UK M&A set to soar in 2022, claims new report

BY Fraser Tennant

The number of M&A deals in the UK is expected to rise significantly in the next 12 months as part of a return to post-pandemic normality, according to a new report by Ansarada.

The ‘Top UK Dealmakers’ M&A Predictions 2022’ report, which polled senior executives from 50 UK-based firms across investment banking, private equity and M&A, reveals that 90 percent of respondents believe that the number of M&A deals in the UK will increase in the next 12 months, including 54 percent who believe it will increase significantly.

The report also found that more than half of respondents expect the number of distressed deals in the UK to rise over the same period, reflecting a difficult period for UK businesses which have faced disruption to supply chains in the midst of the pandemic and Brexit headwinds.

However, the research notes that even Brexit has not dented sentiment in investment opportunities, with 40 percent of respondents stating they expected the UK to become a more appealing venue for cross-border investment as funds benefit from the ability to buy companies at a favourable foreign exchange rate now that Britain has left the EU.

“There is much for investors to be optimistic about and confidence is running high,” said Sam Riley, chief executive of Ansarada. “Most expect even more M&A activity to come, including anticipation of rising special purpose acquisition company (SPAC) activity, which has so far been slow to take off compared with the US market.”

In terms of sectors, one third of respondents highlighted the technology, media and telecoms (TMT) sector as driving the most activity due to wide increases in digital consumption and connectivity. Additionally, 70 percent of survey respondents said they also expected increased activity in distressed M&A to be across industrials and chemicals, real estate and construction, energy and mining, and utilities.

Despite the increase in sentiment across the UK M&A market, however, significant challenges remain. “Deals are still susceptible to a complex mix of extenuating situations,” said Stuart Clout, chief revenue officer and global head of growth at Ansarada. “As we have seen, driver shortages and supply chain disruption in the UK has severely hampered UK businesses recently, and the largely expected surge in COVID-19 cases locally is of course something to be mindful of.

“These events will have knock-on consequences for dealmakers,” he concluded. “Deal speed, preparation and quality due diligence is going to be essential if the expectations from the dealmakers we surveyed are to be met.”

Report: Top UK Dealmakers’ M&A Predictions 2022

Ecolab has agreed to acquire Purolite for $3.7bn

BY Richard Summerfield

Hygiene company Ecolab has agreed to acquire Purolite in a $3.7bn deal which is expected to close later this year.

Under the terms of the agreement, Ecolab will pay approximately $3.7bn in cash, utilising approximately $800m of cash on the company’s balance sheet and low-cost debt for the balance.

Purolite reports sales of around $400m, operates in 30 countries and employs roughly 1000 people worldwide. Upon completion of the deal, the company will operate as a separate business unit and its results will be reported within Ecolab’s life sciences division.

Purolite’s products includes a type of resin beads that are used to separate elements and compounds in industries ranging from sugar refining to manufacturing of mRNA vaccines. The deal is expected to help Ecolab grow in the water purification, food and beverage processing, and metal extraction businesses. The transaction is expected to add to the company’s earnings in 2023.

“With 2021 sales of $0.4 billion and mid-teens growth, Purolite is an acquisition that brings us a fast growing leader in biopharma and industrial purification solutions with very strong margins,” said Christophe Beck, president and chief executive of Ecolab. “With this transaction, we will significantly increase our opportunities in our high growth, high margin life sciences business, such as the purification of mRNA vaccines and monoclonal antibodies for cancer-treatment drugs.

“By combining Ecolab’s state-of-the-art capabilities in clean and safe processing with Purolite’s revolutionary resin technology, we will provide a comprehensive and game-changing offering that will make the customer’s end-product better, safer, healthier and more effective,” he continued. “At the same time, it will further expand our capabilities in industries that are complementary to our already existing leading positions, such as the polishing of advanced microelectronics, ultra-purification of water in nuclear power, food and beverage taste and product quality enhancement, high-end precious metals extraction, like lithium for EV batteries, as well as in the production of hydrogen fuel cells.”

“Over the last 40 years, with the support and contribution of our loyal, highly skilled workforce, we have built our company into a dynamic force within the industries and for the clients we serve,” said Steve Brodie, chief executive of Purolite. “We are truly grateful to our employees and management team for supporting our vision and entrepreneurial spirit. My family and I are very confident that Ecolab can carry on these traditions. We are confident that Purolite will be in good hands and that our goals for high growth, innovation and quality will continue under Ecolab’s stewardship.”

News: Ecolab has agreed to acquire Purolite for $3.7bn

Draftkings abandons offer for Entain

BY Richard Summerfield

US fantasy sports and gambling company DraftKings has confirmed that, following further analysis and discussions with the Entain board of directors, it will not make a firm offer for the company.

In September, Draftkings first declared its interest in a takeover and had until 16 November to make a ‘put up or shut up’ offer for Entain after being granted a one-month extension last week by the City’s Takeover Panel. Under the City’s takeover rules, Draftkings cannot return with a new offer for Entain for six months.

