Ericsson’s $6.2bn Vonage deal

BY Richard Summerfield

Ericsson has agreed to acquire cloud-based services group Vonage in an all-cash, $6.2bn deal, which is expected to close in the first half of 2022, subject to Vonage shareholder approval, regulatory approvals and other conditions.

Under the terms of the deal, Ericsson will pay $21 for each outstanding Vonage share, a 28 percent premium to Friday’s closing price and a 34 percent premium to the average of the last three months.

The deal, Ericsson’s biggest ever, marks the company’s latest attempt to diversify away from its core mobile infrastructure business following a failed attempt to move into media in the 2010s.

Vonage, which had sales of $1.4bn in the year to the end of September, tried to sell its legacy consumer business but abandoned the sale in February. The company had a market value of about $3.6bn in September before activist investor Jana Partners started agitating for it to sell itself or break up. Vonage operates across sectors such as healthcare, finance, education and transportation.

“The core of our strategy is to build leading mobile networks through technology leadership,” said Börje Ekholm, president and chief executive of Ericsson. “This provides the foundation to build an enterprise business. The acquisition of Vonage is the next step in delivering on that strategic priority. Vonage gives us a platform to help our customers monetize the investments in the network, benefitting developers and businesses. Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers. Then back it with Vonage’s advanced capabilities, in a world of 8 billion connected devices. Today we are making that possible.”

“Ericsson and Vonage have a shared ambition to accelerate our long-term growth strategy,” said Rory Read, chief executive of Vonage. “The convergence of the internet, mobility, the cloud and powerful 5G networks are forming the digital transformation and intelligent communications wave, which is driving a secular change in the way businesses operate. The combination of our two companies offers exciting opportunities for customers, partners, developers and team members to capture this next wave. We believe joining Ericsson is in the best interests of our shareholders and is a testament to Vonage’s leadership position in business cloud communications, our innovative product portfolio, and outstanding team.”

Ericsson said the deal would be financed through its existing cash pool. The company also noted that it expected revenue synergies of about $400m and some cost efficiencies from the transaction, which should be accretive to adjusted earnings per share and free cash flow by 2024.

News: Sweden's Ericsson snaps up cloud firm Vonage in $6.2 bln deal

Heineken agrees Distell deal

BY Richard Summerfield

Dutch brewer Heineken has agreed a deal to acquire South Africa’s Distell Group Holdings and Namibia Breweries Ltd (NBL) to form a southern Africa drinks group worth $4.6bn.

Heineken will pay around 40.1bn rand or $2.62bn for Distell. Finalisation of the deal, expected in 2022, is subject to regulatory and shareholder approvals. Upon completion, Heineken will contribute the acquired Distell assets plus its 75 percent directly-owned shareholding in Heineken South Africa and other fully-owned export operations in Africa, into an unlisted public holding company. Heineken will own a minimum of 65 percent of the new company, with the remainder held by Distell shareholders who elect to reinvest.

“We are very excited to bring together three strong businesses to create a regional beverage champion, perfectly positioned to capture significant growth opportunities in Southern Africa,” said Dolf van den Brink, chairman of the executive board and chief executive of Heineken. “Distell is a highly regarded, resilient business with leading brands, a talented workforce and a strong track record of innovation and growth in Africa. With NBL, there are exciting opportunities to expand premium beer and cider in Namibia and grow the iconic Windhoek brand beyond its home market.

“Together we will be able to better serve our consumers and customers through a unique combination of multi-category leading brands and a strengthened route-to-market,” he continued. “The businesses share common values derived from their family heritage, long-term perspectives, entrepreneurial spirit, and care for people and planet.”

“Together, this partnership has the potential to leverage the strength of Heineken’s global footprint with our leading brands to create a formidable, diverse beverage company for Africa,” said Richard Rushton, chief executive of Distell. “I am excited for what lies ahead as we look to combine our strong and popular brands and highly complementary geographical footprints to create a world class African company in the alcohol beverage sector. Our combined entity will grow our local expertise and insights to better serve consumers across the region.”

“What we have achieved with NBL is truly amazing, but the time has come to unleash its full potential, by giving NBL access to the world,” said Sven Thieme, chief executive of NBL. “Having worked with Heineken for many years and knowing that they too are passionate about beer and share similar family values and culture to that of O&L, we are confident that Heineken is best placed to do just that.”

