. The company will be acquired by Quantum Capital Group and its affiliates.

The transaction, which is subject to customary regulatory approvals, is expected to close between the fourth quarter of 2024 and the first quarter of 2025.

Carlyle initially bought the company from Goldman Sachs in 2012 for an undisclosed sum. Over the last 12 years, Carlyle has roughly doubled Cogentrix’s assets by purchasing new power plants and expanding its business. Today, Cogentrix owns 11 natural gas power plants across the US, including in key markets such as Texas, Pennsylvania and New England. The Cogentrix platform is comprised of 5.3 gigawatts of natural gas-fired power plants.

Following the closing of the transaction, Cogentrix will continue to be led by current chief executive John Ragan and the existing management team. “We are grateful for Carlyle’s partnership, which has provided us with the tools and capabilities to capture a growing opportunity set within the US power market,” said Mr Ragan. “As we look to the future, we are confident Quantum’s deep knowledge of the energy markets, successful track record of business building, and risk management capabilities will drive significant long-term value for our customers, employees, investors, and other stakeholders.”

“We are at a critical juncture in the evolution of the domestic power market,” said Wil VanLoh, founder and chief executive of Quantum. “Electricity demand is rapidly increasing thanks to explosive growth in data centers and AI, the reshoring of manufacturing, and the electrification-of-everything. This growth is occurring at the same time our grid is becoming more unstable with additions of intermittent renewable power and continued retirements of coal-fired generation. Now more than ever, we need reliable and efficient power infrastructure. This is what the Cogentrix assets provide.”

“This is a win-win transaction for everyone involved as Cogentrix begins its next chapter of growth with Quantum,” said Matt O’Connor, a partner at Carlyle. “We are proud of the significant transformation Cogentrix has achieved under our ownership. We wish John and his team continued success as they expand their platform and seize numerous opportunities in the rapidly evolving US power sector.”

“We are pleased to have supported Cogentrix’s efforts to establish decarbonization objectives for its fleet of natural gas-fired power generation assets while continuing to support grid reliability, a critical balance required to effectuate the energy transition,” said Pooja Goyal, chief investment officer of global infrastructure at Carlyle. “This successful transaction is a testament to the deep sector expertise of our energy and infrastructure platform at Carlyle. We look forward to continuing our investment activities in this rapidly growing area, including partnering with our management teams on growth opportunities and deploying capital in new investments.”

News: Quantum Capital to buy Cogentrix for $3 bln in bets on rising US power demand

Technology provider R1 RCM sold in $8.9bn deal

BY Fraser Tennant

In a purchase that takes the technology-driven solutions provider private, R1 RCM is to be acquired by investment funds affiliated with TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R), in an all-cash transaction valued at approximately $8.9bn.

Under the terms of the definitive agreement, TowerBrook and CD&R will acquire all the outstanding common stock that TowerBrook does not currently own for $14.30 per share. The transaction is expected to be financed with a combination of committed debt financing and equity from investment funds affiliated with TowerBrook and CD&R.

Upon completion of the transaction, Utah-based R1, which provides services for billing and revenue collection to hospitals, physician groups and other healthcare organisations, will become a private company and its shares will no longer trade on Nasdaq.

The acquisition comes a month after R1 had received a buyout proposal from New Mountain, its largest shareholder, that valued the company at nearly $6bn.

“TowerBrook has been an outstanding long-term investor and partner to R1 and shares our vision of being the automation platform of choice for the provider industry,” said Lee Rivas, chief executive of R1. “We believe the transaction represents the best path forward for R1 at an attractive valuation to our stockholders that reflects the company’s position as a leading provider of technology-driven solutions for its customers.”

The transaction has been unanimously approved by a special committee of the R1 board of directors comprised solely of independent directors which was formed to evaluate strategic alternatives.

“As a long-term, responsible investor in R1, TowerBrook has supported the development of R1 as a leader in healthcare provider revenue management since 2016,” said Ian Sacks, managing director at TowerBrook. “Together with CD&R, we look forward to continuing to invest in the R1’s core operations to drive customer performance and value while also continuing to build the company as a leader in intelligent automation and in the use of guaranteed annual income in revenue management.”

The transaction is expected to close by the end of 2024, subject to customary closing conditions, including receipt of stockholder approval and regulatory approvals.

Ravi Sachdev, a partner at CD&R, concluded: “R1 is a trusted partner in healthcare technology and automation, and we are excited to work alongside TowerBrook and the talented team at R1 to continue setting the standard for healthcare performance.”

News: Health tech company R1 RCM to be taken private in $8.9 bln deal

Data breaches cost FS $6.08m in 2024, reveals new report

BY Fraser Tennant

The global average cost of a data breach in the financial services (FS) sector was $6.08m in 2024, further expanding demands on firms’ cyber teams, according to a new report by IBM and the Ponemon Institute.

In its ‘Cost of a Data Breach Report 2024’ IBM reveals that the FS sector was the second highest of the 17 industries examined in the report – 22 percent higher than the cross-industry average cost of $4.88m.

The top three initial attack vectors affecting banks, insurers and other financial institutions were phishing, compromised credentials and cloud misconfigurations. Only 28 percent of FS firms employed extensive use of security artificial intelligence and automation last year, but those that did saw average cost savings of $1.9m per incident over institutions that did not.

According to the report, attacks on FS institutions typically took 168 days to identify and 51 days to contain – faster than the cross-industry average of 194 days and 64 days respectively.

Additional cross-industry findings in the 2024 IBM report include: (i) more organisations faced severe staffing shortages in 2024 compared to the prior year; (ii) 44 percent of breaches involved data stored across multiple environments including public cloud, private cloud and on-prem; and (iii) organisations would increase the cost of goods or services because of a breach – a slight increase from last year and the third consecutive year that the majority of businesses would push breach costs to consumers.

