First Citizens and CIT agree $2.2bn merger

BY Richard Summerfield

First Citizens BancShares and CIT Group have announced an agreement to merge in a deal worth $2.2bn.

The deal is being billed as a merger of equals, though First Citizens would be the surviving company and its investors would own 61 percent of its outstanding shares. First Citizens will pay $2.2bn in stock for CIT, with CIT shareholders receiving 0.062 shares of First Citizens’ stock for each share they own. The deal is expected to close in the first half of 2021.

Frank Holding, Jr, chairman and chief executive of First Citizens, will retain the same roles at the combined company. Ellen R. Alemany, chairwoman and chief executive of CIT, will assume the role of vice chairwoman and play a key role in the merger integration. In addition, she will serve on the board of directors of the combined company.

The deal will create the 19th-largest bank holding company in the US, with roughly $110bn of assets and a nationwide network of branches.

“This is a transformational partnership for First Citizens and CIT designed to create long-term value for all of our constituents including our stockholders, our customers, our associates and our communities,” said Mr Holding, Jr.  “We have long admired CIT’s market-leading commercial business, including their strong market position across multiple asset classes. Under Ellen’s leadership, CIT has made tremendous progress in reducing its cost of funds, enhancing risk management processes and retaining key talent.”

He continued: “First Citizens has a long history of delivering strong returns to our stockholders, gathering low-cost deposits and driving strong earnings, which are all supported by an exceptional credit culture, strong capital and excellent risk management. Together, First Citizens and CIT will be able to leverage both companies’ unique attributes to create the 19th largest bank in the country, well-positioned to compete across the United States.”

“Frank and I have long respected each other’s companies and believe this transaction will accelerate our strategic goals by bringing together the expertise of both banks to create scale, strength and value,” said Ms Alemany. “I’m proud of the work we have done to transform CIT in recent years to a leading, national commercial bank. This transaction will build on those efforts and more fully unlock the potential in our core franchises. In addition, the strength that is created as a larger US bank will enable greater opportunities for our team, our customers and our communities.”

News: Regional lender First Citizens to buy CIT in $2.2 billion deal

Twilio clinches data deal

BY Richard Summerfield

Cloud computing firm Twilio Inc has agreed to acquire customer data company Segment Inc for around $3.2bn in stock, after a boom in demand for online communications tools during the COVID-19 pandemic.

The all-stock deal, specifically “in Twilio Class A common stock, on a fully diluted and cash free, debt free basis” is expected to close in Q4 2020. Upon completion, Segment will become a division of Twilio, the companies said in a statement.

The deal will accelerate Twilio’s efforts to build the leading global customer engagement platform and offers a combined total addressable market of $79bn.

“Data silos destroy great customer experiences,” said Jeff Lawson, co-founder and chief executive of Twilio. “Segment lets developers and companies break down those silos and build a complete picture of their customer. Combined with Twilio’s Customer Engagement Platform, we can create more personalized, timely and impactful engagement across customer service, marketing, analytics, product and sales. We are thrilled to welcome Segment to the Twilio team.”

“Together, Twilio and Segment have an incredible opportunity to build the customer engagement platform of the future,” said Peter Reinhardt, co-founder and chief executive of Segment. “We created Segment to help businesses set themselves apart in the digital age and deliver rich, connected customer experiences built on high-quality data. By joining forces and applying our customer data platform to Twilio’s engagement cloud, we’ll be able to make the entire customer experience seamless from end-to-end.”

The deal is Twilio’s biggest acquisition since it acquired SendGrid for $2bn in 2018 to add email to its range of communications tools.

Segment, founded in 2012, raised $175m in a Series D round in April 2019 that was led by existing investors Accel & GV. New investors at the time included Meritech Capital, Thrive Capital, Y Combinator Continuity, and e.ventures. That round reportedly valued Segment at $1.5bn.

Twilio went public in June 2016 and has a market capitalisation of more than $45bn.

News: Twilio to buy cloud customer data startup Segment for $3.2 billion

LSEG sells Borsa Italiana to Euronext in $5bn deal

BY Fraser Tennant

In a transaction which creates a leading player in European capital markets infrastructure, London Stock Exchange Group (LSEG) is to sell Borsa Italiana, Italy's only stock market exchange, to pan-European stock exchange Euronext for $5bn in cash.

The combination significantly enhances the scale of Euronext, diversifies its business mix into new asset classes and strengthens its post-trade activities, as well as delivering on its ambition to build the leading pan-European market infrastructure.

“The acquisition of Borsa Italiana marks a significant achievement in our ‘Let’s Grow Together 2022’ strategic plan and a turning point in our history,” said Stéphane Boujnah, chief executive and chairman of the managing board of Euronext “Thanks to this transaction, we will significantly diversify our revenue mix and geographical footprint by welcoming the market infrastructure of Italy, a G7 country and the third largest economy in Europe.”

Euronext is financing the transaction via bridge loan financing and long-term financing to be implemented through a mix of existing available cash, new debt and new equity.

“We have enjoyed a long and successful relationship with LSEG, which has invested in and developed our business over the last 12 years,” said  Raffaele Jerusalmi, chief executive of Borsa Italiana. “We look forward to embarking on the next phase of our history, working in partnership with Euronext to further develop our business and to contribute to the development of European capital markets.”

