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Tag: mergers

  • FTC will appeal judge’s ruling clearing Microsoft-Activision deal

    FTC will appeal judge’s ruling clearing Microsoft-Activision deal

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    The Federal Trade Commission late Wednesday filed notice that it will appeal a judge’s ruling this week that gave Microsoft Corp. the green light to proceed with its $69 billion acquisition of Activision Blizzard Inc.

    In a filing with the Ninth Circuit Court of Appeals in San Francisco, the FTC is seeking to overturn U.S. District Judge Jacqueline Scott Corley’s ruling Tuesday, which said the deal would not hurt competition.

    “The District Court’s ruling makes crystal clear that this acquisition is good for both competition and consumers,” Brad Smith, Microsoft’s vice chair and president, said in a statement.” We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward.” 

    The FTC has claimed the tie-up of a major videogame platform — Microsoft’s
    MSFT,
    +1.42%
    Xbox — with a major videogame publisher — Activision
    ATVI,
    -1.09%
    makes the wildly popular “Call of Duty,” among other titles — would be harmful to the videogame industry and consumers.

    “The facts haven’t changed,” an Activision spokesperson said Wednesday. “We’re confident the U.S. will remain among the 39 countries where the merger can close. We look forward to reinforcing the strength of our case in court, again.”

    Microsoft has pledged to keep “Call of Duty” available to Sony’s
    SONY,
    +1.78%
    PlayStation console for 10 years, and will make it available for Nintendo’s
    7974,
    +1.63%
    Switch and some cloud-gaming platforms.

    The deal faces a July 18 deadline, and still must gain regulatory approval in the U.K.

    Tuesday’s ruling was yet another antitrust setback for the FTC, which has failed to do much to rein in Big Tech, and one analyst told MarketWatch on Tuesday that the regulators need to do ” a much better job of picking their battles,”

    Read more: After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

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  • European Commission approves Broadcom’s $61 billion acquisition of VMware

    European Commission approves Broadcom’s $61 billion acquisition of VMware

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    The European Commission has approved Broadcom Inc.’s
    AVGO,
    +0.49%
    acquisition of VMware Inc.
    VMW,
    +5.19%    ,
    sending VMware’s stock up 2.3% premarket. Broadcom, which makes chip and infrastructure software, announced the $61 billion deal to buy VMware in May 2022, but the deal has been the subject of regulatory scrutiny ever since. It has now been granted legal merger clearance in Australia, Brazil, Canada, South Africa, and Taiwan, and foreign investment control clearance in all necessary jurisdictions, the company said Wednesday. Broadcom “looks forward to continuing to work constructively with regulators around the world. Broadcom is confident that when regulators conclude their review, they too will see that the combination of Broadcom and VMware will enhance competition in the cloud and benefit enterprise customers by giving them more choice and control over where they locate their workloads,” said the company. It still expects to close the deal in fiscal 2023. Broadcom’s stock was up 0.6% premarket.

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  • After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

    After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

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    The U.S. Federal Trade Commission’s defeat as it sought to block Microsoft Corp.’s acquisition of videogame maker Activision Blizzard is yet another setback for an increasingly toothless regulator that needs to pick better battles with Big Tech.

    On Tuesday morning, a federal judge denied the FTC’s injunction that was seeking to block the software giant’s proposed $69 billion acquisition of Activision
    ATVI,
    +10.02%    ,
    best known for its hit videogame “Call of Duty.” The FTC argued that Microsoft
    MSFT,
    +0.19%
    could withhold “Call of Duty” and other Activision games from rival console platforms such as Sony’s PlayStation, and keep the games on its Xbox only.

    Microsoft, in a show of faith, committed in writing to keep “Call of Duty” on PlayStation on parity with Xbox for 10 years, agreed with Nintendo
    7974,
    +1.10%
    to bring “Call of Duty” to Switch and entered into several pacts to bring Activision content to several cloud gaming services, U.S. District Court Judge Jacqueline Scott Corley noted in her decision.

    “With these 10-year contracts that Microsoft made across the board with so many vendors, Nvidia
    NVDA,
    +0.53%    ,
    Nintendo and others, 10 years is a really long time, in my opinion,” said Sarah Hindlian-Bowler, an analyst at Macquarie Equity Research, in an interview Tuesday. “It is long enough to cover the arrival and maturity of the cloud gaming market….She understands  that 10 years is a very long long time to make a guarantee of this kind.”

