FNF to acquire F&G in $2.7bn insurance deal

BY Fraser Tennant

In a transaction valued at $2.7bn, the US’s largest provider of commercial and residential mortgage and diversified services, Fidelity National Finance (FNF) Inc, is to acquire FGL Holdings (F&G), a leading provider of fixed indexed annuities and life insurance.

Under the terms of the merger agreement, holders of F&G's ordinary shares (other than FNF and its subsidiaries) may elect to receive either $12.50 per share in cash or 0.2558 of a share of FNF common stock for each ordinary share of F&G they own. Upon closing of the transaction, F&G shareholders will own approximately 7 percent of the outstanding shares of FNF common stock.

The acquisition of F&G offers FNF entry to an industry that it expects will perform well in economic environments which are challenging for title insurance. “We are excited to announce our plans to acquire F&G Holdings and look forward to welcoming F&G employees and policyholders to the FNF family,” said William P. Foley, II, chairman of FNF. “The board and management diligently reviewed FNF's capital allocation strategy and determined that expanding into the annuity market through the acquisition of F&G Holdings would offer compelling benefit to our shareholders.”

Following the close of the transaction, which has been approved by a special committee of F&G directors, a special committee of FNF directors and the FNF board of directors, F&G will operate as a subsidiary of FNF. “We are pleased to join forces with FNF, a world-class company we know well and respect,” said Chris Blunt, president and chief executive of F&G. “This agreement, which offers immediate value to F&G shareholders and compelling benefits to our stakeholders, will provide a meaningful platform for our business as we continue to build the F&G of the future.”

The transaction is expected to close in the second or third quarter of 2020, subject to the satisfaction of customary closing conditions, including the receipt of regulatory clearances and approval by F&G shareholders.

Mr Blunt concluded: “We are excited to enter into the next phase of growth with FNF and are confident that by combining our complementary businesses, we will be better positioned to carry out our mission of helping customers turn their aspirations into reality.”

News: U.S. insurer Fidelity National to buy FGL Holdings in $2.7 billion deal

PG&E files updated Chapter 11 plan

BY Fraser Tennant

In a move that will allow it to exit bankruptcy as a “reimagined utility” and pay more than $25bn to wildfire victims, PG&E Corporation, the parent company of Pacific Gas and Electric Company, has filed an updated Chapter 11 plan of reorganisation.

According to the filing, PG&E is on track to have its plan confirmed by 30 June 2020, the deadline for participating in California’s new go-forward wildfire fund, a settlement for several wildfires in Northern California which killed dozens of people in 2017.

Upon emergence from Chapter 11, PG&E is expected to be a financially stable company positioned to continue prioritising safe operations and customer focus, while meeting California's energy needs and clean energy goals in a changed climate.

The key updated elements of the plan include: (i) regionalising the company's operations and its infrastructure to enhance the company’s focus on local communities and customers; (ii) further strengthening PG&E’s corporate governance by appointing an independent safety adviser: (iii) establishing a newly expanded role of chief risk officer (CRO) who will report directly to the PG&E chief executive and have oversight of risks associated with PG&E’s operations; (iv) paying value in excess of $25bn to wildfire victims through the settlements reached with individual victims, subrogation claimants and public entities; and (v) emerging with a financing structure that protects customer rates and positions the company for long-term success.

"Under our Plan, the company will emerge from Chapter 11 as a reimagined utility with an enhanced safety structure, improved operations, and a board and management team focused on providing the safe, reliable, and clean energy our customers expect and deserve,” said Bill Johnson, chief executive and president of PG&E Corporation. “Our 23,000 PG&E employees are striving every day to deliver that service and to build the utility of the future.”

Headquartered in San Francisco, Pacific Gas and Electric Company serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California.

Mr Johnson concluded: “We are committed to emerge from Chapter 11 in a manner that allows us to help lead California toward the future, meeting the highest safety, governance and operational standards.”

News: Utility PG&E Files Restructured Chapter 11 Plan

Worldline and Ingenico agree $8.7bn merger

BY Richard Summerfield

France’s two biggest payments companies are to merge after Worldline agreed to acquire rival Ingenico for $8.7bn.

The deal will see Ingenico shareholders receive 11 Worldline shares and €160.50 in cash for every seven Ingenico shares held—a 24 percent premium on Ingenico’s average share price over the last month. Pending regulatory and shareholder approvals, the deal is expected to close in Q3 2020. Under the terms of the deal, Gilles Grapinet, chairman and chief executive of Worldline, will lead the combined company.

“I am proud to announce that today is a great day for Worldline and for Ingenico, and more widely for our payment industry: together we create the European world-class leader in digital payments,” said Mr Grapinet. “We deeply respect Ingenico and its team for the deep business repositioning of their company realised over the last years into one of the largest European payment service providers with outstanding global positions in online payments and merchant acquiring. We have been impressed by the strong improvement in performance realised over the last 18 months under the leadership of Nicolas Huss, as well as by the in-depth transformation initiated at the same time of their global leading payment terminal business, resulting in increased efficiency, more autonomy and a new strategic roadmap.”

