Greystar affiliate to acquire EDR in $4.6bn deal

BY Fraser Tennant

In an all-cash transaction valued at approximately $4.6bn, including debt, Education Realty Trust Inc (EDR), one of the largest owners, developers and managers of collegiate housing in the US, is to be acquired by Greystar Student Housing Growth and Income Fund, LP (GEdR), an affiliate of Greystar Real Estate Partners.

Under the terms of the definitive merger agreement, EDR's stockholders will receive $41.50 per share in cash. The agreement to be acquired by the newly-formed, perpetual-life fund GEdR has been unanimously approved by EDR’s board of directors.

"For more than 50 years, EDR has been a pioneer in the student housing industry, partnering with some of the most prestigious universities in the US to enhance and transform campus housing and achieve student success goals," said Randy Churchey, EDR’s chief executive chairman of the board of directors. "As a public company, one of our priorities is to maximise stockholder value and we believe this transaction with Greystar accomplishes that goal.”

EDR owns or manages 79 communities with more than 42,300 beds serving 50 universities in 25 US states. EDR’s acquirer, Greystar, is a leading, fully integrated real estate company which offers expertise in investment management, development and property management of rental housing properties globally.

"We are pleased to partner with a group of world-class investors to acquire one of the nation's best student housing operators and developers,” said Bob Faith, founder, chairman and chief executive of Greystar Real Estate Partners. “EDR has one of the highest quality and best located student housing portfolios in the US and it will seed Greystar's newly formed flagship student housing-focused perpetual-life fund. Combined, we will leverage our expertise, vision and financial strength to serve our current university partners as well as further expand our global student housing footprint.”

The EDR/GEdR transaction is currently expected to close in the second half of 2018 and is subject to customary closing conditions, including the approval of EDR's stockholders.

The deal adviser for EDR was BofA Merrill Lynch, while Morrison & Foerster LLP and Venable LLP were its legal advisers. J.P. Morgan Securities LLC was financial adviser to Greystar, while Hogan Lovells US LLP and King & Spalding were its legal advisers.

Mr Churchey concluded: “We are certain today's announcement is in the best interest of all of EDR's stakeholders, including university partners, employees and stockholders."

News: Greystar to buy Education Realty for about $4.6 billion including debt

CYBG to buy Virgin Money for $2.3bn

BY Richard Summerfield

Virgin Money Holdings is to be sold to CYBG in a $2.3bn all-stock transaction, creating a bank with around six million customers, making it the UK’s sixth largest bank.

Under the terms of the deal, Virgin Money shareholders will get 1.2125 new CYBG shares for every Virgin Money share they hold, and will end up owning about 38 percent of the combined business, which will be known as Virgin Money. CYBG has agreed a £12m a year licensing deal with Virgin Group owner Sir Richard Branson, rising to £15m after five years

Virgin Money and CYBG – the owner of Clydesdale and Yorkshire banks – have been in negotiations since May. Virgin was willing to negotiate with CYBG because of the improvement the company made to its original proposal. CYBG initially offered Virgin Money shareholder’s a 36.5 percent stake in the new company, though this offer was rejected. Virgin was also willing to accept the new proposal due to the “substantial synergy potential” and growth opportunities the deal represented.

The deal, which is still awaiting shareholder approval, will allow CYBG to benefit from greater scale. It will lead to potential cost savings and allow CYBG to benefit from Virgin Money’s significant high street presence.

Job losses are expected, however. The combined company will have around 9000 employees, however around 1500 jobs are expected to go – a reduction of around 15 percent. According to Ian Smith, CYBG chief financial officer, the £35m the company expects to save from “organisational redesign” would be derived from removing duplication among senior management. There would be “little overlap in our customer-facing roles”, he confirmed. In total, the deal is expected to generate £120m in annual pre-tax cost savings.

David Duffy, chief executive of CYBG  said: “The combination of CYBG and Virgin Money will create the first true national competitor to the status quo in UK banking, offering a genuine alternative for consumers and small businesses.” The combination provided “the opportunity to build a best-of-both model that draws on the talent of both CYBG and Virgin Money”, he added.

Mr Duffy will lead the new company. Jayne-Anne Ghadia, CEO of Virgin Money, will act as a temporary senior adviser to the new Virgin Money.

News: CYBG and Virgin Money join forces to take on Britain's biggest banks

DS Smith to acquire Europac in $2.2bn deal

BY Richard Summerfield

British packaging firm DS Smith is to acquire European rival Papeles y Cartones de Europa, also known as Europac, for $2.2bn, including debt.

The merger will see FTSE 100-listed DS Smith pay €16.80 per Europac share to acquire the company. On Friday 1 June, the last day of trading before the deal was announced, Europac’s shares closed at €15.58.

DS Smith will finance the acquisition by raising $1.3bn from a new share issue, which is expected to launch in June, following the publication of the company’s full-year results. DS Smith will also benefit from a new debt facility of €740m.

The acquisition will be an “exceptional scale opportunity”, according to DS Smith, which will allow the company to enhance its customer offer in a key packaging growth region, as well as strengthen its global supply chain.

Expected pre-tax synergies of €50m have been identified by the company. According to a statement, in 2017 Europac delivered revenue of €868m and posted earnings before interest, tax, depreciation and amortisation of €158m.

