Payments giant Square acquires lending pioneer Afterpay in $29bn deal

BY Fraser Tennant

Bringing together two of the fastest growing global FinTech companies, US payments company Square is to acquire Australian ‘buy now, pay later’ lending provider Afterpay in a $29bn all-stock transaction.

Under the terms of the agreement, which has been approved by the boards of directors of both companies, Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay ordinary share.

Afterpay’s global merchant base will accelerate Square’s growth with larger sellers and expansion into new geographies, while helping to drive further acquisition of new Square sellers.

“Afterpay has built a trusted brand,” said Jack Dorsey, co-founder and chief executive of Square. “Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”

An industry leader with a best-in-class product and strong cultural alignment with Square, Afterpay serves more than 16 million consumers and nearly 100,000 merchants globally, including major retailers across key verticals such as fashion, homewares, beauty, and sporting goods.

“By combining with Square, we will further accelerate our growth in the US and globally, offer access to a new category of in-person merchants, and provide a broader platform of new services to our merchants and consumers,” said Anthony Eisen, co-founder and co-chief executive of Afterpay. “We are fully aligned with Square’s purpose and, together, we hope to continue redefining financial wellness and responsible spending for our customers.”

Afterpay's co-founders and co-chief executives will join Square upon completion of the transaction and help lead Afterpay’s respective merchant and consumer businesses, as part of Square’s Seller and Cash App ecosystems.

“The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world,” added Nick Molnar, co-founder and co-chief executive of Afterpay. “It also provides our shareholders with the opportunity to be a part of future growth of an innovative company aligned with our vision.”

The transaction is expected to close in the first quarter of 2022, subject to the satisfaction of certain closing conditions.

Mr Dorsey concluded: “Square and Afterpay have a shared purpose: building our business to make the financial system more fair, accessible and inclusive.

News: Twitter's Dorsey leads $29 bln buyout of lending pioneer Afterpay

Safety first for Magna

BY Richard Summerfield

Car parts giant Magna International has agreed to acquire Swedish rival Veoneer Inc. in an all-cash deal worth $3.8bn.

Under the terms of the deal, Magna will acquire all the issued and outstanding shares of Veoneer for $31.25 per share in cash, representing an equity value of $3.8bn, and an enterprise value of $3.3bn, inclusive of Veoneer’s cash, net of debt and other debt-like items as of 31 March 2021. The price represents a 57 percent premium to Veoneer’s closing price on Thursday, the day the deal was announced.

The acquisition will help Magna achieve about $100m in annual cost savings by 2024, according to a joint statement released by the two companies. The deal, which has been approved by the boards of both companies, is expected to close by the end of this year.

For Magna, the acquisition of Veoneer will provide a boost to the company’s efforts to build driver assistance technology geared toward autonomous vehicles. Veoneer manufactures advanced driver assistance systems, such as collision warning and parking assist systems.

Global automotive suppliers are increasingly positioning themselves to benefit from the growth in advanced safety features in passenger cars. Semi-autonomous features like hands-free driving and crash-avoidance technology are becoming ever more prevalent.

Veoneer was spun off by auto-safety supplier Autoliv Inc. in 2018.

“Veoneer’s complementary technology offerings, customer base, and geographic footprint make it an excellent fit with our ADAS business, and the acquisition strengthens our global engineering and software development talent base,” said Swamy Kotagiri, chief executive of Magna. “We expect the combined entity to be an industry leader in active safety solutions, to enhance its position in complete ADAS systems, and to be well-positioned for the transition towards higher levels of autonomy. The acquisition is also consistent with our go-forward strategy to accelerate investment in high-growth areas.”

“This is a compelling transaction for all stakeholders,” said Jan Carlson, chairman, president and chief executive of Veoneer. “It will deliver significant and immediate value to Veoneer stockholders through an attractive premium to our trading price, and provide new opportunities for our employees to join one of the most capable suppliers in the mobility space. In addition, combining forces with Magna will allow the combined business to elevate its status as a full-systems ADAS supplier, which should benefit our customers, supplier partners and ultimately consumers.”

News: Magna's $3.8 billion Veoneer buy to drive car safety business

Zoom to acquire Five9 in $14.7bn all-stock deal

BY Richard Summerfield

Zoom Video Communications Inc is to buy cloud-based call centre operator Five9 Inc in an all-stock deal worth $14.7bn. The transaction is expected to close in the first half of 2022.

Under the terms of the deal, Five9 stockholders will receive 0.5533 shares of Class A common stock of Zoom for each share of Five9. Based on the closing share price of Zoom Class A common stock on 16 July 2021, this represents a per share price for Five9 common stock of $200.28 and an implied transaction value of approximately $14.7bn.

Zoom has risen to prominence over the last 18 months thanks to the role it has played in keeping businesses and schools operating during the pandemic. But as economies begin to open up thanks to the COVID-19 vaccine roll out, the company has been under pressure to diversify its product offering.

“The acquisition is expected to help enhance Zoom’s presence with enterprise customers and allow it to accelerate its long-term growth opportunity by adding the $24-billion contact center market,” Zoom said in a statement.

Five9 is a cloud-based call centre operator whose facilities are used by more than 2000 clients globally.

