Veritas to acquire DXC unit for $5bn

BY Richard Summerfield

DXC Technology announced it has agreed to sell its state and local health and human services business to private equity firm Veritas Capital for $5bn in cash. The deal is expected to close in December, subject to customary closing conditions and the receipt of third-party consent and regulatory approvals. The deal is not subject to any financing condition or shareholder approval.

The deal is the outcome of a process announced by DXC in November 2019 to explore strategic alternatives for three of its non-core assets. The company will use proceeds from the sale to pay down existing debt, which is consistent with DXC’s policy of maintaining a strong balance sheet and an investment grade credit profile.

“I’m pleased that we continue to execute the plan that we outlined in November, especially in this volatile environment,” said Mike Salvino, chief executive of DXC, in a statement announcing the deal. “The transaction is an important first step in our business and focusing on the enterprise technology stack. The transaction progressed much faster than we originally anticipated, but we are absolutely delighted to partner with Veritas Capital, the leading investor in health care and government sector.”

“DXC’s US State and Local Health and Human Services business is a leading player in a highly complex market that continues to benefit from technological innovation,” said Ramzi Musallam, chief executive and managing partner of Veritas. “The intersection of government, technology and healthcare is a key focus area for Veritas. By combining the business’ talented employees with our extensive industry experience, we plan to build on the business’ unwavering commitment to its customers and leadership in mission critical healthcare technology to drive continued improvement in the quality of healthcare for citizens nationwide. We look forward to welcoming the business and its employees into the Veritas portfolio.”

News: DXC Technology to sell healthcare unit for $5 billion to Veritas Capital

Tesco sells Malaysian and Thai assets to Charoen for $10.6bn

BY Fraser Tennant

In a deal which will see the return of $6.6bn to its shareholders, supermarket giant Tesco is to sell its businesses in Thailand and Malaysia to Bangkok-based conglomerate Charoen Pokphand Group for $10.6bn, including debt.

The sale of its Malaysian and Thai assets will simplify the Tesco Group, enabling a stronger focus on its retail businesses in the UK, Ireland and Central Europe. The transaction also generates substantial  value for Tesco’s shareholders and allows the Group to further de-risk by reducing indebtedness through a pension contribution of £2.5bn.

Over the last four years Tesco’s performance has significantly improved – particularly within the UK, its largest and most important market – but also across the wider Tesco Group. It is from this strengthened position that the Tesco board decided to respond to the expressions of interest it received for its businesses in Thailand and Malaysia and unanimously concluded that the offer by Charoen should be recommended to shareholders.

Operating across many industries ranging from industrial to service sectors, which are categorised into eight business lines covering 13 business groups, Charoen currently has investments in 21 countries and economies.

"Following inbound interest and a detailed strategic review of all options, we are announcing the proposed sale of Tesco Thailand and Tesco Malaysia,” said Dave Lewis, chief executive of Tesco. “This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders. I would like to thank all of our Tesco Thailand and Tesco Malaysia colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of such a strong business.”

Subject to customary regulatory approvals in Thailand and Malaysia, the transaction is expected to be completed during the second half of 2020.

Mr Lewis concluded: “I am confident that the agreement we have reached with Charoen presents an exciting opportunity for their continued success."

News: Tesco plans $6.6 bln shareholder return from Thai, Malaysia sale

Thyssenkrupp sells elevator business for $18.7bn

BY Richard Summerfield

Thyssenkrupp AG has agreed to sell its elevator business to a consortium of Advent, Cinven and Germany’s RAG foundation for $18.7bn.

Once completed, the deal will be the biggest private equity acquisition in Europe since 2007, when KKR took Alliance Boots Plc private in a deal valued at more than $23bn including debt.

Thyssenkrupp will use cash from the elevator unit sale to pay down borrowings and fund some of its pension obligations. The company is heavily indebted and in its most recent earnings statement, net debt jumped to €7.1bn.

“With the sale, we are paving the way for Thyssenkrupp to become successful,” said Martina Merz, chief executive of Thyssenkrupp. “Not only have we obtained a very good selling price, we will also be able to complete the transaction quickly. It is now crucial for us to find the best possible balance for the use of the funds. We will reduce Thyssenkrupp’s debt as far as is necessary and at the same time invest as much as is reasonable in developing the company. With this, Thyssenkrupp can pick up speed again.”

