Blackrock acquires IT Group in “natural fit”

BY Fraser Tennant

In a deal expected to bring significant benefits to the fields of construction and technology, specialist professional consultancy Blackrock Expert Services Limited is to acquire IT Group, an independent provider of professional services for IT disputes, digital forensics and e-disclosure.  

Both companies have stated their “delight” over joining forces and believe the transaction will allow them to better integrate services in a rapidly growing technology-related expert services market. 

“The shared ethos of quality, integrity and independence meant the two businesses were a natural fit together,” said Giles Derry, chief executive of Blackrock. “The ever-increasing importance of technology in construction and the continued growth of technology, IP and data disputes means this will be an area where access to IT experts is essential.” 

With technology having a more prominent role in construction projects, Blackrock’s acquisition of IT Group is particularly timely, bringing technology expertise in-house and further enhancing Blackrock’s position as a global provider of integrated consultancy services. “There is a scarcity of experienced IT experts in the market place,” added Mr Derry.

Having advised on complex construction projects in 50 countries with a combined value of over £150bn, Blackrock has built a distinguished track record since its founding in 2009. The acquisition of IT Group adds to Blackrock’s portfolio of high-profile contracts.

 “IT Group has been involved in some of the world's largest IT disputes, as well as disputes involving technology in construction projects,” said Tony Sykes, founder and senior partner of IT Group. “We are really excited about the opportunity to advise on Blackrock’s projects as well as continuing to offer technology dispute and forensic services to clients across the group.”   

Experienced in software licensing, IT project management, cyber, data theft and system design and specification disputes, IT Group operates internationally and has worked for insurers and law firms in the UK, US, EMEA and the Far East.

Mr Derry concluded: “The combination of Blackrock and IT Group is entirely consistent with our long-term strategy to provide excellence across a range of expert services.” 

Deals decline

BY Richard Summerfield

Despite favourable macroeconomic conditions and abundant cash levels among keen acquirers, both the number of reported M&A transactions and deal value worldwide declined for the second consecutive year in 2017, according to Wilmer Hale’s ‘2018 M&A Report’.

The number of reported M&A transactions worldwide dropped by 10 percent, from 59,544 deals in 2016 to 53,854 in 2017. Global M&A deal value decreased 9 percent, from $3.59 trillion to $3.26 trillion. The size of the average deal in 2017 was $60.6m, up slightly from the $60.4m in 2016, but trailing the $69.4m average recorded in 2015.

Deal volume in the US fell 13 percent from 21,666 transactions in 2016 to 18,957 in 2017. Deal value also declined by 15 percent, falling from $2.24 trillion to $1.91 trillion. Average deal size fell 3 percent to $100.9m in 2017, from $103.6m in 2016.

There was also a 7 percent fall in deal volume in Europe last year, with 20,721 transactions recorded, down from 22,305 in 2016. Total deal value fell 15 percent from $1.41 trillion to $1.19 trillion. The average deal size recorded also fell by 9 percent to $57.4m in 2017, from $63m in 2016.

The Asia-Pacific region also saw a 9 percent decline in deal volume with 16,926 transactions recorded in 2016 falling to 15,330 in 2017. Total deal value dropped 16 percent, from $1.25 trillion to $1.05 trillion. Average deal size fell 7 percent, from $73.8m to $68.5m.

Deal volumes also declined across a number of key sectors, including technology, life sciences and telecommunications. In the tech space fell, 2017 saw 9016 deals, a fall from 9103 deals in 2016. Deal value also fell for the second year running, declining 35 percent from $522.1bn to $338.4bn.

The financial services industry was the best-performing sector in 2017. Deal activity was up 3 percent to 3042 transactions record last year. Global deal value in the sector did fall by 18 percent, however, from $329.1bn to $271.3bn. Average deal size fell 20 percent, from $111.4m to $89.2m.

Following two consecutive years of declining deal volume and value, Wilmer Hale believes that 2018 could reverse the trend, despite the presence of some prevailing headwinds. A number of key factors should positively influence dealmaking, including improved economic stability and growth in most major economies. In addition, high levels of cash are being held by both strategic and private equity acquirers . Fundraising among private equity firms has also grown for the fifth year running and they are facing increasing pressure to exit investments and return capital to investors.