    Also read: Regulators face an antitrust dilemma after Meta launches Threads

    Hindlian-Bowler said that she had been in the minority of Wall Street analysts in not believing the U.S. government would be able to block this deal.

    “The assumption that this somehow decreases the market is going to prove to be wildly incorrect,” she said, adding that she does not believe that the U.K.’s  Competition and Markets Authority will be able to block the deal either.

    The latest upset at the FTC was also not too surprising to other Capitol Hill watchers, especially in the light of other high-profile setbacks by the agency and its once-heralded commissioner, Lina Khan. When she was sworn in as chair of the FTC in mid-2021, Khan was hailed as the sheriff who would rein in Big Tech.

    “It’s hard to say I am surprised by the ruling because Khan has had a fairly unsuccessful track record,” said Owen Tedford, a senior research analyst at Beacon Policy Advisors. “The regulators are pushing the boundaries, deals that previously would have gone unchallenged have now gone challenged. And they are breaking precedent because Khan and company have expressed a dislike of settlements.”

    The FTC’s attempts to sue Meta Platforms Inc.
    META,
    +1.42%
    have had some defeats so far. In February, a California judge denied the FTC’s attempts to block Meta from buying a virtual-reality startup called Within Unlimited. The FTC’s suit to reverse Meta’s acquisitions of WhatsApp and Instagram, filed in 2021, is still plodding along.

    Additionally, the FTC recently filed a suit against Amazon.com Inc.
    AMZN,
    +1.30%    ,
    alleging that it is too difficult for consumers to cancel their Prime accounts, and the agency is reportedly also mulling another far-reaching suit against Amazon alleging that the e-commerce giant punishes merchants who do not use its logistics services. One analyst has already made a case that the FTC will lose that fight too.

    “I think that the FTC is in need of some change, in need of some refreshing and in need of doing a much better job of picking their battles,” said Hindlian-Bowler. “This does feel toothless, a lot of the fights they are picking are toothless. And unfortunately, they are missing the real battle. They are missing TikTok, they are missing the real fights where we actually have national security at risk.”

    In February, one of the Republican commissioners on the FTC resigned, and wrote an op-ed in the Wall Street Journal accusing Khan of disregarding the rule of law and due process.

    Compared to the European Union, which has had far more success implementing regulation to rein in Big Tech, the U.S. is still much weaker. “The EU seems to be having somewhat more success, levying big fines, getting these companies to change,” said Beacon’s Tedford. “The EU has passed these bills, but the U.S., despite these efforts, has not gotten there and is not going to get there for the next two years.”

    Money spent by Big Tech to lobby Congress in a huge part of the problem, whereas in Europe, “those lawmakers feel less beholden,” he added.

    More than a century ago, President Teddy Roosevelt, known for his “speak softly and carry a big stick” foreign policy, also used his bully pulpit to bust industrial monopolies.

    If Khan and her staff want to follow his lead and rein in Big Tech, they need to start picking their future battles more carefully — and carry bigger sticks.

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  • FTC Loses First Bid to Block Microsoft’s Acquisition of Activision Blizzard

    FTC Loses First Bid to Block Microsoft’s Acquisition of Activision Blizzard

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    FTC Loses First Bid to Block Microsoft’s Acquisition of Activision Blizzard. The Focus Turns to U.K. Regulators.

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  • Five Reasons Small Businesses Should Consider Mergers and Acquisitions | Entrepreneur

    Five Reasons Small Businesses Should Consider Mergers and Acquisitions | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Mergers and acquisitions (M&A) have become increasingly popular among large corporations as a business strategy. However, small and medium-sized businesses may hesitate to engage in M&A due to the perceived complexities and risks involved. This shouldn’t necessarily be the case.

    M&A refers to the process of combining two or more companies to form a new entity, or to have one company take over another. It is true that M&A carries inherent risks and the process can be intricate, but in many cases, the benefits far outweigh these hurdles. M&A can be a strategic move for large and small companies looking to expand their business operations, gain a competitive advantage or enter new markets.