“Cinven is delighted to invest in and accelerate the growth of Thyssenkrupp Elevator both organically and through further acquisitions,” said Bruno Schick, partner and head of DACH and Emerging Europe at Cinven. “Further investment in product development, R&D and international expansion will enable us to grow the business sustainably over the long-term. Alongside Advent and RAG-Stiftung, we look forward to partnering with management to shape the next phase of this outstanding business.”

“Thyssenkrupp Elevator has established itself as an international market leader, with a strong and innovative product portfolio,” said Ranjan Sen, managing partner and head of Germany at Advent. “We look forward to working alongside Cinven and RAG-Stiftung to leverage our collective expertise and capital resources and to build on this excellent platform for further growth, thereby creating a strong, independent industrial company.”

The deal is expected to close by the end of the third quarter of 2020, subject to customary closing conditions and regulatory approvals.

News: Thyssenkrupp sells elevator unit for $18.7 billion to Advent, Cinven consortium

Intuit’s good Karma

BY Richard Summerfield

FinTech firm Intuit has agreed to acquire Credit Karma for approximately $7.1bn in cash and stocks.

Intuit intends to use Credit Karma’s assets to create a digital personalised finance assistant, a platform that gives users access to their personal finance information, such as income and credit history, as well as information about financial products and other advice.

Credit Karma has 106 million members in the US, UK and Canada, with 37 million monthly active users. The company generated nearly $1bn in revenue in 2019, up 20 percent from the prior year.

The purchase price will be payable in equal portions of cash and Intuit shares, which are being valued at about $299.73 per share, according to a statement announcing the deal.

“Our mission is to power prosperity around the world with a bold goal of doubling the household savings rate for customers on our platform,” said Sasan Goodarzi, chief executive of Intuit. “We wake up every day trying to help consumers make ends meet. By joining forces with Credit Karma, we can create a personalized financial assistant that will help consumers find the right financial products, put more money in their pockets and provide insights and advice, enabling them to buy the home they’ve always dreamed about, pay for education and take the vacation they’ve always wanted.”

“We started Credit Karma with a goal to build a trusted destination for all consumers, to make financial progress regardless of where they are in life,” said Kenneth Lin, founder and chief executive of Credit Karma. “We saw the opportunity to enrich people’s financial lives through transparency, simplicity and certainty.”

The deal — expected to close in the second half of 2020, subject to regulatory approvals — is the largest in Intuit’s 37-year history and the first significant acquisition announced since Mr Goodarzi took control of the company.

News: Intuit to buy Credit Karma for $7.1 billion in cash-and-stock deal

Morgan Stanley to acquire E-Trade in $13bn deal

BY Fraser Tennant

In a combination which creates an industry leader in wealth management, global financial services firm Morgan Stanley is to acquire online brokerage industry company E-Trade in a deal valued at $13bn.

A pioneer in the digital brokerage and banking space for nearly 40 years, E-Trade’s consumer-facing technology platforms and digital banking services, including direct integration with brokerage accounts, checking and high-yield savings accounts, is expected to complement and significantly accelerate Morgan Stanley’s digital banking efforts. 

“Since we created the digital brokerage category nearly 40 years ago, E-Trade has consistently disrupted the status quo and delivered cutting-edge tools and services to investors, traders and stock plan administrators,” said Mike Pizzi, chief executive of E-Trade. “By joining Morgan Stanley, we will be able to take our combined offering to the next level and deliver an even more comprehensive suite of wealth management capabilities.”

For Morgan Stanley, the acquisition marks the continuation of a decade-long effort to rebalance its portfolio of businesses, so that a greater percentage of its revenues and income are derived from balance sheet light and more durable sources of revenues.

“E-Trade represents an extraordinary growth opportunity for our wealth management business and a leap forward in our wealth management strategy,” said James Gorman, chairman and chief executive of Morgan Stanley. “The combination adds an iconic brand in the direct-to-consumer channel to our leading adviser-driven model, while also creating a premier workplace wealth provider for corporations and their employees.

“E-Trade’s products, innovation in technology and established brand will help position Morgan Stanley as a top player across all three channels: financial advisory, self-directed and workplace,” continued Mr Gorman. “In addition, this continues the decade-long transition of our firm to a more balance sheet light business mix, emphasising more durable sources of revenue.”

Morgan Stanley’s acquisition of E-Trade is subject to customary closing conditions, including regulatory approvals and approval by E-Trade shareholders, and is expected to close in the fourth quarter of 2020.

Mr Gorman concluded: “We look forward to welcoming the infusion of management and technology talent that E-Trade will bring to Morgan Stanley.”

News: Morgan Stanley to buy E-Trade Financial in $13bn deal