Jimmy Choo sold for $1.2bn

BY Richard Summerfield

Luxury shoe manufacturer Jimmy Choo Plc has been sold to fashion brand Michael Kors in a deal worth $1.2bn, or $1.35bn including assumed net debt.

According to a statement announcing the deal, Jimmy Choo investors will receive 230 pence, or about $3, for each share held. The price represents a 36.5 percent premium to the company’s share price in April, before the company announced it was putting itself up for sale. The deal is expected to close in Q4 2017.

Though the company has retained many of its celebrity endorsements since it shot to fame in the late 1990s and early 2000s, it has struggled to retain its status in recent years. Furthermore, JAB Holding, the company which holds a 70 percent stake in Jimmy Choo, having acquired the brand for £500m, is moving out of the luxury fashion market and is exploring dealmaking opportunities in other industries, including the food and beverage sector. Jimmy Choo has only been publicly owned for a little over three years.

John D. Idol, chairman and chief executive of Michael Kors, said, “We are pleased to announce the acquisition of Jimmy Choo, an iconic brand with a rich history as a leading global luxury house. Jimmy Choo is known worldwide for its glamorous and fashion-forward footwear. The company is a leader in setting fashion trends. Its innovative designs and exceptional craftsmanship resonate with trendsetters globally. We believe that Jimmy Choo is poised for meaningful growth in the future and our company is committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years.”

Pierre Denis, chief executive of Jimmy Choo, said, “It is a privilege for our management team to lead Jimmy Choo and to preside over such an exciting period for our company. We are convinced that there is so much more that can be delivered in the years ahead. We look forward to working closely with the leadership and team at Michael Kors Holdings Limited to further develop our iconic brand. Our two companies share the same vision of style and trend leadership. Our luxury heritage is the foundation of Jimmy Choo and we will continue to bring our brand vision to consumers globally.”

News: Michael Kors to buy luxury shoemaker Jimmy Choo for $1.2 bln

Mega deals boost H1 global M&A activity, reveals new report

BY Fraser Tennant

Mega deals across the globe boosted the value of mergers & acquisitions (M&A) activity to bumper levels in H1 2017, with Europe a particular hotspot, according to a report released by Mergermarket this week.

The report, ‘Global and regional M&A: H1 2017’, reveals that although deal volume has remained low, aggregate deal value so far this year has been the opposite – due largely to the significant number of mega deals struck.

The key data in the Mergermarket report shows that: (i) 17 mega deals have been announced since the beginning of the year (including Amazon’s recent takeover of Whole Foods), as companies look to ‘future-proof’ in the wake of rapid change to technology and politics to keep ahead of rivals; (ii) the consumer sector has seen six megadeals in H1 2017, in comparison to just one during the entirety of 2016; (iii) European M&A has surged ahead, securing 32.3 percent share of global value, while both the US and Asia Pacific have seen their share drop; and (iv) the energy, mining & utilities sector has been the most targeted industry, partially fuelled by some stabilisation of oil prices.

 “The first six months of 2017, and particularly the second quarter, has seen a clear resurgence in European M&A activity,” said Jonathan Klonowski, Europe, the Middle East and Africa (EMEA) research editor at Mergermarket. “The year started with worry over potential populist shocks but there now appears to be greater confidence in the market.

“M&A activity in the first six months of 2017 has seen firms look to adapt to changes, both in terms of politics and technology. The result has seen values increase to $1.49 trillion, an increase of 8.4 percent despite there being 1117 fewer deals in comparison to H1 2016. A key driver of this has been the increase in megadeals (with a value of $10bn) – with 17 in the first half of this year in comparison to 14 in H1 2016.”

Additional findings in the report are that the US and Asia have stagnated slightly, and despite the year starting with worry over potential populist shocks, there now appears to be greater confidence in the market following elections in France and the Netherlands.

Mr Klonowski concluded: “While volumes remain relatively low, values have continued to soar and there is no obvious reason why this should not continue for the rest of the year.”

Report: Global and regional M&A: H1 2017

Consulting sector M&A deals peak amid global turbulence

BY Fraser Tennant

Mergers & acquisitions (M&A) activity in the consulting sector has reached a nine-year high (up 1 percent) despite the impact of ongoing geopolitical turbulence, according to Equiteq’s ‘Global Consulting Mergers & Acquisitions Report 2017’. 

Now in its 10th year, the Equiteq report provides data such as deal sizes and structures, valuation multiples, equity share price performance, regional activity and strategic and private equity buyer trends. For example, it reveals that 44 percent of all consulting sector deals took place in North America (which enjoyed the highest M&A value), although Europe, with 38 percent of deals, and Asia-Pacific, with 9 percent, enjoyed stronger M&A growth. The report also notes that deal activity was particularly robust in the UK, with the number of completed transactions increasing by 20 percent over the course of the year.

Additional findings include: (i) the top consulting segments for deal activity were the rapidly evolving management consulting, IT services and media segments, with management consulting seeing a 2 percent growth in deal volumes and a 32 percent increase in the share-price index; and (ii) traditional boundaries between consulting segments continue to blur, leading to a strong convergence at the intersection of management consulting, media & marketing and technology.

