Weekly Banking Insight: A cautious increase in deal activity

Greetings and welcome back to this weekly global investment banking update where we talk about the top transactions, themes, and narratives in the investment banking world.

This week saw an increased amount of deal activity but caution and good quality assets remained the key focus in decision-making.

Malloy Aeronautics, UK drone company, acquired by BAE Systems

BAE Systems acquires Malloy Aeronautics, a UK tech company focusing on heavy-lift drones, for an undisclosed sum. The move reflects growing investor interest in unmanned aircraft amid global events like the Ukraine war. Advanced technologies, including sensors and AI, are reshaping defense procurement, enabling cost-effective solutions with reduced human risk. Start-ups driving innovation in the sector become acquisition targets for larger players, exemplified by Saab’s stake in Helsing. Malloy Aeronautics’ unmanned quadcopters, designed for logistics and evacuation missions, highlight the strategic alliance with BAE’s FalconWorks. The deal aims to integrate innovation and experience for mutual growth.

Media conglomerate Vivendi’s Canal+ acquired MultiChoice, South Africa’s TV giant, for $2.5bn

Canal+ offered $2.5bn to acquire South Africa’s MultiChoice, aiming to rival Netflix in Africa’s burgeoning streaming market. Despite a 40% premium, MultiChoice shares surge 27%. The move aligns with Canal+’s plan to spin off from Vivendi but faces challenges due to South African legislation limiting foreign control. Canal+ eyes a South African listing and intends to merge with MultiChoice. MultiChoice, once part of Naspers, reported a $48mn loss amid Showmax investments and market challenges. Canal+ emphasizes readiness to invest in local production amid escalating competition in Africa’s streaming sector.

PE house McWin acquired Sticks’n’Sushi for €80m

McWin, a London-based private equity firm, acquired a 95% stake in Sticks’n’Sushi, a Danish-owned restaurant group providing Japanese cuisine, for c.€80m. The deal signals McWin’s entry into the hospitality sector, aligning with the trend of private equity groups returning to this industry. Sticks’n’Sushi, with 27 sites across the UK, Denmark, and Germany, plans expansion in France and central Europe. This marks the end of a decade-long ownership by Maj Invest, reporting record revenues of £90mn in June 2023. Sticks’n’Sushi’s CEO, Andreas Karlsson, remains with a stake as McWin aims to support existing strategies.

Wm Morrison sold its petrol forecourt business to Motor Fuel Group for £2.5bn

Wm Morrison, a UK supermarket chain owned by Clayton, Dubilier & Rice (CD&R), agreed to a £2.5bn deal, selling its petrol forecourt business to sister company Motor Fuel Group (MFG). Morrison retains a 20% stake in the expanded MFG. The move, aimed at bolstering Morrison’s balance sheet, follows efforts to address its £5.5bn net debt. The transaction allows MFG to enhance its electric vehicle presence, targeting 800 electrified sites by 2030. Analysts suggest the deal alleviates Morrison’s debt burden, improving financial flexibility. CD&R purchased MFG for £500mn a decade ago, transforming it into the UK’s leading independent petrol forecourt operator.

Zurich Insurance’s sale of $20bn to Viridium collapsed

The $20bn life insurance book sale from Zurich Insurance Group to Viridium collapses, citing concerns over Viridium’s ownership structure amid heightened regulatory scrutiny. Viridium, majority-owned by Cinven, faces challenges similar to Italy’s Eurovita, leading Germany’s BaFin to raise objections. Zurich, aiming to reduce interest rate exposure, expresses commitment to finding an alternative solution, asserting no impact on financial targets. Private equity’s growing presence in the life insurance sector prompts regulatory caution, emphasizing risks highlighted by Italy’s experience and concerns about the misalignment of interests between long-term insurance and shorter PE fund ownership.

Other key highlights from the week:

  1. Amazon has abandoned the $1.45bn acquisition of iRobot, a Roomba maker, over concerns regarding EU’s competition regulators blocking the deal in the future
  2. The big US media merger, Skydance-National Amusements, is one to watch as it escalates to the DD stage
  3. There is an increasing trend of consumer companies selling out their ‘under-performing’ or ‘non-core-focused’ brands giving opportunities to niche trade buyers and PE houses around the world to invest in these companies
  4. Vodafone Group has rejected Iliad’s offer to merge their Italian businesses leading to its stock declining c.4%

Parting thoughts

This week was quite eventful giving a flavour of where transactions are heading this year. Geopolitics is clearly driving the market with the likes of unmanned aircraft companies gaining reputation while buyers are cautious in their approach over concerns regarding regulators’ reaction and cash management. There is increased activity in the services sector which also gives hope to a country like the UK where services are one of the major contributors to the country’s GDP.

January has ended well and let’s hope February starts kicking the momentum in transactions.

Stay tuned for the summary next week to stay upbeat in this fast-paced sector!

Sources: Bloomberg, Financial Times, Desktop Research

Disclaimer: This weekly global investment banking update provides insights into recent transactions and market trends for informational purposes only. It does not constitute financial advice, and readers are encouraged to verify information independently before making investment decisions. The content reflects the views of the respective sources mentioned, and while efforts are made to ensure accuracy, completeness, and reliability, we do not guarantee it. Investing involves risks, and past performance is not indicative of future results. The mention of specific companies or transactions does not imply endorsement. Stay informed about regulatory changes and market conditions, and consider seeking advice from qualified financial professionals for personalized guidance.
MSc Finance graduate from the London School of Economics and Political Science (LSE)
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Ria V Vaghela is an M&A Executive at RSM UK and an MSc Finance graduate from the London School of Economics and Political Science (LSE). She has worked at Jefferies, Dial Partners and 7i Capital prior to RSM UK gaining an experience of about 1.5 years. She has also worked as an Editor and Content Writer for The Representative Media. Apart from finance, she is interested in reading books on psychology and economics and also likes to paint and play lawn tennis

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