M&A deal leaks plummet, reveals new report

BY Fraser Tennant

The number of M&A deal leaks has fallen for two years running, a decline driven entirely by the Asia-Pacific (APAC) region, according to a new Intralinks report.

The ‘2019 M&A Leaks Report’, a study carried out annually by Intralinks in association with the M&A Research Centre at the University of London’s Cass Business School, found that, after peaking at around 9 percent of announced M&A transactions in 2013, worldwide deal leaks have declined in recent years.

The report also notes that the decline in M&A deal leaks has occurred at the same time as increased regulations and enforcement actions by financial regulators against different forms of market abuse, including deal leaks – and there is undoubtedly a connection between increased regulatory attention and the decline in leaks.

Among the report’s other key findings, worldwide, the rate of M&A deal leaks fell in 2018 for the second consecutive year, and 7.4 percent of deals in 2018 involved a leak of the deal prior to its public announcement, compared to 7.9 percent in 2017 and 8.6 percent in 2016.

The fall in the overall worldwide rate of deal leaks in 2018 was driven solely by the APAC region, where leaked deals declined to 7.9 percent from 10.8 percent the previous year.

Furthermore, both the Americas and the Europe, Middle East and Africa (EMEA) regions saw increases in the rate of deal leaks in 2018 of 0.5 and 0.4 percentage points, respectively. APAC remains the region with the highest rate of deal leaks, followed by the Americas at 7.6 percent and EMEA at 5.8 percent.

“Deal leaking is down, but the stakes remain high,” said Philip Whitchelo, vice president of Intralinks. “In 2018, the difference in the median target takeover premium for leaked deals compared to non-leaked deals was an average of an extra $68.1m accrued to the shareholders of the targets in deals that leaked. This was the highest ‘leak premium’ difference for three years.”

Finally, for the 10 regions with the most M&A activity, the top three for deal leaks in 2018 were Hong Kong, Japan and the US. The bottom three countries for deal leaks in 2018 were the UK, Australia and France.

Report: 2019 M&A Leaks Report

Dream deal for Blackstone

BY Richard Summerfield

Funds managed by Blackstone Group have agreed to acquire Dream Global Real Estate Investment Trust for $4.7bn.

The deal will see Dream stockholders receive C$16.79 in cash for each share they hold, a premium of 18.5 percent to Friday’s closing stock price. The deal is expected to close by December.

The deal needs at least 66.67 percent approval from Dream Global’s shareholders. Its board of trustees unanimously approved the deal and recommended the shareholders vote in favour of it.

“This transaction is the culmination of the tremendous growth that Dream Global has achieved since its 2011 IPO,” said Detlef Bierbaum, chairman of Dream Global’s board of trustees. “At a time when the Western European real estate market is becoming increasingly competitive, this transaction provides premium value to unitholders. Upon completion of the Transaction, Dream Global will have increased its equity market capitalisation by nearly eight times and will have delivered total annualised returns of 15 percent to our unitholders, since inception, which exceed both the Canadian and European REIT benchmarks by approximately 60 percent and are competitive against the best managed real estate private equity funds and pension funds globally, over the same time period.”

“Today’s announcement can be attributed to Dream Global’s high-quality portfolio of properties located in key markets in Western Europe and the strength of our property management platform, as evidenced by our strong relationships with tenants, partners and lenders,” said Jane Gavan, president and chief executive of Dream Global. “By combining a disciplined approach to capital allocation with active asset management, we have established Dream as one of the most respected brands for investing in Western European office properties.”

“We are delighted to be acquiring Dream Global, a high-quality and diversified portfolio of office and logistics assets in Western Europe, which has been created by Dream over the last eight years,” said James Seppala, head of Blackstone Real Estate Europe. “This transaction is an exciting opportunity for Blackstone to expand its existing office and logistics portfolios in some of the largest and most important markets in the region.”

Canadian REIT Dream Global, which was formerly known as Dundee International REIT, started out by acquiring properties leased to Deutsche Post, Germany’s post office. Today the firm owns over 200 office and industrial properties in key markets in Western Europe with a particular focus on Germany and the Netherlands.

News: Dream Global REIT to be bought by Blackstone funds in $4.7 billion deal

Prudential acquires personal and financial health platform in $2.35bn deal

BY Fraser Tennant

In a transaction valued at $2.35bn, Prudential Financial is to acquire Assurance IQ – a direct-to-consumer platform that transforms the buying experience for individuals seeking personalised health and financial wellness solutions.

Prudential plans to use a combination of its current cash, debt financing and equity to fund the acquisition, which is expected to close early in the fourth quarter of 2019.

A financial wellness leader and premier active global investment manager with more than $1 trillion in assets under management, Prudential has operations in the US, Asia, Europe and Latin America. Its board of directors has unanimously approved the deal to acquire Assurance’s technology-driven, on-demand service platform.

