Sprint Shareholders Approve $21.6 Billion Acquisition by SoftBank

June 27, 2013 10:05 by Clayton Reeves in M&A, Telecom  //  Tags:   //   Comments (0)
After nearly eight months of drama and deal making worthy of its own television series, Sprint investors have agreed to be acquired by SoftBank for $21.6 billion.  Softbank has the majority of regulatory approvals in line, although they still need to be cleared by the FCC (Federal Communications Commission). This deal seemed done in late 2012, when SoftBank made an offer of $20.1 billion for  70 percent of the company.  However, Dish came in with a  $25.5 billion offer for Sprint in April, although the terms were rumored to be more restrictive and less appealing to Sprint.  Sprint also has mentioned that the bid was never firm enough to be considered “actionable.”  To seal the deal, SoftBank raised its bid to $21.6 billion for 78 percent of Sprint on June 10.  Sprint set a date of June 18th for Dish to respond, and although Dish protested the time line, they subsequently withdrew their bid.  Sprint was also competing with Dish in their bid for affiliate Clearwire.  Dish dropped their bid for Clearwire after Sprint raised their price to $5/share.  Thus, the way was clear of major obstacles and the two sides were able to get a deal done. This appears to be good news for Sprint, as SoftBank’s Chief Executive Masayoshi Son has performed a similar turnaround on Vodafone and has extensive experience in the telecom sector.  He is appalled at the lack of speed in the US wireless marketplace, which he says lags Japan by 30-40%.  It will be interesting to see what changes come to Sprint, and the excitement surrounding the company is a welcome change from the struggles they’ve encountered since the Nextel merger. (Information above sourced from Bloomberg, WSJ and Reuters)

Tenet Announces Acquisition of Vanguard

June 25, 2013 12:58 by Clayton Reeves in Capital Markets, Healthcare, M&A  //  Tags:   //   Comments (0)
Tenet has announced that they will acquire Vanguard Health Systems in a deal valued at $4.3 billion including the assumption of $2.5 billion in Vanguard debt. The deal is expected to close by the end of this year. Tenet anticipates annual synergies between $100-200 million. The offer price of $21 represents a 70% premium to Friday's closing price of $12.37 a share. The combined entity would form the second largest for-profit hospital in the country. The transaction will be financed by BoA, including a recapitalization of the existing Vanguard debt at attractive rates. (Reuters) The EV/EBITDA multiple came in at ~11.6x, using March '12-13 numbers (Yahoo! Finance), which is higher than the 8x EBITDA that many hospitals are trading at.  Healthcare continues to be a hotbed for acquisitions, as large players like Tenet expand aggressively. According to Healthcare Daily, Greg Koonsman, a senior partner at VMG Health in Dallas, recently said that “systems offensively and defensively are getting bigger. There is a lot of vertical integration. It’s Business 101. They are getting bigger at any cost... There is a lot of capital chasing few sellers right now. However, about 2,000 (of the nation’s 5,300 hospitals) should be for sale.” Looks like we will continue to see activity in the healthcare sector.

PE Firms Finding Exits Easier Than Investment Opportunities

June 25, 2013 12:33 by Clayton Reeves in Capital Markets, M&A, Private Equity  //  Tags:   //   Comments (0)
In an article on Dealbook today, this year $62 billion worth of deals larger than $1 billion have been announced, according to Thomson Reuters. That seems to be a positive indicator, as it represents a higher value than all of 2012; however, the purchase of the Heinz Company ($27 billion) and Dell Inc. ($18 billion) are atypical. Heinz was driven more by the oracle, Warren Buffett, than by private equity, and the purchase of Dell was driven by Michael Dell buying back the company bearing his namesake. According to Preqin research, the industry has $187 billion of dry powder available, which could amount to more than $700 billion of deals. Without the two atypical deals mentioned above, however, 2013 has seen only five deals amounting to $16 billion. The crux of the issue seems to be a lack of confidence in current valuations and wary attitudes regarding private equity by potential sellers. Regardless of these hurdles, the piles of cash sitting in the coffers of PE should find their way to the market by one avenue or another. It remains to be seen when that dry powder will ignite large deal volume.

Q1 Private Equity: Calm Before the Storm or Indications of a Slowdown?