The deal is the first since Mr van den Brink took charge at Heineken in June 2020. The company has announced plans to restore profit margins, partly through terminating 8000 jobs.

News: Heineken to buy S.Africa's Distell and Namibian Breweries

Newcrest to acquire Pretium Resources in $2.8bn deal

BY Richard Summerfield

Newcrest Mining Ltd has agreed to acquire all of the issued and outstanding common shares of Pretium Resources Inc. that it does not already own, in a deal worth $2.8bn.

Under the terms of the deal, Newcrest has offered Pretium’s shareholders the right to receive C$18.50 in cash or 0.8084 of a Newcrest share for each Pretium share held. The cash offer represents a 22.5 percent premium to Pretium’s last close on Monday.

The deal is subject to the approval of Pretium shareholders, as well as approval under the Investment Canada Act and other standard requirements. The companies said they expect the deal to close in the first quarter of 2022.

The agreement between the companies includes a C$125m break fee that Pretium would be required to pay Newcrest if it breaks away in favour of another deal.

Pretium is the owner of the Brucejack operation in the highly prospective Golden Triangle region of British Columbia, Canada. Brucejack began commercial production in July 2017 and is one of the highest-grade operating gold mines in the world. The Pretium Technical Report of 9 March 2020 estimated gold production of 311,000oz/y at an AISC of US$743/oz of gold over a projected 13-year mine life.

“We are delighted to be expanding our presence in this highly prospective region in British Columbia,” said Sandeep Biswas, managing director and chief executive of Newcrest. “Brucejack is a Tier 1 mine in a Tier 1 jurisdiction and will deliver immediate production, free cash flow and earnings diversification to Newcrest and will fit seamlessly into our long life, low cost portfolio.

“Following this transaction Newcrest will have exposure to six Tier 1 orebodies and a portfolio of organic growth options of unrivalled quality,” he continued. “The transaction will also drive a material increase in mineral resources, ore reserves and annual gold production.”

“The acquisition of Pretium by Newcrest is an outstanding opportunity for Pretium and its shareholders, employees, First Nations partners and the local communities in northwest British Columbia,” said Jacques Perron, president and chief executive of Pretium. “The transaction delivers an immediate and compelling premium for Pretium shareholders that reflects the excellent work of our employees and contractors in developing and operating the Brucejack gold mine, while also offering an opportunity to benefit from potential upside as Newcrest shareholders.”

News: Australia's Newcrest to buy Canadian gold miner Pretium in $2.8 billion deal

Bouygues Group to acquire Equans from Engie in €7.1bn deal

BY Fraser Tennant

In a €7.1bn transaction that will create a French world leader in energy, digital and industrial transition, construction and services group Bouygues is to acquire the autonomous multi-technical services firm Equans from multinational utility company Engie.  

Under the terms of the agreement, 100 percent of the shares of Equans will be financed from the Bouygues group’s existing resources and a fully committed loan from partner banks, which will ultimately be refinanced through bond issuance.

Through the acquisition of Equans, Bouygues intends to create a world leader in multi-technical services, anchored in France. As part of the deal, Bouygues has agreed to not implement any forced redundancy plans in France and Europe for five years after closing, and to create 10,000 additional jobs over the same period.

Launched in July 2021 as a separate division within Engie, Equans has become a global multi-technical services leader employing 74,000 people in 17 countries, 27,000 of whom are in France. The firm generates an annual turnover of more than €12bn.

“By joining Bouygues, Equans will benefit from the strong growth of its underlying markets,” said Catherine MacGregor, chief executive of Engie. “This is a major milestone in the execution of our strategy, aimed at simplifying the group and accelerating investment in our core businesses, notably in renewables.”

The transaction is expected to be completed by the second half of 2022.

“The multi-technical services market is an up-and-coming one with strong growth potential and will play a crucial role in the energy transition,” said Olivier Roussat, chief executive of Bouygues. “The acquisition of Equans by Bouygues is a project that creates value for customers, for employees and for shareholders. This activity will become a new standalone business segment within the Bouygues group and will be the largest in terms of headcount and sales.”

Completion of the transaction is subject to regulatory approvals and customary closing conditions.  

Mr Roussat concluded: “This is the biggest acquisition Bouygues has ever made, and all our people will pull together to make it a success.”

News: Equans services group to become Bouygues' largest business segment

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