The sale of Borsa Italiana to Euronext is supported by the board of LSEG who intend to recommend that shareholders vote in favour of the resolution to approve the transaction at a extraordinary general meeting on 20 November 2020.

“We believe the sale of Borsa Italiana will contribute significantly to addressing the EU’s competition concerns,” said David Schwimmer, chief executive of LSEG. “Borsa Italiana has played an important part in LSEG’s history. We are confident that it will continue to develop successfully and contribute to the Italian economy and to European capital markets under Euronext’s ownership.”

The completion of the transaction is expected in the first half of 2021 subject to Euronext’s and LSEG’s shareholder approvals, and regulatory approvals in Italy, the UK, the US, Belgium and France.

Mr Boujnah concluded: “The combination of Euronext and the Borsa Italiana delivers the ambition of building the leading pan-European market infrastructure, connecting local economies to global capital markets.”

News: LSE agrees to sell Borsa Italiana to Euronext for $5 billion

NEC Corp to acquire Avaloq for $2.2bn

BY Richard Summerfield

NEC Corp has agreed to acquire software company Avaloq Group AG in a deal worth $2.2bn. The parties expect the deal to close in April 2021.

The sale of Avaloq ends a three-year investment by private equity firm Warburg Pincus, which owns 45 percent of the company. The rest of Avaloq is held by its founder Francisco Fernández and its employees. 

Avaloq has about 2300 employees and serves more than 150 banks and wealth managers in key financial centres including London, Frankfurt and Paris. In a statement announcing the deal, Juerg Hunziker, Avaloq’s chief executive, said the deal would help the company expand its geographical footprint beyond Europe.

“The Avaloq team is delighted to be joining NEC Group, a highly trusted and well-respected company with a long heritage, which will help further enlarge our geographical footprint across the globe,” said Mr Hunziker. “Due to very similar values of professionalism, reliability, quality and excellent service for clients with a focus on precision, we firmly believe that this partnership will be a successful one for employees, clients as well as other stakeholders.”

He added: “The whole Group Executive Board at Avaloq is committed to driving forward our growth strategy and we are very glad to have a strong partner on our side who supports our long-term vision. With NEC, Avaloq found a perfect new home to continue our success story of serving our clients with solutions that make their lives simpler in an ever more complex world. The Avaloq team would like to thank Warburg Pincus for its valuable strategic advice and continued support during our successful partnership.”

“NEC strongly believes in the importance of safety and security around financial institutions, which is absolutely crucial for sustainable prosperity and digital inclusion,” said Takashi Niino, president and chief executive of NEC. “Avaloq is a recognised global leader in their field, and their compelling offering is expected to complement our current solutions. NEC aims to further expand its business in the digital government and digital finance areas, by globally developing SaaS and BPaaS business models that utilise software and technologies from throughout the NEC Group, including Avaloq’s.”

“We have enjoyed a rewarding and successful partnership with Avaloq’s chairman and founder, Francisco Fernandez and Juerg Hunziker, Group CEO,” said Adarsh Sarma, partner and co-head of Warburg Pincus Europe. “Avaloq has grown quickly to establish itself as a global leader in banking software and is one of the most strategic FinTech companies in its space. Together with management, we have transitioned Avaloq from an on-premise business model into software-as-a-service provider, launched new innovative cloud native digital products and expanded into multiple new geographies. With strong leadership and governance in place, we are confident that Avaloq will have great future success under new ownership and wish them the very best.”

The deal follows NEC’s 2018 acquisition of British IT services company Northgate Public Services and its 2019 purchase of Danish e-government services firm KMD for more than $1bn.

News: NEC to buy Swiss software firm Avaloq for $2.2 billion

Caesars bets on William Hill

BY Richard Summerfield

US casino operator Caesars Entertainment has agreed to acquire UK gambling group William Hill for $3.7bn.

The deal will see William Hill shareholders receive 272 pence in cash for each share held, a 25 percent premium to last Thursday’s closing share price of 217.60 pence, the day before William Hill said it had received the offer. Caesars will partly fund the transaction via a $1.7bn issue of new stock.

The deal, which must be agreed by 75 percent of William Hill shareholders, was unanimously recommended by the company’s directors. It came after two rival bids by US private equity firm Apollo were turned down.

Caesars is believed to be considering selling William Hill’s UK assets to Apollo, however, as the company is more focused on the fast-growing US sports-betting market. Caesars and William Hill are already engaged in a US sports-betting joint venture, which is currently 80 percent-owned by William Hill.

“The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect,” said Tom Reeg, chief executive of Caesars Entertainment. “William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to serve our customers in the fast-growing US sports betting and online market. We look forward to working with William Hill to support future growth in the US by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment.”

“The William Hill Board believes this is the best option for William Hill at an attractive price for shareholders,” said Roger Devlin, chairman of William Hill. “It recognises the significant progress the William Hill Group has made over the last 18 months, as well as the risk and significant investment required to maximise the US opportunity given intense competition in the US and the potential for regulatory disruption in the UK and Europe."

News: Caesars to buy William Hill for $3.7 billion in sports-betting drive