Miles Roberts, group chief executive of DS Smith, said: “The acquisition of Europac is a very exciting development for DS Smith, strengthening our position as a leading global supplier of sustainable packaging solutions.  We have a long-standing relationship with Europac, which is a company we have long admired, given the quality of their assets, employees and customers. This acquisition will enhance our customer offer in Western Europe, a key packaging growth region, and help us meet the rising demand for our high-quality packaging and sustainable products. It will also strengthen our global supply chain and means we can serve our, and Europac’s, customers better.”

José Miguel Isidro Rincón, executive chairman of Europac, said: “Europac is a great company, well structured, strongly positioned with its customers and has a great management team. Iberia is the third largest packaging market in Europe and has great growth potential. In my capacity as shareholder, I believe that the offer submitted by DS Smith, which upon implementation would result in a combination with Europac, would deliver important operating and commercial synergies for both companies.”

As there is little overlap between the operations of the two companies, DS Smith expects the deal to win regulatory approval.

News: DS Smith to buy Europac for $2.2 billion as paper deals accelerate

Sony remains “number one” with $2.3bn acquisition

BY Fraser Tennant

In a $2.3bn deal which the multinational conglomerate says represents its commitment to its writers and artists, as well as to the music business as a whole, Sony Corporation has acquired a controlling stake in EMI Music Publishing – one of the world’s largest music publishing companies.

Once complete, the transaction will see Sony, which already holds the publishing rights to The Beatles, among many others, obtain a catalogue of more than two million songs, including hits by Queen, Kanye West, Alicia Keys, Drake, Sam Smith, Pink, Pharrell Williams and Calvin Harris.

“We are thrilled to bring EMI Music Publishing fully into the Sony family and maintain our number one position in the music publishing industry,” said Kenichiro Yoshida, president and chief executive of Sony Corporation. “I would also like to convey my gratitude to Mubadala, our equity partner in EMI Music Publishing, for sharing our long-term perspective on the potential success of music publishing and their support as we grew the business.”

Over the past six years, Mubadala Capital – the financial investment arm of Mubadala – and Sony have worked together as partners to create value alongside Sony/ATV, Sony’s music publishing arm. 

“EMI Music Publishing has been a successful investment for Mubadala,” said Hani Barhoush, head of Mubadala Capital. “I would like to personally extend my appreciation to the leadership at Sony and Sony/ATV, who have been instrumental in administering the EMI Music Publishing catalogue, as well as shaping the music landscape on a global basis. They have been tremendous partners to us.”

The Sony/Mubadala partnership, coupled with the global rise of streaming and paid streaming services, have led to an appreciation in value of the EMI Music Publishing catalogue as millions of new consumers have been provided access to innovative distribution channels. “The sale of our consortium’s interest in EMI represents a milestone for Mubadala and our private equity business,” added Adib Mattar, head of private equity for Mubadala Capital and chairman of EMI Music Publishing.

Mr Yoshida concluded: “In the entertainment space, we are focusing on building a strong intellectual property (IP) portfolio, and I believe this acquisition will be a particularly significant milestone for our long-term growth.”

News: Sony takes controlling stake in EMI Music Publishing

Vodafone strikes €18.4bn deal for Liberty Global’s European operations

BY Fraser Tennant

In an €18.4bn deal which expands its mobile, TV and broadband services in Europe, multinational telecommunications conglomerate Vodafone has agreed to acquire US firm Liberty Global’s operations in Germany, the Czech Republic, Hungary and Romania.

The total enterprise value of the transaction is expected to comprise approximately €10.8bn of cash consideration paid to Liberty Global and €7.6bn of existing Liberty debt, subject to completion adjustments. Once complete, Vodafone will become the leading next generation network (NGN) owner in Europe, with 54 million cable/fibre homes ‘on-net’ and a total NGN reach of 110 million homes and businesses.

In Germany, the combination of Vodafone and Unitymedia (which runs Liberty Global's operations in Germany as well as being the country’s second largest cable operator) will bring Gigabit connections to around 25 million German households by 2022. In Central and Eastern European (CEE) markets, the transaction will accelerate the availability of converged fixed, mobile and TV services.

“This transaction will create the first truly converged pan-European champion of competition,” said Vodafone Group chief executive Vittorio Colao. “It represents a step change in Europe’s transition to a Gigabit Society and a transformative combination for Vodafone. We are committed to accelerating and deepening investment in next generation mobile and fixed networks, building on Vodafone’s track record of ensuring that customers benefit from the choice of a strong and sustainable challenger to dominant incumbent operators.”

Vodafone has also said that management and employees of the acquired Liberty Global businesses will have the opportunity to play an integral role within the combined company in each country and across the wider Vodafone Group.

“We have a rich history at Liberty Global of successfully developing and reshaping our business to drive innovation, advance customer services and create significant value for shareholders,” said Mike Fries, chief executive of Liberty Global. “This is one of those moments. Now more than ever, Europe needs strong competition from scaled national challengers willing and able to invest in next-generation wireless, video and broadband services.”

The Vodafone/Liberty Global transaction is subject to regulatory approval by the European Commission and is anticipated to be completed in mid-2019.

Mr Fries added: “This is also an important and exciting transaction for our customers and employees. In each of these markets, the combination of Liberty Global and Vodafone’s businesses will transform the competitive landscape and bring a new level of convergence to customers.”

News: Vodafone makes €18bn swoop on Liberty Global cable networks