“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” said Eric S. Yuan, chief executive and founder of Zoom. “Zoom is built on a core belief that robust and reliable communications technology enables interactions that build greater empathy and trust, and we believe that holds particularly true for customer engagement.

“Enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers,” he added. “We are thrilled to join forces with the Five9 team, and I look forward to welcoming them to the Zoom family.”

“Businesses spend significant resources annually on their contact centers, but still struggle to deliver a seamless experience for their customers,” said Rowan Trollope, chief executive of Five9. “It has always been Five9’s mission to make it easy for businesses to fix that problem and engage with their customers in a more meaningful and efficient way.

“Joining forces with Zoom will provide Five9’s business customers access to best-of-breed solutions, particularly Zoom Phone, that will enable them to realize more value and deliver real results for their business,” he continued. “This, combined with Zoom’s ‘ease-of use’ philosophy and broad communication portfolio, will truly enable customers to engage via their preferred channel of choice.”

News: Zoom to buy cloud-based call center operator Five9 in $15 bln deal

Advent sells Allnex for $4.75bn

BY Richard Summerfield

US private equity firm Advent International has agreed to sell German coating resins manufacturer Allnex to PTT Global Chemical for $4.75bn. The deal is expected to close in Q4 2021, subject to regulatory approvals.

Allnex has around 4000 employees worldwide and manages a global production network of 33 state-of-the-art manufacturing sites and 23 research and technology facilities. The company has been pioneering sustainable innovations for the coatings industry for over 70 years and focuses on environmentally friendly technologies, such as waterborne industrial resins, powder resins, energy curable resins and high-solids technologies. The company has annual revenue of around €2bn.

Advent acquired Cytec Industries’ coating resins business in 2013, rebranded it Allnex and merged it with Nuplex in 2016.

“We are proud of the success we have had in building allnex into a global player and are very grateful to Advent for its strong support and excellent partnership over the past years,” said Miguel Mantas, chief executive of Allnex. “In order to build on our leading market position, we will continue to invest in innovative technologies and look to expand our presence in APAC. With its resources, industrial network and expertise, PTT Global Chemical will represent an extraordinary opportunity to take the next steps in the development of our business.”

“Over the past eight years, we have supported allnex’s management team in transforming the company from a corporate carve-out into the number one global producer of industrial coating resins,” said Ronald Ayles, managing partner and head of the global chemicals and materials practice at Advent. “Our significant investment in growth lead to an impressive track record – especially in green technologies. With PTTGC, we have now found the ideal partner to support allnex’s next phase of growth and to continue its success story.”

“In line with our vision to become a leading global chemical company while improving people’s quality of life, as well as our core strategies to drive new sustainable growth opportunities, we are pleased to announce PTTGC International (Netherlands) B.V., a PTTGC wholly owned subsidiary, invests in allnex, a business with outstanding innovation, history and promise, to establish a stronger position internationally,” said Dr Kongkrapan Intarajang, chief executive of PTTGC.

New: Advent sells coating resins maker Allnex to Thailand's PTTGC

KPS Capital exits DexKo in $3.4bn deal

BY Richard Summerfield

Brookfield Business Partners has agreed to acquire DexKo Global Inc, a maker of recreational vehicle components, from private equity firm KPS Capital Partners LP in a $3.4bn deal.

Brookfield Business Partners, a subsidiary of Brookfield Asset Management, said the deal would be funded with about $1.1bn of equity, of which Brookfield intends to invest approximately $400m. The balance of the equity investment will be funded by institutional partners. The transaction is expected to close by the end of the year.

Michigan-based DexKo manufactures highly engineered components for recreational vehicles, trailers and towable equipment providers. The company employs more than 6000 people across 50 production facilities.

“We are pleased to grow our industrials operations with the acquisition of DexKo, a market leader known for quality and reliability,” said Mark Weinberg, managing partner of Brookfield Business Partners. “DexKo’s world-class management team has delivered consistently strong performance and we are excited to partner with them to further build on an established track record of value creation.”

“DexKo exemplifies the KPS investment strategy of seeing value where others do not, buying right and making businesses better, across decades, economic and business cycles, geographies and industries,” said Raquel Palmer, co-managing partner of KPS. “We are proud of DexKo’s extraordinary transformation under our ownership. DexKo demonstrates our ability to partner with world-class management teams to build industry-leading manufacturing companies on a global basis.”

“Our partnership with KPS has been extraordinary,” said Fred Bentley, chief executive of DexKo. “KPS recognized DexKo’s strength and potential from the start and invested to support DexKo’s growth ambitions. DexKo has become a better business as a result of KPS’ investments in our operations and people.

“DexKo is well positioned for future growth which we look forward to pursuing in partnership with Brookfield,” he added.

The deal is the latest addition to Brookfield’s portfolio of industrials, infrastructure and business services. The company says it has $600bn in assets under management with $22bn invested in the industrials sector alone.

Financing for the deal will be led by a syndicate of banks including Credit Suisse, Deutsche Bank, BMO Capital Markets, Bank of America, Goldman Sachs and RBC Capital Markets. Davis Polk & Wardwell LLP is acting as legal adviser to Brookfield.

News: Brookfield to buy recreational vehicle parts maker DexKo Global for $3.4 billion