“The combination of Worldline and Ingenico offers a unique opportunity to create the undisputed European champion in payments on par with the largest international players,” said Bernard Bourigeaud, chairman of Ingenico. “This transaction comes at the time of accelerating consolidation of the industry and I am convinced that the joined forces of both leaders will deeply transform the industry. I am very pleased to write a new page in the European payment landscape and build the foundation of a strong and breakthrough payment player. This transaction is unanimously supported by Worldline and Ingenico’s board of directors and I would be very proud to become the non-executive chairman of the board of directors at closing to pursue this exceptional success story.”

The combined company will have 20,000 employees across 50 countries with 1 million merchant and 1200 financial institution customers. Worldline said it expects combined proforma 2019 net revenues of €5.3bn out of the deal.

News: Worldline's $8.7 billion Ingenico deal to create European payments leader

BorgWarner assimilates Delphi Technologies

BY Richard Summerfield

US auto parts manufacturer BorgWarner has agreed to acquire UK-based Delphi Technologies in a $3.3bn deal.

The deal will see Delphi stockholders receive a fixed exchange ratio of 0.4534 shares of BorgWarner common stock per Delphi Technologies share. That translates to $17.39 per share, a premium of around 77 percent to Delphi’s closing price on Monday.

Upon closing of the transaction, current BorgWarner stockholders are expected to own approximately 84 percent of the combined company, Delphi Technologies stockholders are expected to own approximately 16 percent. The deal is expected to close in the second half of 2020, pending shareholder and regulatory approval and customary closing conditions.

“This exciting transaction represents the next step in BorgWarner’s balanced propulsion strategy, strengthening our position in electrified propulsion as well as our combustion, commercial vehicle and aftermarket businesses,” said Frédéric Lissalde, president and chief executive of BorgWarner. “Delphi Technologies will bring proven leading power electronics technologies, talent and scale that will complement our hybrid and electric vehicle propulsion offerings. As a combined company, we look forward to delivering enhanced solutions to our customers while driving increased value for our stockholders.”

“This is a compelling transaction that we are confident delivers clear benefits to our stakeholders,” said Richard F. Dauch, chief executive of Delphi Technologies. “Delphi Technologies’ portfolio is highly complementary to BorgWarner’s, and together we plan to create a pioneering propulsion technologies company uniquely equipped to serve OEMs and aftermarket customers around the world. BorgWarner’s team shares our focus on addressing today’s and tomorrow’s challenges, and the combination will create exciting opportunities for our employees. We also expect our stockholders will benefit from the opportunity to participate in the future growth and upside potential of the combined company.”

The combined company will be led by Mr Lissalde and BorgWarner chief financial officer Kevin Nowlan and will operate as BorgWarner.  BorgWarner had sales of $10.17bn in fiscal 2019, while Delphi had sales of $4.36bn.

News: BorgWarner to buy Delphi Technologies in $3.3 billion auto parts deal

CEO pessimism over global growth hits record high, says new report

BY Fraser Tennant

Chief executives are showing record levels of pessimism in the global economy, with 53 percent predicting a decline in the rate of economic growth in 2020, according to a new report by PwC.

In ‘Navigating the rising tide of uncertainty’, PwC’s 23rd annual global chief executive survey, PwC notes that chief executive pessimism over global economic growth is particularly significant in North America, Western Europe and the Middle East, with 63 percent, 59 percent and 57 percent of chief executives from those regions predicting lower global growth in the year ahead.

“Given the lingering uncertainty over trade tensions, geopolitical issues and the lack of agreement on how to deal with climate change, the drop in confidence in economic growth is not surprising – even if the scale of the change in mood is,” said Bob Moritz, chairman of the PwC Network. “These challenges facing the global economy are not new – however the scale of them and the speed at which some of them are escalating is new, the key issue is how are we going to come together to tackle them?”

The report – which features the views of almost 1600 chief executives from 83 countries across the world – also reveals that chief executives are not too positive about their own companies’ prospects for the year ahead, with only 27 percent saying they are “very confident” in their own organisation’s growth over the next 12 months – the lowest level recorded since 2009 and down from 35 percent in 2029.   

“On a brighter note, while there is record pessimism among business leaders, there are still real opportunities out there,” continues Mr Moritz. “With an agile strategy, a sharp focus on the changing expectations of stakeholders, and the experience many have built up over the last ten years in a challenging environment, business leaders can weather an economic downturn and continue to thrive.”

That said, the shortage of key skills remains a top threat to growth, with only 18 percent of chief executives stating that they have made “significant progress” in establishing an upskilling programme. 

Mr Moritz concluded: “Business leaders, educators, government and civil society must work together to ensure that people around the world stay productively engaged in meaningful and rewarding work. Although people may have fears about the future, they want to learn and develop, and they are looking to leaders to provide a trusted path forward.”

Report: Navigating the rising tide of uncertainty