April 12, 2013 15:49 by Clayton Reeves in M&A  //  Tags:   //   Comments (0)
After an the exclamation point to 2012 that was the fourth quarter, there is sometimes a need to take in a deep breath; that is exactly what happened in private equity ("PE") markets during February and March of Q1 2013.  After momentum from the end of 2012 carried through January, a huge drop off in deal volume and transaction total occurred in February and March.  With only $52 billion spread across 355 deals in the U.S., Q1 represented the lowest quarterly numbers since 2009.  Exit activity in Q1 was even more sluggish than deal-making, as volume and capital exited spiraled down 67% and 81%.     Is this a cause for alarm?  Right now, the panic button should remain untouched.  With how good Q4 was, a dropoff was expected; as you can see from the chart below, Dec and Jan were incredibly busy months for PE.  Furthermore, their remains substantial expiring dry powder, cheap availability of debt and a willingness to do deals that could help regain momentum through the end of the year.     To see the entire report, visit Pitchbook.com here.

Lower Equity Contributions Fueling M&A Activity

March 19, 2013 10:38 by Stephanie Siders in Financing, M&A, Private Equity  //  Tags:   //   Comments (0)
Equity contributions in private equity-backed deals are trending lower as private equity buyers increase leverage with cheap debt, enabling them to write checks for a lower percentage of the entire deal.  Equity contributions in leveraged buyouts averaged 39.4% in 2012, the lowest level seen since 2007.  The combination of cheap debt, lower equity contributions, and continued high levels of dry powder bodes well for increased M&A activity and deal size.   Read more here.

Considering an acquisition? What's the right price?

March 11, 2013 11:49 by Terry Christenberry in M&A  //  Tags:   //   Comments (0)
There are many qualitative and quantitative factors to consider in determining the right price for an acquisition. Many of these factors, especially factors like impact on employees, corporate image, markets served etc. involve long term considerations and are difficult to quantify. [More]

Q1 2013 PE Deal Multiples & Trends Report

March 7, 2013 12:17 by Clayton Reeves in M&A  //  Tags:   //   Comments (0)
Pitchbook has released their Q1 2013 PE Deal Multiples & Trends Report. Some excerpts are included below:   Two thirds of transactions involved EBITDA multiples greater than 5.0x.   The revenue multiple spectrum was fairly dispersed, although over one fourth of transactions involved EV/Rev of over 2.0x, further enforcing PE's hunger for positive revenues.  The chart below shows the appetite for growth has also continued.   Read the full report from Pitchbook here.

CC Capital Advisors: The State of M&A in Kansas City

March 4, 2013 11:12 by Clayton Reeves in Capital Markets, M&A  //  Tags:   //   Comments (0)
CC Capital Advisors has released their annual M&A report for the greater Kansas City area.  This document provides details on each of the 151 transactions, including analysis around historical trends and forward looking prognosis for the M&A market.   Feel free to download a copy here.

Energy M&A: Off to the Races

February 20, 2013 13:04 by Clayton Reeves in Energy, M&A  //  Tags:   //   Comments (0)
General mergers & acquisitions in the United States are taking place at the fastest rate since before the Great Recession.  Retail giants Office Max and Office Depot are combining to form a more efficient global purveyor of office goods and supplies.  Market mover Warren Buffett joined another firm in buying all the stock of H.J. Heinz Co. for a cool $23 billion.  Two weeks ago, Michael Dell took the company bearing his name private, in a leveraged deal that looked a lot like a pre-recession transaction.  Liberty Global bought British Cable business Virgin Media for $16 billion. Energy/oil & gas M&A has been particularly robust, hitting a 10 year high according to PwC in Houston.  Q4 activity increased overall deal volume in 2012 to a 10-year high at 204 transactions when counting only deals valued at $50 million+.  These deals represent $146.2 billion, the second highest total deal value in ten years.  The recovery in energy M&A seen last quarter was driven by several factors, according to PwC; these included urgency to finish deals before potential tax changes, an increase in shale play popularity and improving private equity interest. Read more here.

Mergers Make Comeback

February 19, 2013 17:36 by Stephanie Siders in M&A  //  Tags:   //   Comments (0)
After a less than stellar year for deals in 2012, confidence is up and each week seems to bring an announcement of a new mega-merger in the works.  Year-to-date M&A activity totals $158.7 billion, more than double the activity in the same period one year ago.  What is driving the increase in deals?  A big reason is capital.  S&P 500 companies have more than $1 trillion on their balance sheets, and are finally putting it to work. Private equity firms are looking for deals to put dry powder to use.  Banks are more willing to lend after putting the housing crisis behind.  And interest rates remain at record lows.  Read more here.

Past Posts