Report: M&A Report 2018

Battle for Sky intensifies

BY Richard Summerfield

The battle for UK pay-TV broadcaster Sky has intensified as both 21st Century Fox and Comcast have increased their offers for the company to £24.5bn and £26bn respectively.

Fox’s sweetened offer, which was submitted on Wednesday, would see it pay £14 per share. Fox’s original bid of £10.75 per share for the 61 percent of Sky it does not own was lodged in December 2016.

Comcast first offered £12.50 per share, valuing the company at £22bn. Comcast's latest offer of £14.75 per share prompted Sky’s independent committee recommending shareholders to reject Fox's. Comcast also announced that its increased offer has been recommended by the Sky Independent Committee of Directors.

“We are pleased to be announcing a recommended increased offer for Sky today,” said Brian Roberts, chief executive of Comcast. “We have long admired Sky, which we believe is an outstanding company and a great fit with Comcast. We will be posting our offer document to Sky shareholders shortly.”

Comcast’s offer represents an “attractive premium to the current alternative offer", said Martin Gilbert, deputy chairman of Sky. “We have long recognised the unique position that Sky occupies, and unanimously recommend this offer by Comcast,” he added.

The UK government had been expected to approve Fox’s latest bid for Sky after the company satisfied ongoing concerns over media plurality. Britain’s former Culture Secretary Matt Hancock, who was replaced this week following a cabinet shakeup, was willing to let the takeover go ahead, provided Fox sold Sky’s 24-hour news channel to Disney.

The battle for Sky is just part of the wider ongoing fight for control in the media and telecoms sector, where consolidation has become a key consideration. Fox itself is subject to an ongoing battle between Disney and Comcast. Fox’s assets, including its existing stake in Sky, as well as its movie studios, cable channels, National Geographic and a 30 percent stake in streaming service Hulu are all subject to ongoing fight for Fox.

Disney has offered $71.3bn in cash and shares for the company, minus Fox News, Fox Sports and Fox Television Stations, which would be spun off into a new company called ‘New Fox’. Sky has 23 million customers in five European countries and also boasts a market-leading platform. The company has a slew of original content and licence agreements, notably with the English Premier League.

The media and telecoms industry is in a state of flux as traditional players attempt to keep pace with streaming giants such as Netflix and Amazon and readjust to the new media landscape.

Sky’s shares were up 3 percent on Thursday in anticipation of additional bidding for the company.

News: Sky shares rally after Comcast and Fox go head-to-head in bid battle

SYNNEX and Convergys combine in $2.8bn deal

BY Fraser Tennant

In a deal which combines two industry leaders to create a “premier global customer engagement services company”, SYNNEX Corporation is to acquire Convergys Corporation in a transaction valued at approximately $2.8bn.

Under the terms of the agreement, business process services company SYNNEX will acquire call centre operator Convergys in a cash and stock transaction, including approximately $170m of Convergys outstanding net debt. Convergys shareholders will receive $26.50 per share, which includes $13.25 per share in cash and 0.1193 SYNNEX common shares for each share of Convergys common stock.

Following the close of the transaction, it is expected that Convergys will be combined with SYNNEX’s industry-leading customer relationship management business process outsourcing (CRM BPO) subsidiary, Concentrix – enhancing the capabilities of both organisations and creating a premier global customer engagement services company.

Synnex acquired Concentrix in 2006.

"We continue to be focused on driving superior returns to our shareholders through our investments," stated Dennis Polk, president and chief executive of SYNNEX Corporation. "This transaction is expected to enhance our earning potential while continuing our strategy of investing in high value services. Following this acquisition, we expect to have a solid leadership position in technology solutions and Concentrix businesses, with more balanced adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) contribution."

The SYNNEX/Convergys transaction has been approved by both companies’ boards of directors and is expected to close by the end of 2018, subject to the approval of shareholders of both companies, the receipt of regulatory approvals and other customary closing conditions.

“We are pleased to have reached this agreement, which provides important benefits for all of our stakeholders, including our shareholders, who will receive an immediate premium in addition to value from their equity participation in the growth and synergies resulting from the combination of Convergys and SYNNEX,” said Andrea Ayers, president and chief executive officer of Convergys. “Our clients will be even better served by the combined organisation’s increased scale, strong talent, best-in-class analytics, technology and digital offerings, and a shared commitment to helping them successfully navigate the increasingly complex CX ecosystem.”

News: Synnex Reaches Deal to Acquire Convergys

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