Lockheed Martin terminates $4.4bn deal to acquire Aerojet Rocketdyne

BY Fraser Tennant

Blaming efforts by the US Federal Trade Commission (FTC) to block the acquisition, global security and aerospace company Lockheed Martin Corporation has terminated its agreement to buy rocket engine maker Aerojet Rocketdyne Holdings, Inc. in a $4.4bn deal.

The cancellation of the transaction comes three weeks after the FTC announced a lawsuit that sought to block the proposed merger on antitrust grounds – a preliminary injunction that would have put the deal on hold pending an administrative trial in June. 

The regulatory agency stated a concern that the proposed deal would hurt competition in the defence industry by allowing Lockheed to cut other contractors off from vital missile components Aerojet provides, particularly scramjet engines for hypersonic missiles and control systems for missile interceptors.

"Our planned acquisition of Aerojet Rocketdyne would have benefitted the entire industry through greater efficiency, speed and significant cost reductions for the US government," said James Taiclet, chairman, president and chief executive of Lockheed Martin. "However, we determined that in light of the FTC's actions, terminating the transaction is in the best interest of our stakeholders.”

Headquartered in Bethesda, Maryland, Lockheed Martin Corporation is a global security and aerospace company that employs approximately 114,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

"Moving forward, we will maintain our focus on the most effective use of capital with the highest return on investment, including our ongoing commitment to return value to shareholders,” added Mr Taiclet. “We remain confident in our company's strong foundation and growth potential as several exciting projects enter production.”

In a statement following the termination of the merger agreement, Aerojet said that it is was “poised to deliver substantial value to its shareholders, driven by its continued leadership in key space exploration and defence growth markets, including by advancing hypersonics and strategic, tactical and missile defence systems”.

Headquartered in El Segundo, California, Aerojet Rocketdyne is an innovative technology-based manufacturer of aerospace and defence products and systems, with a real estate segment that includes activities related to the entitlement, sale and leasing of the company’s excess real estate assets.

Mr Taiclet concluded: “We will continue to support the US and its allies through our industry leadership and developing the technologies to ensure effective threat deterrence for decades to come."

News: Lockheed scraps $4.4 billion deal to buy Aerojet amid regulatory roadblocks

Quantum computing leader D-Wave goes public in $1.6bn deal

BY Fraser Tennant

In a combination that will take it public, Canadian Quantum computing business D-Wave Systems Inc. is to merge with special purpose acquisition company (SPAC) DPCM Capital, Inc. in a transaction valued at $1.6bn.

Under the terms of the definitive transaction agreement, the combined company will receive $300m in gross proceeds from DPCM Capital’s trust account, as well as $40m in gross proceeds from a group of strategic and institutional investors participating in the transaction via a committed private investment in public equity (PIPE).

The PIPE is led by new and existing investors, including leading Canadian public sector pension plan manager PSP Investments, NEC Corporation, Goldman Sachs, Yorkville Advisors and Aegis Group Partners.

The transaction is expected to enhance D-Wave’s leadership in commercial quantum computing and accelerate quantum use cases into significant customer segments, including manufacturing, logistics, pharmaceuticals, finance and government.

Upon close of the transaction, shares of D-Wave Quantum Inc., a newly formed parent company of D-Wave and DPCM Capital, are expected to trade on the New York Stock Exchange under the symbol ‘QBTS’.

“This deal marks an inflection point signalling that quantum computing has moved beyond just theory and government-funded research to deliver commercial quantum solutions for business,” said Alan Baratz, chief executive of D-Wave Systems. “D-Wave, along with DPCM Capital and our new and long-term investors, collectively believe that this event represents a moment of practical value creation for customers and for investors.

“We are working with our customers to identify applications with high likelihood of quantum value and to translate those problems to run on the quantum computer and then validate that value,” he continued. “We expect this ‘value creation and validation’ to accelerate as an increasing number of diverse use cases emerge – creating a robust cycle of product delivery, application development and market growth.”

Unanimously approved by the boards of directors of D-Wave Systems and DPCM Capital, the transaction is expected to close in the second quarter of 2022, subject to the satisfaction of customary closing conditions, including approval by the stockholders of DPCM Capital.

Emil Michael, chief executive of DPCM Capital, concluded: “By accelerating the $150bn quantum computing market, we are confident that D-Wave will continue to deliver long-term value to stockholders.”

News: 4 Firms Rep Quantum Computing Biz's $1.6B Go-Public Deal

Spirit Airlines and Frontier agree $2.9bn merger

BY Richard Summerfield

Spirit Airlines and Frontier Group Holdings have agreed a $2.9bn cash-and-stock merger deal, the companies have announced.

The deal has a transaction value of $6.6bn including for the assumption of net debt and operating lease liabilities, the companies said in a statement. Upon completion, Frontier will own a 51.5 percent stake in the combined entity, while the remaining 48.5 percent will be held by Spirit’s shareholders. Spirit investors will receive 1.9126 shares of Frontier plus $2.13 in cash for each share they own, giving Spirit shareholders an implied value of $25.83 per share - a 19 percent premium over the value of Spirit shares at the end of last week, the companies said.

The merger is expected to close in the second half of 2022, subject to satisfaction of customary closing conditions, including completion of the regulatory review process and approval by Spirit stockholders.

