U.S. Bancorp to acquire MUFG Union Bank in $8bn deal

BY Richard Summerfield

U.S. Bancorp, parent of US Bank, has agreed to acquire MUFG Union Bank in a deal worth around $8bn.

Under the terms of the deal, U.S. Bancorp will pay $5.5bn in cash and issue 44 million shares of its common stock, giving the Japanese parent of MUFG Union Bank a 2.9 percent stake in the company. The transaction excludes the purchase of MUFG Union Bank’s Global Corporate & Investment Bank, certain middle- and back-office functions, and other assets.

The transaction has been unanimously approved by the boards of directors of U.S. Bancorp and MUFG, though it is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals. The deal is expected to close in the first half of 2022.

“The acquisition of MUFG Union Bank underscores our commitment to strengthen and grow our business on the West Coast, make investments to serve customers and local communities and enhance competition in the financial services industry,” said Andy Cecere, chairman, president and chief executive of U.S. Bancorp. “With MUFG Union Bank, we will increase access to state-of-the-art financial products while maintaining U.S. Bank’s strong track record of putting its customers and communities first.

“We are also committed to maintaining both organizations’ excellent records of serving low-income communities and supporting minority-led institutions,” he continued. “We have a great deal of respect for the MUFG Union Bank team and share customer-centric and relationship-based strategies and cultures based on integrity. We look forward to welcoming MUFG Union Bank to the U.S. Bancorp family.”

“We are very pleased to have reached this agreement which will allow MUFG to focus and increase our resources on accelerating growth in our Americas wholesale businesses – specifically our corporate and investment banking, global markets, Japanese corporate banking and transaction banking businesses,” said Kevin Cronin, MUFG regional executive for the Americas and chief executive of MUFG Americas Holdings Corporation and MUFG Union Bank, N.A.

For U.S. Bancorp, the deal creates a group with combined assets of $665bn and gives it access to MUFG Union Bank’s 300 branches in the US. The bank said it expects to achieve about $900m in pre-tax cost synergies.

There has been a spate of consolidation deals in the US banking sector over the last two years. Driven by the coronavirus (COVID-19) pandemic, dealmaking has gathered pace. In February, M&T Bank agreed to acquire smaller rival People’s United Financial for $7.6bn, while Pittsburgh-based PNC struck a $11.6bn deal last year to buy the US business of Spain’s BBVA. 

News: Japan's MUFG to exit U.S. retail banking in $8 bln deal with U.S. Bancorp

Consortium buys WestConnex toll road for AU$11.1bn

BY Fraser Tennant

In an AU$11.1bn transaction that gives it full control of one of the largest road infrastructure projects in the world, a consortium led by Australian road operator Transurban is to acquire 49 percent of the WestConnex toll road in Sydney.

The consortium, Sydney Transport Partners (STP), already owns 51 percent of WestConnex – an approximately 70km-system of toll roads – after it purchased the stake from the New South Wales (NSW) government in 2018 and emerged as the top bidder for the remainder.

In addition to Transurban, which owns 50 percent, STP, AustralianSuper and Tawreed Investments are also partners in the consortium. Following the acquisition of the remaining 49 percent stake of WestConnex, AustralianSuper and Tawreed Investments will maintain their holding in STP, while the consortium will add Canada’s Caisse de dépôt et placement du Québec (CDPQ) as a new partner.

“WestConnex is one of the largest road infrastructure projects in the world and a key component of NSW’s integrated transport plan to ease congestion and connect communities in Sydney,” said Scott Charlton, chief executive of Transurban. “We feel privileged to take STP’s holding in this critical asset to 100 percent.”

Under the terms of the acquisition, CDPQ will contribute 20.5 percent of the acquisition cost for the remaining 49 percent stake in WestConnex for a 10 percent stake in STP. Canada Pension Plan Investment Board's interest in the STP consortium will be 10.5 percent.

Upon completion of the transaction, the NSW government will have received a total of AU$20.4bn from the sale of the entire WestConnex project.

To fund the acquisition, Transurban will raise AU$4.22bn of new equity. Overall, the acquisition will be fully funded by STP with equity upfront and no additional debt funding. The increased WestConnex ownership is currently expected to facilitate more than AU$600m of additional potential capital releases until 2025.

Dominic Perrottet, NSW treasurer, concluded: “This transaction continues our successful asset recycling strategy, which has been the cornerstone of our record A$108.5 billion infrastructure pipeline that has built and upgraded schools, hospitals, road and rail across NSW.”

News: Transurban consortium to pay $8.1 billion for full control of Sydney tunnel network

Packable strikes $1.55bn SPAC deal

BY Richard Summerfield

Ecommerce marketplace enablement platform Packable has entered into a definitive agreement to merge with Highland Transcend Partners Corp, a special purpose acquisition company (SPAC), in a deal worth $1.55bn.

Packable, which is backed by private equity firm The Carlyle Group, was valued at around $1.1bn in November 2020 when Carlyle invested $250m to acquire its stake in the company.

Under the terms of the deal, Packable’s existing shareholders will receive 71 percent of the combined company, Highland Transcend SPAC founders and investors will own 19 percent, while private investment in public equity (PIPE) investors, including Fidelity Management & Research Company, Lugard Road Capital, Luxor Capital, Park West Asset Management and Morningside, will receive the remaining 11 percent.