“Assurance was founded to protect and improve the personal and financial health of every individual,” said Michael Rowell, co-founder and chief executive of Assurance. “Prudential’s shared vision, coupled with the strength of its offering and capabilities, make it the ideal partner with which to begin our next chapter. We are excited to create an ecosystem that reaches more people and new markets with a more expansive suite of products to drive our combined growth.”

Launched in 2016, Assurance uses advanced data analytics to match buyers with customised solutions spanning life, health, Medicare and auto insurance, giving them options to purchase entirely online or with the help of a technology-assisted live agent.

Assurance also matches consumers with the live agent or specific sales process that is best suited to their needs, resulting in better customer outcomes that drive higher levels of engagement and conversion.

“Assurance accelerates the strategy and growth potential of Prudential’s financial wellness businesses, bringing us closer to more people across the entire socio-economic spectrum to better serve the full picture of their needs,” said Charles Lowrey, chairman and chief executive of Prudential. “We look forward to working with Mike Rowell and his entire team to grow the Assurance business in the U.S., and, over time, to extend its unique approach to customers around the world.”

In addition to enhancing the growth of Prudential’s financial wellness businesses, the acquisition of Assurance is expected to generate cost savings of $50m to $100m.

News: Prudential buys Assurance IQ for $2.35 billion in new tech bet

J2 acquires APi in $2.9bn transaction

BY Fraser Tennant

In a $2.9bn deal it describes as an “excellent fit”, investment vehicle J2 Acquisition Limited is to acquire commercial life safety solutions and industrial specialty services provider APi Group, Inc.   

A publicly-listed acquisition company that listed in October 2017, J2’s definitive agreement to acquire APi is its debut transaction.

Operating in over 200 locations across the US, Canada, and the UK, APi is the leading independent life safety services provider and a top-five specialty services contractor.  Once the acquisition is complete, J2 plans to continue to build on APi's operating strengths with a focus on expanding the service portion of the business across its portfolio.

"The J2 team's decades of leadership experience operating large diverse businesses, broad industrial knowledge, and disciplined acquisition strategy – that they have employed successfully at previous companies and ventures – will be instrumental in further growing APi's inherent value and innovative, customer-centric approach over the long-term,” said Russell A. Becker, president and chief executive of APi .

The transaction is expected to close in the fourth quarter of 2019, subject to customary closing conditions. Following closing, APi's existing management team will remain in place.

"We were immediately impressed by APi's management team, its strong culture and its commitment to leadership development, combined with consistent delivery of margins and cash flow at the high-end of its peer group over the years,” said James E. Lillie, co-founder of J2. “The business operates in resilient and dynamic markets with attractive growth drivers and we believe that, with the current management team, we can drive shareholder value by guiding the business to even better levels of performance and growth.”

Sir Martin E. Franklin, co-founder of J2, concluded: “We believe APi is an excellent foundation for J2's initial investment and is solidly in line with our disciplined investment criteria. We look forward to working with APi and to the strong growth opportunities ahead.”

News: Franklin's J2 blank check company buys APi Group for $2.9 billion

BP to sell Alaska business to Hilcorp in $5.6bn deal

BY Fraser Tennant

In a transaction valued at $5.6bn, BP is to sell all of its Alaska operations – including interests in the giant Prudhoe Bay field and Trans Alaska Pipeline – to oil and natural gas exploration and production company Hilcorp Energy.

The deal forms a significant part of BP's plan to divest $10bn of assets over 2019 and 2020.

The sale of BP’s Alaska business to Hilcorp includes its entire upstream and midstream business in the state, including BP Exploration (Alaska) Inc., which owns all of BP's upstream oil and gas interests in Alaska, and BP Pipelines (Alaska) Inc.'s interest in the Trans Alaska Pipeline System (TAPS).

Hilcorp’s affiliate, Hilcorp Alaska, is based in Anchorage and has been operating in the state since 2012. The company currently produces more than 75,000 barrels of oil-equivalent per day in gross production.

"Alaska has been instrumental in BP's growth and success for well over half a century and our work there has helped shape the careers of many throughout the company,” said Bob Dudley, group chief executive of BP. “We are extraordinarily proud of the world-class business we have built, working alongside our partners and the State of Alaska, and the significant contributions it has made to Alaska's economy and America's energy security.

“However, we are steadily reshaping BP and today we have other opportunities, both in the US and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment,” he continues. “This transaction also underpins our divestment programme, further strengthening our balance sheet and enabling us to pursue new advantaged opportunities for BP's portfolio within our disciplined financial framework.”

The deal is subject to state and federal regulatory approval and is expected to be completed in 2020.

“Our people have achieved incredible success over the decades developing and maintaining these hugely important assets,” said Janet Weiss, regional president of BP Alaska. “We are confident this sale is in BP’s and the state’s best interests and the business will be best positioned for the future with Hilcorp.”

News: BP to quit Alaska after 60 years with $5.6 billion sale to Hilcorp