Following the effects of the coronavirus (COVID-19) pandemic and the relaxation of sports betting laws in the US, Entain has seen immense growth in its online revenues in recent years. Accordingly, the company has attracted interest from several parties. Earlier this year, Entain rejected an approach from MGM Resorts International. Draftkings offered £25 per share for the company, though that was rejected for being too low. It then upped the proposal to £28 per share, or $22.4bn, which represented a 43 percent premium over the company’s stock price.

“After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time,” said Jason Robins, chief executive, co-founder and chairman of DraftKings. “Based on our vertically-integrated technology stack, best-in-class product and technology capabilities and leading brand, we are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market.”

Entain’s board said it remains focused on executing its growth and sustainability strategy. In a statement, the company said: “The board strongly believes in the future prospects of Entain, underpinned by its leading market positions, world class management team and industry-leading proprietary technology. Entain has an outstanding track record of growth having delivered 23 consecutive quarters of double digit online NGR growth.”

While neither firm explained in any significant detail the main reasons behind the deal’s collapse, Entain’s joint venture with MGM in the US, BetMGM, may have made the likelihood of a transaction more complicated.

Interest in UK bookmakers has grown markedly in recent years. In 2020, Las Vegas casino firm Caesars Entertainment agreed to acquire William Hill for £2.9bn.

News: Ladbrokes owner Entain's shares tumble as Draftkings drops $22bn offer

Telstra to acquire Digicel Pacific in $1.6bn transaction

BY Fraser Tennant

In a strategic move in the South Pacific, Australian telecommunications company Telstra Corporation is to buy the Pacific arm of fellow telecoms giant Digicel Group Holdings Limited (DGHL) in a transaction valued at $1.6bn.

Under the terms of the agreement, Telstra and the Australian government will acquire Digicel Pacific – a joint venture that many view as a political block to China's influence in the region. The deal involves Telstra contributing $270m, with the government providing the bulk of the financing with $1.33bn.

Headquartered in Papua New Guinea, Digicel is the biggest telecommunications business in the South Pacific. It also operates across Vanuatu, Nauru, Samoa, Tonga and Fiji, with 2.5 million mobile phone and internet subscribers and 1700 employees.

Upon completion, Digicel will have no operational responsibility for the Pacific operations, though customary transition services will be provided by DGHL for a limited period. Furthermore, there will be no change to the Digicel brand in the six markets in which it operates, and the current DPL management team will continue to lead the business.

"This announcement is a tremendous testament to our colleagues across Digicel Group and in particular, our 1700 staff in the Pacific,” said Denis O’Brien, founder and chairman of Digicel. “In 2006, we established a business in the South Pacific region that has helped democratise mobile communications and transform local economies and societies by making affordable best-in-class communications available to more than 10 million people across six of the most exciting markets in the South Pacific region.

"I am very pleased that today's agreement with Telstra, our very near neighbour in the Pacific, will further enhance DPL’s infrastructure, data and call termination links with one of the largest and most reliable networks in Australia,” he continued. “I thank all of our colleagues in the South Pacific and beyond who have made today possible, and I remain committed to ensuring a successful transition in my ongoing role as a director of the newly formed holding company.”

The transaction, which remains subject to customary government and regulatory approvals, is expected to complete in the first quarter of 2022.

Mr O’Brien concluded: “From a Digicel perspective, this transaction is a very successful realisation of a strategic investment following our entry in the South Pacific in 2006.”

News: Telstra to buy Digicel Pacific in Australia government-backed $1.6 bln deal

Columbia and Umpqua unite in $8.2bn transaction

BY Fraser Tennant

In a deal that creates the leading regional bank on the US West Coast, Columbia Banking System, Inc. and Umpqua Holdings Corporation are to merge in an all-stock combination valued at $8.2bn.

Under the terms of the definitive agreement, Umpqua shareholders will receive 0.5958 of a share of Columbia stock for each Umpqua share they own. Umpqua shareholders will own approximately 62 percent and Columbia shareholders will own approximately 38 percent of the combined company.

Upon completion, the combined company will be the West Coast's leading regional bank with $43bn in deposits, including $16bn of deposits in Oregon, $15bn in Washington, $10bn in California and $2bn collectively in Idaho and Nevada.

In addition, the deal strengthens the combined company's competitive position in high-growth, attractive markets, including leading market share in the Seattle, Portland and Sacramento metro areas.

"This combination brings together two well-respected organisations and talented teams, accelerating our shared strategic objectives to create the leading regional bank headquartered in the West,” said Cort O'Haver, president and chief executive of Umpqua. “Together, with increased scale, we will have the ability to provide expanded opportunities for associates and serve customers through an even more comprehensive suite of solutions.”

The transaction has been unanimously approved by the boards of directors of both companies.

"This is a historic partnership that will enhance what both banks are able to do for clients, team members and communities, while driving significant value for our shareholders,” said Clint Stein, president and chief executive of Columbia Banking System. “We believe blending the complementary expertise, services and innovative technology of both banks will position the combined organization as the preferred bank for business and families across the West.”

The combined company will be led by an executive team composed of leaders from both Columbia and Umpqua.

The transaction is expected to close in mid-2022, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approvals from each company's shareholders.

Mr O’Haver concluded: “I look forward to partnering with the Columbia team to expand our market share as a combined organisation.”

News: Columbia Banking, Umpqua Bank to Merge in $5 Billion Deal