“This is an incredibly exciting time for our team, and we are thrilled to partner with Highland Transcend as we plan to enter our next chapter as a public company,” said Packable co-founder and chief executive Andrew Vagenas. “While we’ve become a market leader in our industry, there is significant runway ahead of us in multiple avenues: from the continued proliferation of online marketplaces and geographic opportunities to our ability to invest in and grow Digitally Native Brands, while providing new data and technology services, as well as marketing options for our brand partners.”

“While we believe that third-party marketplaces will contribute more than 40 percent of all ecommerce revenues by 2025, brands find themselves challenged to manage the complexity of executing across these platforms,” said Ian Friedman, chief executive of Highland Transcend. “Packable has a leading software-driven offering enabling brands to grow their businesses across multiple online marketplaces. Andrew and the entire team have built an incredibly strong competitive platform; with approximately 75 million customer transactions to-date, we believe that Packable has one of the largest sets of third-party marketplace transaction data, outside of the marketplaces themselves. This data enables Packable’s competitive pricing, merchandising, and marketing decisions and will allow the company to launch a Software-as-a-Service offerings in the future.”

News: Carlyle-backed Packable agrees $1.55 billion SPAC merger

PayPal to acquire Paidly for $2.7bn

BY Richard Summerfield

Payment behemoth PayPal Holdings Inc has agreed to acquire Japanese ‘buy now, pay later’ firm Paidy in a deal worth $2.7bn.

Completion of the transaction, following regulatory approval, is expected in the fourth quarter of 2021. Under the terms of the agreement, Paidly will continue to operate its existing business and maintain the brand while the company’s leaders, Riku Sugie, president and chief executive, and Russel Cummer, founder and executive chairman, will keep their respective positions.

The ‘buy now, pay later’ market has grown significantly of late – likely as a result of the coronavirus (COVID-19) pandemic – with companies including Paidly, Klarna and Afterpay all increasing in prominence. The industry has also begun to see some consolidation, with Square Inc announcing in August that it was to acquire Afterpay Ltd for $29bn.

Paidly has more than 6 million registered users. It plans to integrate PayPal and other digital and QR wallets with Paidy Link – a service it launched in April 2021 which allows customers to link digital wallets to their Paidly account – to connect further online and offline merchants.

While Paidly has a considerably smaller customer base, Japanese consumers are beginning to move away from cash payments, which at present account for 70 percent of payments in the country. As such, there is considerable room for growth in the ‘buy now, pay later’ segment of the Japanese e-commerce space. The acquisition will see PayPal increase it’s foothold in Japan - the world’s third-largest e-commerce market - where it currently has around 4.3 million active users.

“Combining Paidy’s brand, capabilities, and talented team with PayPal’s expertise, resources, and global scale will create a strong foundation to accelerate our momentum in this strategically important market,” said Peter Kenevan, vice president and head of Japan at PayPal.

“There is no better home for Paidy to continue to grow and innovate than PayPal, which has been removing friction from online shopping for more than 20 years,” said Mr Cummer.

PayPal is already active in the buy now, pay later space. In August 2020, the company introduced a new instalment credit option for PayPal users called ‘Pay in 4’.

News: PayPal's $2.7 bln Japan deal heats up buy now, pay later race 

Prosus increases Indian investments

BY Richard Summerfield

Prosus N.V. has agreed to acquire BillDesk in a deal worth $4.7bn, subject to approval from the Competition Commission of India.

The deal will increase Prosus’ total investment in Indian start-ups to more than $10bn, the company said in a statement. Prosus’ Indian portfolio includes food delivery company Swiggy, EdTech giant BYJU’S, FinTech company LazyPay, and Urban Company.

Upon completion, the deal is expected to create a financial ecosystem that could handle 4 billion transactions annually, which is nearly four times what PayU, another Prosus FinTech, does in India currently, as well as meet the changing payments needs for multiple stakeholders in the country.

“We have a long and deep relationship with India, having supported and partnered with some of its most dynamic entrepreneurs and new tech businesses since 2005,” said Bob van Dijk, group chief executive of Prosus. “We’ve invested close to US$6 billion in Indian tech to date, and this deal will see that increase to more than US$10 billion. BillDesk exemplifies the ambition and expertise of Indian entrepreneurs, who are among the best in the world, with exceptional abilities to build products and services and understand scale and value. This is critical in a country as vast as India.”

“We believe this transaction will stimulate both innovation and competition within India’s digital payments industry,” said Laurent Le Moal, chief executive of PayU. “This will not only help to strengthen India’s digital economy, but also bring financial services to those who may have historically been excluded. This ambition is fully aligned with the Government of India’s vision of ‘Digital India’ and is a key objective for PayU across all the communities we serve globally. This deal is an example of how our purpose and our business objectives work together, accelerating growth and increasing access to financial services.”

“BillDesk has been a pioneer in driving digital payments in India for well over a decade,” said M N Srinivasu, co-founder of BillDesk. “This investment by Prosus validates the significant opportunity in India for digital payments that is being propelled by innovation and the progressive regulatory framework put into place by the Reserve Bank of India, India’s central bank. BillDesk has always been committed to making payments faster, easier and more secure. We are excited about what the two great teams at BillDesk and PayU can deliver together as a driving force within the evolving digital payments landscape in India.”

BillDesk was founded in 2000 and counts Visa, General Atlantic and Temasek Holdings, among others, as its investors.

News: Prosus doubles down on India with $4.7 bln deal for BillDesk