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In this competitive world, a company has to keep evolving – either by expansion and/or by diversification. Particularly looking at the sporting industry, the former nowadays is a necessity. With a market size of USD 60bn, the global sporting goods market is growing rapidly. Every company in the industry has to be agile to avoid being disrupted. The acquisition of Amer Sports by Anta Sports reflects this line of thought. Founded three decades ago as a low-cost manufacturer for global brands, Anta is now aiming to rival Adidas and Nike with its planned USD 6.3bn takeover.
Deal Logic BB&T / SunTrust
(2019)
Two regional retail banks merging to become the 6th largest bank in the US sounds very much like inorganic growth. After all, that is how Chemical Bank, Manufacturer's Hanover Trust Company, Chase Manhattan Bank and J.P. Morgan became one of the largest banks in the world today. But an aspect which is more relevant today than ever is inorganic growth enabling organic growth. Scalability applies to technology on the revenue side as well as on the cost side and gives larger banks a crucial competitive advantage. The strategic option of consolidation seems to be something which was long overdue, considering the dynamic market environment.
Deal Logic Careem / Uber
(2019)
Confirmed in March 2019, Uber plans to acquire its Middle Eastern rival Careem in a deal worth USD 3.1bn. The transaction value is expected to be a record for a Middle Eastern tech startup exit and among the highest globally for ride-hailing mergers and acquisitions. As part of this deal, which is expected to close in early 2020, Uber will acquire Careem’s mobility, delivery and payments business across the greater Middle Eastern region, which includes operations in Egypt, Jordan, Pakistan, Saudi Arabia and the UAE. After pulling out of major markets like China and selling its business in Southeast Asia to Grab last March, Uber has been seeking new avenues of growth.
Fiserv (NASDAQ: FISV) and First Data Corporation (NYSE: FDC) coannounced on Jan 16th an unanimous merger agreement under which Fiserv would acquire First Data in a pure-stock transaction. The merger would combine two well-established Fintech companies into one giant. For each share of First Data, a fixed exchange ratio of 0.303 Fiserv shares is agreed, for a total equity value of USD 22bn. After the close of the transaction, Fiserv shareholders will own 57.5% of the new combined company, and First Data shareholders will own 42.5% on a fully diluted basis. The pure stock transaction is intended to be tax-free to First Data shareholders. The transaction is slated to close in the second half of the year, subject to shareholder and regulatory approval.
E.ON SE intends to acquire Innogy SE from its competitor RWE AG based on a comprehensive exchange of business activities. The acquisition was announced in the first quarter of 2018 and is expected to be finalized late 2019. Next key milestones are the closing of a public takeover offer to minority shareholders and the approval of relevant antitrust and regulatory authorities. On the one hand, the merger will directly affect existing structures in the German energy market, helping both companies, E.ON and RWE, to significantly strengthen their respective core businesses. On the other hand, however, potential disadvantaged parties include Innogy itself, employees, municipalities and end customers.
Deal Logic Linde / Praxair
(2018)
Currently in news for the last moment approval from the Federal Trade Commission to make the Praxair and Linde merger a reality, the development of the deal has not been short of hurdles. Initially, Praxair-Linde faced resistance from the European Union under the accusation that the merger would hinder competition. Later, both companies had to undertake multiple selling transactions to meet the anti-trust requirements of the countries in which they operated. Praxair and Linde were finally able to meet the requirements in early November for a successful completion of the merger.
Linde and Praxair, the world’s no. 2 and no. 3 industrial gas suppliers respectively, were in the spotlight due to the size of the merger and the impact that it would have on the gas industry, almost making them a monopoly firm.
After a period of unchallenged market leadership in the segment of PC soft- and hardware, Microsoft faced increasing pressure from its competitors after 2010. Following this increase Microsoft initiated a new strategic alignment in recent years.
With more than 230 acquisitions Microsoft exhibits an extensive history of M&A transactions. In order to support its strategic shift, Microsoft announced in June 2013 its biggest deal with the acquisition of LinkedIn, bidding $26.2 billon.
Looking back on Microsoft's deal history, especially due to value destroying deals like the acquisition of Nokia's device segment, experts are sceptical whether Microsoft is able to generate value for shareholders.
Deal Logic LVMH / Belmond
(2019)
In the recent past, the demand for luxury experiences has grown. An increase in the middle and upper class disposable income, changes in lifestyle patterns, and demand for unique and exotic holiday experiences have been the forefront drivers. The global luxury travel market is expected to garner USD 1.2tr by 2022. Epitomising desirable destinations, luxurious accommodations, convenient transport facilities, and authentic travel experience, the luxury travel market has great future potential to grow and diversify. Customization and personalization gain increasing importance in luxury tourism. Also, the concept of luxury travel changes from opulence to exclusive. Synonymous with luxury, LVMH bets on the future of this market that is increasingly going experiential. Belmond would help it increase its luxury image. It would benefit from a luxury perception with both tangible and experiential products in its portfolio.
Disrupt yourself to avoid getting disrupted: Large firms struggling with further growth, acquiring smaller innovation drivers with complementary assets isn’t something new. But what is hard, in this context, is to justify the surging valuations and to identify the underlying synergies. When it comes to the High-Tech sector this can quickly become a philosophical question. The big question in the acquisition of Red Hat Inc. by IBM, analyzed in this Deal Logic, is the one concerning the future of cloud computing, especially when it comes to customer approval.
Deal Logic Shire / Takeda
(2019)
After a long bidding phase, the Japanese pharma company Takeda is going to take over the Ireland based manufacturer and wholesaler of pharmaceutical products Shire PLC. In the fifth attempt, Takeda offered USD 62 bn. The acquisition will create a leading provider of drugs for the treatment of rare diseases, cancer, blood clotting disorders, neurological disorders, or gastroenterology. With Shire, Takeda would double the size of their pharmaceutical business to about USD 30 bn, making it one of the top ten pharma companies worldwide. The takeover is the second biggest the pharmaceutical industry has seen so far and the largest overseas acquisition by a Japanese company.