Weekly Banking Insight: Cautious growth 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 a frenzy of news on recession and cautious optimism in deal activity increasing.

RedBird IMI to acquire All3Media for £1.15bn

RedBird IMI has secured a £1.15bn deal to acquire London-based TV and film production company All3Media, known for hits like Fleabag and Squid Game: The Challenge. This follows RedBird IMI’s recent acquisitions of the UK’s Telegraph newspaper and Spectator magazine. Jeff Zucker, CEO of RedBird IMI, will chair the All3Media board, while existing leadership, Jane Turton and Sara Geater, will continue in their roles. The deal is a strategic move amidst challenges in the television production sector. RedBird IMI beat competitors like Banijay, Sony, and ITV. The acquisition reflects RedBird’s focus on global content creators and intellectual property ownership.

Renesas Electronics to acquire Altium for $5.8bn

Renesas Electronics is set to acquire Australian software design tools provider Altium for A$8.8bn ($5.8bn) in cash. As a leading chip supplier to the global automotive industry, including Toyota and Nissan, Renesas aims to diversify amid supply chain challenges and geopolitical tensions. This marks Renesas’s fourth major deal since 2017, following acquisitions of Dialog, Integrated Device Technology, and Intersil. The Altium deal aligns with Renesas’s strategy to expand into higher-margin sectors such as data centers and consumer devices. The acquisition, pending shareholder and regulatory approval, reflects a trend of cash-rich Japanese firms seeking overseas acquisitions. Altium shares surged nearly 30% on the offer.

Tritax Big Box to merge with UK Commercial Property Reit for £900m

Tritax Big Box is set to become the UK’s fourth-largest listed landlord through a £900m all-share merger with UK Commercial Property Reit (UKCM). This consolidation trend among real estate investment trusts aims to enhance share liquidity and investor appeal. The deal offers an 11% premium to UKCM’s closing share price. While Tritax shares dipped 3%, UKCM rose 5% following the announcement. The merger, led by Tritax Management and backed by Abrdn, emphasizes the resilience of the warehouse sector amid a challenging real estate market. The combined group, with a £3.9bn market cap and £6.3bn portfolio, remains smaller than Segro.

Diamondback Energy to acquire Endeavor Energy Resources for $26bn

Diamondback Energy is set to acquire Endeavor Energy Resources in a $26bn cash and stock deal, outbidding ConocoPhillips for the prominent Permian Basin oil producer. This transaction will elevate Diamondback to a major player in the vast Permian Basin, the largest US oilfield. The deal, with an $8bn cash component and 117.3m Diamondback shares, values Endeavor at $26bn. The combined entity will produce 816,000 barrels of oil equivalent per day. Endeavor’s owners will retain a 40% stake. This move reflects the ongoing consolidation trend in the US shale industry, with Diamondback expanding its footprint significantly.

Yodel to be sold to a consortium of investors

Parcel delivery company Yodel is set to be sold to a consortium, including Tuffnells owner, as part of the Barclay family’s move to unwind debt-laden financial interests. The sale follows uncertainty surrounding Yodel’s future, with the Barclay family seeking to raise cash amid conflicts with lenders like Lloyds Banking Group. Yodel, backed by £180m debt from HSBC, will be acquired by a new entity, YDLGP, backed by a consortium including Solano Partners and Shift, a logistics provider. The merged companies aim to create a “super-scale” logistics platform, leveraging Shift’s technology for automation and efficiency.

Other key highlights:

1. Brussels intensifies its crackdown on anti-competitive behavior by Big Tech, evidenced by Amazon’s $1.45bn withdrawal from the iRobot acquisition, sparking concerns among European start-ups about limited exit strategies and potential innovation setbacks amid increased regulatory scrutiny on tech deals.
2. Deloitte undergoes a strategic shift in its UK deals business, scaling back its regional deals advisory practice and withdrawing from lead advisory roles in financial services and intellectual property deals, aiming to focus on larger, sector-focused M&A transactions due to lower profit margins and a quiet market, leading to potential job cuts and competitive opportunities for rivals.
3. Wish, the online retailer, faces an unexpected turn as it sells itself to Singapore’s Qoo10 for $173m, rebrands as ContextLogic, and plans to leverage $2.7bn in net operating losses (NOLs) as a shell company, seeking a merger partner to utilize the tax shield, akin to the strategy employed by successful cases like Washington Mutual’s WMIH.
4. UK electronics retailer Currys rejects an unsolicited bid from US investment group Elliott Management, deeming the proposed 62p per share offer, a 32% premium to its latest price, significantly undervalued; Elliott Management, managing around $65bn in assets, has until March 16 under UK takeover regulations to decide on a firm offer or withdrawal.
5. Diego Della Valle, CEO of Italian luxury brand Tod’s, announces a delisting deal with LVMH-backed private equity firm L Catterton, where the Della Valle family retains a 54% majority stake, reducing from 64%, and L Catterton acquires a 36% stake, valued at approximately €2bn, to revitalize Tod’s performance amid low share prices despite a sales increase of 11.9% to €1.13bn last year.

Parting Thoughts

While deal activity is taking momentum, negative sentiment is still floating in the market.

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.