Furthermore, highlighting the global nature of M&A activity in the consulting sector, the report confirms that despite some major political upheavals, cross-border deal activity remained strong – accounting for 28 percent of all deal volumes (up 27 percent from the year before).

“We are seeing unprecedented diversification amongst acquirers of knowledge-led businesses such as management consultants, media agencies, engineering consultants and HR consulting,” said David Jorgenson, chief executive of Equiteq. “As a result this is driving convergence between consulting sectors and creating hybrid business models with creative, technology consulting and managed services. This convergence trend – driven by digital disruption, changing client demands and the search for growth – is blurring traditional boundaries.”

Commenting on the prospects for the consulting sector in the second half of 2017 and beyond, Mr Jorgenson concluded: “Having already seen high-profile deals across segments of the consulting market, as well as strong deal activity amongst high-profile PE investors, we expect that this robust demand for M&A will continue over the next twelve months.”

Report: Global Consulting M&A Report

Clariant and Huntsman clinch merger of equals

BY Richard Summerfield

Clariant and Huntsman Corporation have announced a merger of equals which will create a leading global speciality chemical company with an enterprise value of approximately $20bn, including debt.

Under the terms of the all-stock deal, Huntsman holders will get 1.2196 shares in the new company for each share they own. Clariant shareholders will have a 52 percent stake in the combined company, which will be known as HuntsmanClariant.

According to a statement announcing the deal, the two companies expect the merger to generate more than $400m in annual cost savings, leading to $3.5bn in value creation.

"This is the perfect deal at the right time. Clariant and Huntsman are joining forces to gain much broader global reach, create more sustained innovation power and achieve new growth opportunities,” said Hariolf Kottmann, CEO of Clariant. “This is in the best interest of all of our stakeholders. Peter Huntsman and I share the same strategic vision and I look forward to working with him.”

Peter R. Huntsman, president and CEO of Huntsman, who is expected to hold the same title at the combined group, said: “I could not be more enthusiastic about this merger and look forward to working closely with Hariolf Kottmann, a man I have admired and trusted for the past decade. We also look forward to a close association with his immensely talented colleagues around the world. Together, we will create a global leader in specialty chemicals with a combined balance sheet providing substantial financial strength and flexibility.”

Dr Kottmann will serve as HuntsmanClariant’s chairman. The firm, once merged, will operate in more than 100 countries and employ around 32,000 people. HuntsmanClariant will have a global headquarters in Pratteln, Switzerland, and an operational headquarters in The Woodlands, Texas.

Rumours of a merger between the two companies have circulated for some time. Indeed, Clariant and Huntsman are believed to have ended merger talks in late 2016 over a disagreement about which firm would play the lead role. The two companies have been on friendly terms for a while, and their respective CEOs are said to have had a professional and personal friendship for around the last eight years.

The deal is expected to close by the end of 2017, pending shareholder and regulatory approval.

News: Clariant to Buy Huntsman for $6.4 Billion as M&A Surges

Industry leaders agree $3.1bn deal to accelerate 5G deployment

BY Fraser Tennant

In a deal designed to scale and accelerate the deployment of next-generation broadband services throughout the US, Verizon Communications Inc. has announced it has signed an agreement to acquire Straight Path Communications Inc., a holder of millimeter wave spectrum configured for 5G wireless services.

The definitive agreement will see Verizon purchase Straight Path for $184 per share, or a total consideration of $3.1bn, in an all-stock transaction. The deal has been approved by the boards of directors of both Straight Path and Verizon.

Concurrently, Verizon is to pay (on behalf of Straight Path) a termination fee of $38m to the US multinational telecommunications conglomerate AT&T. Announced in April 2017, the previous definitive agreement between AT&T and Straight Path was cancelled after the Straight Path board of directors determined, following consultation with its financial advisers and outside legal advisers, that the transaction with Verizon constituted a superior proposal.

Based in Virginia, US, Straight Path holds millimeter wave spectrum licences configured for 5G services, including 39 GHz licences that serve the entire country and 28 GHz assets in major markets. A proposed telecom standard that will succeed the current 4G standards, 5G is expected to provide wireless internet speeds 40 times faster than at present.

Once complete, Verizon’s acquisition of Straight Path will give the wireless giant a significant nationwide portfolio of millimeter-wave spectrum, which is viewed as being particularly important for the deployment of the next generation of wireless services.

"Verizon now has all of the pieces in place to quickly accelerate the deployment of 5G," said Hans Vestberg, executive vice president and president of global network and technology at Verizon. "Combined with our recent transactions with Corning Incorporated, XO Communications, and Prysmian Group, this is another step to build the next-generation network for our customers."

Acting as legal counsel to Verizon in connection with the transaction is Debevoise & Plimpton LLP. For Straight Path, Evercore served as exclusive financial adviser while Weil, Gotshal & Manges LLP served as company counsel.

The Verizon/Straight Path transaction is anticipated to close within nine months and is subject to review by the Federal Communication Commission (FCC).

News: Verizon beats AT&T to buy spectrum holder Straight Path