“We worked jointly with the Board of Directors and senior management team across both carriers to arrive at a combination of two complementary businesses that together will create America’s most competitive ultra-low fare airline for the benefit of consumers,” said William A. Franke, the chair of Frontier’s board of directors and the managing partner of Indigo Partners, Frontier’s majority shareholder.

“We are thrilled to join forces with Frontier to further democratize air travel,” said Ted Christie, president and chief executive of Spirit. “This transaction is centered around creating an aggressive ultra-low fare competitor to serve our Guests even better, expand career opportunities for our Team Members and increase competitive pressure, resulting in more consumer-friendly fares for the flying public. We look forward to uniting our talented teams to shake up the airline industry while also continuing our commitment to excellent Guest service.”

“This combination is all about growth, opportunities and creating value for everyone – from our Guests to our Team Members to the flying public at large,” said Mac Gardner, chairman of the board of Spirit. “We’re a perfect fit – our businesses share similar values, including our longstanding commitment to affordable travel. At the same time, we have complementary footprints and fleets, including one of the youngest and greenest fleets worldwide. Together, we will be even more competitive for our Guests and our Team Members, and we are confident we can deliver on the benefits of this combination to consumers.”

News: Spirit Airlines, Frontier to merge in $2.9 bln deal

SIG Combibloc to acquire Scholle IPN

BY Richard Summerfield

Swiss packaging company SIG Combibloc has agreed to acquire Scholle IPN, one of the leading innovators of sustainable packaging systems and solutions for liquids, in a deal worth €1.36bn.

The transaction, which has an equity value of €1.05bn, will be funded through 33.75 million SIG shares issued from existing authorised capital and €370m in cash. The existing debt of Scholle IPN will be refinanced once the deal completes. The transaction is expected to close before the end of the third quarter of 2022, subject to customary closing conditions.

 “The acquisition of Scholle IPN cements SIG’s position as a global leader in innovative and sustainable packaging for food and beverages,” said Samuel Sigrist, chief executive of SIG. “It is consistent with our strategy of geographic and category expansion accompanied by share gains in key markets. By delivering clear benefits for customers, consumers, and the environment, we will drive value for shareholders.”

“This combination is compelling for our customers, who will benefit from our capabilities and expertise in the liquid packaging industry,” said Laurens Last, chairman and owner of Scholle IPN. “I am excited about the future of the combined business, and I look forward to our joint innovation, with SIG further developing packaging substrates and solutions that are at the forefront of sustain­ability.”

Ross Bushnell, president and chief executive of Scholle IPN, will continue to lead the legacy Scholle IPN business and will join SIG’s group executive board upon close of the transaction.

“SIG and Scholle IPN are highly complementary businesses in terms of market approach and the importance of sustainability of our products,” said Mr Bushnell. “I believe that the combination of entrepreneurial spirit, nimble market response, and shared R&D capabilities will enable us to accelerate innovations for our customers and cement our collective market leadership in sustainable packaging solutions – particularly across aseptic and mono-material offerings which are key to packaging for the circular economy.”

Once combined, the new company will employ nearly 8000 people in 69 sales and manufacturing sites across the globe. The team will service customers across six continents. Their shared technology and R&D capabilities in renewable paper substrates, film extrusion, injection moulding, and filling equipment are backed by an industry 4.0 manufacturing mindset and a drive to become the world’s leading sustainable packaging partner.

News: SIG Combibloc acquires bag-in-box maker Scholle IPN in $1.53 bln deal

ETAO set to go public in $2.5bn SPAC deal

BY Fraser Tennant

In a combination that takes the digital healthcare group public, ETAO International is to merge with special purpose acquisition company (SPAC) Mountain Crest Acquisition Corp. III in a transaction valued at $2.5bn.

Under the terms of the definitive agreement, a $250m private investment in public equity (PIPE) will be included at $10 per share from investor China SME Investment Group, which is scheduled to close simultaneously with the SPAC transaction.

In addition, ETAO has also received commitments through a separate private placement of $51m, which is expected to close prior to 15 February 2022.

“A business combination is an important step for ETAO in realising our goal of becoming a leading provider of modern, patient-centric healthcare services,” added Dr Lee Winter, president of ETAO. “Mountain Crest’s understanding of our market and of our global strategy makes them an ideal partner to accompany us during our rapid growth.”

A multinational company founded in 2017, with businesses in China, Canada and Australia, ETAO is a leader in the telehealth industry, maintaining a network of private specialised hospitals, telemedicine platforms and artificial intelligence healthcare technologies on a global scale.

“ETAO aims to become the world’s leading digital healthcare group – providing transformative medical care and quality service,” said Wilson Liu, chairman and chief executive of ETAO. “The partnership with Mountain Crest will enable us to expand more rapidly and bring many more talented clinicians and more advanced telemedicine technologies to bear on our commitment to better healthcare delivery to the Chinese population.”

The transaction, which is expected to complete in the summer of 2022, has been unanimously approved by the boards of directors of ETAO and Mountain Crest III, and is subject to approval by ETAO’s stockholders, Mountain Crest III’s stockholders and other customary closing conditions.

“I am thrilled to take the third SPAC of our Mountain Crest franchise to the next phase of the deal process,” concluded Dr Suying Liu, chairman, chief executive and chief financial officer of Mountain Crest III. “ETAO is a compelling investment opportunity and the secular tailwinds in the telehealth sector further add to its significant growth potential.”

News: Digital healthcare group ETAO to go public via $2.5 bln SPAC deal