    Throughout my career, I have completed more than 20 successful deals — M&A is a strategy I have employed time and time again. These purchases have accelerated our growth, allowed us to expand into new industries and markets, and they afforded us new expertise, technologies and increased the services we are able to offer our customers.

    Here are five reasons I think small and medium-sized businesses should consider M&A as a growth strategy.

    Related: Cultural Fit Can Make or Break an M&A Deal

    1. New markets and customers

    M&A can provide access to new markets and new customers. Customer acquisition can be costly, both in time and resources, but acquiring a company often comes with established customers that are already familiar with the products and services offered. This can be especially useful for expanding geographically or into new industries.

    For example, a software company that specializes in sales management tools may acquire a project management software company to gain access to a new market. It is a huge benefit if the acquired company has an established customer base in a different geographical region or industry, which can help the acquiring company expand its reach and diversify its offerings.

    Additionally, acquiring a company in a different market can provide a brick-and-mortar presence and a foothold there.

    2. Cost savings

    There are significant cost savings and economies of scale that can be achieved through M&A. By merging with another company and combining resources and operations, they can eliminate redundancies, streamline processes and benefit from synergies — such as shared overhead costs, reduced administrative expenses and improved purchasing power.

    This can increase profitability which is vital for smaller companies with limited resources. Additionally, by leveraging the strengths and resources of both organizations, the company can create a more efficient and effective business model.

    3. Diversity of products and services

    By acquiring a business that offers complementary products or services, a company can expand its offerings and potentially tap into new revenue streams.

    For example, a company that sells office supplies may acquire a printing services company. By offering a more comprehensive solution, the company can differentiate itself from its competitors and can also provide opportunities for cross-selling and up-selling.

    In that same example, the office supplies company can then promote its printing services to its existing customer base and vice versa, helping to increase sales and customer retention.

    Related: Successful M&A Strategies for Startups

    4. Talent acquisition

    An acquisition can create an opportunity to level up or add talent across the organization with highly skilled employees.

    With the staff of both organizations combined into one, the merged organization can benefit from a more diverse and skilled workforce. Additionally, the company can acquire new expertise.

    For instance, a marketing agency may acquire a search engine optimization company to boost its digital marketing capabilities. Access to new technologies or expertise can help drive innovation and growth.

    Related: 7 Strategies to Conquer Mergers and Acquisitions

    5. Exit strategy

    Finally, M&A can provide an avenue for an exit or a liquidity event for business owners or investors. Business founders or owners who want to retire or venture into other business opportunities can sell their company and exit the market.

    Selling to a larger organization can provide not only a profitable exit for them, but it can also help ensure that their company and employees will continue on and grow. Additionally, M&A can provide liquidity events for investors and shareholders, unlocking value and providing a return on investment.

    Small and medium-sized businesses can significantly benefit from mergers and acquisitions as a powerful growth strategy, just as large businesses can. And while all M&A activity does carry risks that need to be carefully considered, there are significant benefits.

    It can be complex, but the right partner can help you navigate the process. By adopting the right approach and strategy, M&A can be a game-changing opportunity for any size company to take their business to the next level.

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    Marius Silvasan

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  • Cava Group’s stock soars 11% as analysts start coverage on a bullish note

    Cava Group’s stock soars 11% as analysts start coverage on a bullish note

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    The stock of Mediterranean-style fast-casual restaurant chain Cava Group Inc. soared 11% Monday, after analysts initiated coverage on the stock which made its debut on public markets in mid-June with a flurry of buy ratings.

    At least four of the banks that were underwriters on the initial public offering — JP Morgan, Stifel, William Blair and Jefferies — assigned the stock a buy rating or the equivalent.

    FactSet shows one bank has a hold rating but it’s a restricted listing so it’s not clear who it’s from.

    The company
    CAVA,
    +8.04%
    raised $317 million in its initial public offering, which priced above its proposed range at $22 a share and immediately rallied on opening. The company issued 14.4 million shares at a valuation of $2.45 billion. The stock was last trading at $43.83.

    See also: Like choosy shoppers at a retail store, IPO investors are demanding discounts and displaying price sensitivity

    The company is not profitable and has high cash burn and just $23 million in cash and cash equivalents on its balance sheet, according to its IPO filing documents.