“Businesses are caught in a continuous cycle of breaches, containment and fallout response,” said Kevin Skapinetz, vice president of strategy and product design at IBM Security. “This cycle now often includes investments in strengthening security defenses and passing breach expenses on to consumers – making security the new cost of doing business.

“As generative AI (GenAI) rapidly permeates businesses, expanding the attack surface, these expenses will soon become unsustainable, compelling business to reassess security measures and response strategies. To get ahead, businesses should invest in new AI-driven defences and develop the skills needed to address the emerging risks and opportunities presented by GenAI.”

The report is based on an in-depth analysis of real-world data breaches experienced by 604 organisations globally between March 2023 and February 2024. The research, conducted by Ponemon Institute, and sponsored and analysed by IBM, has been published for 19 consecutive years.

Report: Cost of a Data Breach Report 2024

Software provider Mobileum files for Chapter 11

BY Fraser Tennant

In a bid to trim a debt of more than $500m, telecommunications services provider Mobileum and certain of its US-based affiliates has filed for Chapter 11 bankruptcy in order to complete a restructuring support agreement (RSA).

The RSA, which has the full support of its key financial partners, will strengthen Mobileum’s financial foundation, significantly deleverage its capital structure and provide the company with $60m of new money through a debtor-in-possession (DIP)-to-exit facility.

The Chapter 11 filing does not include any of Mobileum’s non-US subsidiaries, and the company’s international operations are not part of the court-supervised restructuring process. Additionally, the RSA contemplates that trade vendors and suppliers will be paid in full under normal terms for goods and services provided on or after the filing date.

Through the RSA and related restructuring transactions, Mobileum is expected to eliminate $529m of prepetition debt and substantially reduce its interest expense burden, positioning the company for sustainable, long-term growth and allowing Mobileum to continue to capitalise on long-term 5G and internet of things tailwinds.

Global operations are expected to continue without interruption during the Chapter 11 cases, including complete continuity of all telecommunications products and services. Mobileum expects to swiftly complete its financial restructuring and emerge from Chapter 11 within 60 days.

“The RSA and filing are important steps forward that will position Mobileum to continue as a leading provider for the telecommunications industry for the long-term,” said Mike Salfity, chief executive of Mobileum. “With a strengthened balance sheet and the committed support of our financial partners, Mobileum will be equipped with the financial flexibility to build for the future and continue driving value for our customers through our suite of category-defining analytics solutions.”

Headquartered in Silicon Valley, Mobileum is a leading provider of telecommunications analytics solutions for roaming, core network, security, risk management, domestic and international connectivity testing and customer intelligence. It has global offices in countries including Germany, Greece, India, Japan, Portugal, Singapore and the United Arab Emirates.

Mr Salfity concluded: “We expect complete continuity during the Chapter 11 and RSA processes, and for our customers to maintain uninterrupted access to Mobileum’s mission critical products and services.”

News: Mobileum goes bankrupt amid PE owners' legal battle

Carlsberg to acquire Britvic in $4.2bn deal

BY Richard Summerfield

Danish brewer Carlsberg has agreed to buy UK soft drinks maker Britvic in a deal worth around $4.2bn.

Following two unsuccessful attempts to acquire the company in June, which Britvic said significantly undervalued it, Carlsberg returned with a sweetened bid of 1315 pence per share – comprising cash and a special dividend of 25 pence a share. The rejected bids priced shares at 1200p and then at 1250p apiece.

Carlsberg expects the deal to deliver a number of benefits, including cost and efficiency savings worth $128m over five years, thanks to common procurement, production and distribution networks. Carlsberg plans to name the new beverage business Carlsberg Britvic.

The deal will also expand Carlsberg’s existing relationship with PepsiCo. Britvic bottles PepsiCo drinks in the UK and Ireland while Carlsberg bottles products for the US giant in other countries such as Norway and Sweden. To facilitate the acquisition of Britvic, PepsiCo agreed to waive a change-of-control clause in its contract with the UK firm.

“Britvic is an outstanding business with a strong heritage built on its portfolio of family-favourite brands, long-standing customer relationships, a well-invested supply chain infrastructure and a fantastic team of people across multiple markets,” said Ian Durant, non-executive chair of Britvic. “All these factors have supported a consistent track record of delivery for Britvic’s stakeholders over a sustained period of time.

“The proposed transaction creates an enlarged international group that is well-placed to capture the growth opportunities in multiple drinks sectors,” he continued. “Crucially, to remain competitive at a time when the market is being shaped by the trend of increasing consolidation among bottling partners, Carlsberg’s agreement with PepsiCo provides the combined group with a strong platform for continued success.”

“With this transaction, we are combining Britvic’s high-quality soft drinks portfolio with Carlsberg’s strong beer portfolio and route-to-market capabilities, creating an enhanced proposition across the UK and markets in Western Europe,” said Jacob Aarup-Andersen, chief executive of Carlsberg. “The proposed transaction is attractive for shareholders of Carlsberg, supporting our growth ambitions and being immediately earnings accretive and value accretive in year three.

“We are committed to accelerating commercial and supply chain investments in Britvic, and we are confident that Carlsberg Britvic will become the preferred multibeverage supplier to customers in the UK with a comprehensive portfolio of market-leading brands,” he added.

“We are looking forward to building on our long-standing and successful partnerships with both Carlsberg and Britvic,” said Silviu Popovici, chief executive of PepsiCo Europe. “We believe that the combination of Carlsberg and Britvic will create even stronger sales and distribution capabilities for our winning brands in important markets. We look forward to continuing to expand the partnership into further important markets in the future.”

News: Carlsberg to buy Britvic for $4.2 billion