Weekly Banking Insight: M&A market adapting to geopolitical complexity

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 creative ways in which businesses are navigating the complex geopolitics to explore growth avenues and strategically position themselves in the market.

Polymetal’s Strategic Move in Russia

Polymetal, a once-profitable gold miner, has secured a buyer, Mangazeya Mining, valuing its Russian business at over $3bn. Shareholders will vote on the deal next month, with potential closure in March. CEO Vitaly Nesis acknowledges suboptimal financial terms but prioritizes a swift deal amid concerns about the risk of nationalization. The transaction, valued at $3.69bn, faces challenges due to Western sanctions and limited viable buyers. Mangazeya, a Siberian precious metals producer, is selected for its compliance with sanctions and ability to finalize the deal discreetly. Exiting Russia proves challenging as geopolitical uncertainties and upcoming elections impact corporate exits.

JD.com Eyes UK’s Currys Amid Bidding War Speculations

Chinese e-commerce giant JD.com is considering a bid for UK electronics retailer Currys, following a rejected offer from Elliott Management. Currys shares surged 36.4% after the announcement. JD.com, facing a domestic market slowdown, emphasized no assurance of an offer. Currys CEO Alex Baldock aims to revitalize the company, rebranded in 2021. Analysts suggest Currys’ value, with interests in electronics refurbishment and mobile, exceeds its depressed share price. Despite challenges, including a weak Nordic business, interest from JD.com and Elliott signals a potential bidding war for the retailer, valued at over £725m. The outcome remains uncertain.

S&P Global’s Acquisition in Financial Data Market

S&P Global is close to acquiring research platform Visible Alpha for over $500m from a consortium including Goldman Sachs, Jefferies, and UBS. Visible Alpha, founded in 2015, aggregates research and financial models from investment banks, generating nearly $100m in 2023 revenue. The acquisition aligns with S&P’s strategy to enhance its financial data services, competing with Bloomberg. The deal also secures a successful exit for the consortium, which founded Visible Alpha. S&P’s acquisition follows its 2018 purchase of IHS Markit as part of its expansion in the financial data market.

SumUp’s Fundraising for International Expansion

UK payments firm SumUp is in talks to secure approximately €1bn from private credit lenders, aiming to refinance existing debt. The London-based company, known for card readers in retail, seeks funds for international expansion after a recent €285m raise. SumUp, reporting positive EBITDA since late 2022, appeals to private credit funds with its growth trajectory and recurring revenues. This potential deal, structured on recurring revenues, signifies the private credit industry’s growing role in financing larger businesses, exemplified by recent refinancing deals such as the $3.3bn loan for UK insurance broker Ardonagh Group.

Corporate Bond Demand Surges due to M&A deals

Corporate bond demand has surged, with investors once again financing major M&A deals, signaling a robust start after a slow year in dealmaking. In the past two weeks, approximately $50bn in bonds have been issued for acquisitions and spinoffs, including offerings from AbbVie, Bristol Myers Squibb, and Cisco Systems. Investors are capitalizing on attractive yields before potential interest rate adjustments, with at least $276bn in pending M&A activity expected to be financed in the US investment-grade debt market this year. Robust demand and declining borrowing costs indicate a favorable backdrop for companies seeking capital.

Other key highlights:

  1. Capital One Financial Corp.’s proposed acquisition of Discover Financial Services includes a $1.38bn termination fee, payable by either company under specific circumstances, as part of the $35bn all-stock deal anticipated to be finalized in late 2024 or early 2025, pending regulatory approvals.
  2. Asahi Group Holdings Ltd. CEO Atsushi Katsuki announces plans for large-scale M&As from next year onward, expressing a desire to expand Super Dry beer in the US after acquiring Octopi Brewing in Wisconsin last month, while also emphasizing the growth of low- and non-alcohol products to constitute 20% of total volume by 2030.
  3. French insurance broker April Group is seeking a €1.2bn syndicated loan from traditional lenders, including KKR Capital Markets, HSBC Holdings Plc, and Nomura Holdings Inc., to refinance debt taken out from private creditors just over a year ago, following KKR & Co.’s acquisition of April in late 2022.
  4. Centroid Investment Partners, having acquired TaylorMade in 2021, is raising a $500m fund and considering the acquisition of a U.S. company worth over $1bn, aiming for a globally renowned brand similar to TaylorMade; the Seoul-based firm recently launched the Sun Day Red apparel line with Tiger Woods and holds interests in various golf-related ventures, underlining its ambition in the golfing industry.
  5. Macy’s Inc. acknowledges receiving nine board nominations from activist investor Arkhouse Management, which, alongside Brigade Capital Management, previously proposed a $5.8bn acquisition bid rejected by Macy’s; the retailer stated it would consider the director nominees but emphasized the lack of financing details provided by Arkhouse and Brigade despite multiple opportunities to do so.
  6. Negotiations for the planned $30bn merger between the chemicals arms of Abu Dhabi National Oil Company (Adnoc) and Austria’s OMV have stalled due to disagreements over various issues, ranging from the name of the merged unit to complex cross-shareholdings; the parties have temporarily halted talks, but there is a possibility of resumption.
  7. Elliott Management is launching Hyperion, a company aimed at acquiring global mining assets valued at least $1bn, tapping into the sector’s depressed valuations; the venture will be led by Sandeep Biswas, former CEO of Newcrest Mining, focusing on metals and commodities essential for electric vehicles, renewable energy, and power grids.
  8. Private equity firms are increasingly opting for a “deal-by-deal” approach, with a record $31bn deployed last year; this strategy allows more flexibility in fundraising, catering to investors seeking lower management fees and quicker returns amid a challenging fundraising market.
  9. London’s listed property sector is experiencing a surge in share-based takeovers focused on warehousing space, with Urban Logistics REIT launching a counter-offer for Aberdeen Property Income Trust in an attempt to create an £800m vehicle amid the turmoil caused by writedowns on US offices and higher interest rates; this consolidation trend indicates a potential upswing in the cycle for industrial properties, particularly logistics, despite a recent decline in valuations.

Parting thoughts

In closing, this week’s moves reveal some sector-specific challenges and opportunities. The surge in corporate bond demand adds a positive note to the overall deal financing environment. As we anticipate the outcomes of pending votes, potential bidding wars, and market responses, it’s crucial for investors to stay informed, considering the unique factors influencing each sector. The coming weeks promise further insights into the adaptive strategies of industry players as they steer through a complex and dynamic economic terrain.

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)
Avatar for Ria Vaghela

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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