    But analysts were unfazed, with William Blair analysts calling it a clear leader in a fast-growing category with proven geographic appeal.

    “CAVA has hit upon a winning formula with its customizable menu of bowls and pitas featuring bold Mediterranean flavors that can fit in any dietary preference,” wrote analysts led by Sharon Zackfia.

    “CAVA’s customer appeal is evident in average unit volumes (AUVs) of roughly $2.5 million and a 44% five-year revenue CAGR through 2022.”

    The company accelerated its growth with the 2018 acquisition of Zoës Kitchen, “which provided immediate access to attractive real estate in new markets while enabling capital-efficient densification in top-tier trade areas (Zoës conversions roughly half the cost of a typical greenfield CAVA),” they wrote.

    That has set the company up to end 2023 with roughly triple the number of locations as it had in 2020.

    William Blair estimates that there’s room for at least 1,200 domestic Cava restaurants based on the population per restaurant already achieved in Virginia, where it’s still adding locations.

    That supports management’s target of 1,000-plus locations by 2032.

    “We also see the potential for digital drive-thrus to further lengthen CAVA’s growth runway while lifting AUVs (and potentially returns), with about one-third of this year’s new units having drive-thrus, ramping up to about half in 2024 (versus roughly 20 drive-thrus today),” they wrote. William Blair initiated coverage with an outperform rating.

    JP Morgan launched coverage with an overweight rating and a December 2024 $45 stock price target. Analysts cheered the entrepreneurial sprit of Founder and CEO Brett Schulman with help from Chairman Ron Shaich, the founder of Panera Bread.

    “In-store design/operational procedures and back-end support for the network allows CAVA to be efficient, safe and consistent as the brand leverages these systems for its goal national brand penetration,” they wrote in a note to clients.

    Mediterranean cuisine covers many types of food and occasions, so the end-market is large, topping out at more than $1 trillion in U.S. sales.

    While bowl builds priced at $10.95 to $16.95 will likely limit a high frequency of lower-income consumers, “we believe the brand has an enduring appeal to a very broad customer base for at least occasional usage.”

    And suburbs are 82% of the site mix and are expected to remain a key location base, they added.

    Stifel and Jefferies analysts initiated coverage with a buy rating and $48 price target. Stifel analysts led by Chris O’Cull also cheered the wide appeal of the food and compelling unit-level returns and highlighted the company’s healthy balance sheet.

    “The company is in strong financial condition with no funded debt and roughly $340M in cash on hand following the company’s IPO,” they wrote in a note to clients. “We project the company’s average quarterly cash balance will remain above $200M with no funded debt for the foreseeable future. We project positive annual free cash flow starting in 2026.”

    Still, not everyone is convinced the company is a buy. David Trainer, chief executive of New Constructs, an independent equity research firm that uses machine learning and natural-language processing to parse corporate filings and model economic earnings, published a series of critical reports before the IPO.

    Trainer questioned Cava’s ability to reach profitability and its high valuation. He even compared it to WeWork 
    WE,
    +5.80%    ,
     the infamous startup created by Israeli entrepreneur Adam Neumann, that at its peak was valued at $47 billion, but is now trading at just 26 cents a share, or a market cap of $521 million.

    The Renaissance IPO ETF 
    IPO,
    +0.52%
     has gained 32% in the year to date, while the S&P 500 
    SPX,
    -0.07%
    has gained 15%.

    For more, see: Fast-casual restaurant chain Cava Group’s IPO documents raise some red flags: analyst

    Read now: Cava Group CFO is confident restaurant chain will be profitable—but she won’t say when

    Related: 5 things to know about the fast-casual Mediterranean restaurant chain Cava

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  • Mullen Automotive’s stock more than doubles in 2 days. Here’s why.

    Mullen Automotive’s stock more than doubles in 2 days. Here’s why.

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    Shares of Mullen Automotive Inc. rocketed on massive volume for a second-straight day, after the electric vehicle maker announced plans to buy back a chunk of its shares.

    The company
    MULN,
    +29.02%
    said it believes its stock is “significantly undervalued,” given its current cash position of about $235 million. Therefore, the board of directors have authorized the repurchase of up to $25 million worth of its outstanding shares through the end of this year.

    The buyback amount represents 17.1% of Mullen’s current market capitalization of about $145.8 million.

    “We are initiating this buyback program as an attractive opportunity to deploy capital and return value to our shareholders,” said Chief Executive Officer David Michery.

    The stock soared as much as 88.2% intraday, before paring gains to be up 32.8% in afternoon trading. Trading volume swelled to an already record 1.78 billion shares, compared with the full-day average over the past 30 days of about 205.0 million shares.

    On Wednesday, the stock blasted 69.4% higher, the biggest one-day gain since it ran up 145.6% on Feb. 28, 2022, on then-record volume of 1.39 billion shares. That followed the company’s announcement that it retained a law firm to combat illegal naked short selling.


    FactSet, MarketWatch

    A short sale is a way for investors to bet that prices will fall. The short seller must pay to borrow stock owned by another investor so they can sell it with the hope of buying the stock back at a lower price. If the investor who originally owned the stock sells their stock, the borrower must cover their short so they can return the stock.

    “Naked” short selling refers to the illegal act of shorting a stock without borrowing it first. While that is often blamed for what companies believe are unwarranted declines in their stock, market structure experts have often refuted those claims.

    Read: Short sellers are not evil, but they are misunderstood.

    Before the stock’s two-day bounce, it had closed Monday at a record low of 10.1 cents, even after the company reported last week that it recorded revenue for the first time, and that it received additional financing that put it in the “best financial position” in its history.

    Mullen had said on Wednesday that it “believes it may have been” targeted by naked short sellers, and therefore decided to investigate any “potential wrongdoing.”


    FactSet, MarketWatch

    The latest exchange data showed that the percent of Mullen’s public float, or shares freely available to trade, that have been shorted was 16.2%, according to FactSet data. That’s less than half what the percentage was a month ago.

    In comparison, fellow “meme” stock AMC Entertainment Holdings Inc.
    AMC,
    +0.94%
    has 23.6% of its float shorted and 20.8% of GameStop Corp.’s
    GME,
    -4.48%
    float is shorted.

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  • Brookfield Reinsurance to acquire remaining shares of AEL in $4.3 billion cash-and-stock deal

    Brookfield Reinsurance to acquire remaining shares of AEL in $4.3 billion cash-and-stock deal

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    Brookfield Reinsurance Ltd.
    BNRE,
    -0.63%
    has agreed to acquire the shares of American Equity Investment Life Holding Co.
    AEL,
    -0.69%    ,
    or AEL, it does not already own in a cash-and-stock deal valued at $4.3 billion. Under the terms of the deal, AEL shareholders will receive $55 per AEL share, consisting of $38.83 in cash and 0.49797 of a Brookfield Asset Management Ltd.
    BAM,
    +0.25%
    class A limited voting share with a value of $16.15, subject to adjustment. The price is equal to a 35% premium over AEL’s undisturbed closing share price on June 23, and a 42% premium to AEL’s 90-day volume-weighted average price as of that date. “This transaction represents an important step in the continued growth of our insurance business, further diversifying, and scaling, our insurance capabilities, and is a direct result of the partnership we have developed with AEL since our initial investment in 2020,” said Brookfield Reinsurance CEO Sachin Shah in a statement. The deal is expected to close in the first half and will not be dilutive to BAM, BN or Brookfield Reinsurance. Once ti closes, AEL shares will be delisted from the NYSE. AEL’s stock rose 2.4% premarket.

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  • Activision’s Microsoft Saga Is Almost Over. It May Be Time to Sell the Stock.

    Activision’s Microsoft Saga Is Almost Over. It May Be Time to Sell the Stock.

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    The fate of


    Microsoft


    $69 billion purchase of


    Activision


    Blizzard will finally be known in the coming weeks—and investors may want to consider taking profits on the videogame maker’s stock before then.

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  • Intel Stock Drops Despite Plan for Cost Savings. This Is Why.

    Intel Stock Drops Despite Plan for Cost Savings. This Is Why.

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    Chip maker


    Intel


    offered positive news on its foundry business Wednesday as it continues to build out new facilities to expand the custom chip-making service. Investors sold the stock anyway.

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  • Cathie Wood Sold More Tesla Stock. She Might Not Be Done.

    Cathie Wood Sold More Tesla Stock. She Might Not Be Done.

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    Cathie Wood Sold More Tesla Stock. She Might Not Be Done.

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  • Amazon’s $1.7 Bln Takeover of iRobot Cleared by UK Regulator

    Amazon’s $1.7 Bln Takeover of iRobot Cleared by UK Regulator

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    By Joe Hoppe

    The U.K. Competition and Markets Authority on Friday said it has cleared Amazon.com’s proposed $1.7 billion acquisition of iRobot Corp.
    

    The regulator, which had launched an initial formal investigation in April into the takeover of the Roomba maker, concluded that the deal wouldn’t lead to competition concerns in the U.K.
    

    

    The deal remains under regulatory review in other jurisdictions. In September, iRobot said the U.S. Federal Trade Commission formally requested documents from both companies explaining the deal’s purpose and rationale. A securities filing by iRobot said both companies would cooperate with the FTC’s investigation.
    

    After an investigation, which typically takes up to a year, the FTC can sue to block a merger, seek concessions such as divestitures or decline to take action, allowing a deal to close.
    

    “We’re working cooperatively with the relevant regulators in their review of the merger,” an Amazon spokesperson said at the time.
    

    Write to Joe Hoppe at joseph.hoppe@wsj.com
    

    

    

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    Adobe Earnings Are Coming. The Focus Remains on AI.
    
			
    Adobe Earnings Are Coming. The Focus Remains on AI.
    
			
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            Adobe
    
          
    
        
    
       Systems reports financial results after the close of trading on Thursday, but the stock is more likely to move on any tidbits the company shares about its push into artificial intelligence—and the status of its pending $20 billion acquisition of the collaborative design software company Figma.
    

    

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    Judge temporarily blocks Microsoft’s $69 billion purchase of Activision
    
			
    Judge temporarily blocks Microsoft’s $69 billion purchase of Activision
    
			
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    A federal judge late Tuesday approved a request by the Federal Trade Commission to temporarily block Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc.
    

    U.S. District Judge Edward Davila in San Francisco issued a temporary restraining order in order to “maintain the status quo,” and set a evidentiary hearing to be held June 22-23 on whether a preliminary injunction should be issued.
    

    

    The deal was set to be finalized as soon as this Friday. Tuesday’s order said the deal may not close until at least five days after the court’s preliminary injunction ruling.
    

    The acquisition has raised antitrust concerns that Microsoft
    
        MSFT,
    
        +0.74%    ,
    
       with its Xbox gaming console, could withhold hit Activision Blizzard
    
        ATVI,
    
        +1.17%
    
       videogame franchises such as “Call of Duty” and “Overwatch” from competing console platforms.
    

    On Monday, the FTC filed for a restraining order and injunction to block the deal, arguing “a preliminary injunction is necessary to maintain the status quo and prevent interim harm to competition.”
    

    “This loss of competition would likely result in significant harm to consumers in multiple markets at a pivotal time for the industry,” the FTC said in its filing Monday.
    

    In a statement Tuesday evening, a Microsoft spokesperson said: “Accelerating the legal process in the U.S will ultimately bring more choice and competition to the gaming market. A temporary restraining order makes sense until we can receive a decision from the court, which is moving swiftly.” 
    

    While EU regulators approved the deal in May, British regulators have tentatively scheduled appeal hearings after saying in April they would prohibit the purchase.
    

    

    

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    Manchester United shares leap on report Qatari suitor to be named preferred bidder
    
			
    Manchester United shares leap on report Qatari suitor to be named preferred bidder
    
			
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    Manchester United shares
    
        MANU,
    
        +3.98%
    
       jumped 17% in premarket trade following a report from Qatar’s Al-Watan that Qatar’s Sheikh Jassim bin Hamad al-Thani will soon be announced as the preferred bidder. He has been battling Jim Ratcliffe for control of the club after the controlling Glazer family said they would consider selling.
    

    

    

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    Nasdaq stock dives after deal to buy Adenza for $10.5 billion in cash and stock from Thoma Bravo
    
			
    Nasdaq stock dives after deal to buy Adenza for $10.5 billion in cash and stock from Thoma Bravo
    
			
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    Shares of Nasdaq Inc.
    
        NDAQ,
    
        +0.28%
    
       dove 5.1%, enough to pace the S&P 500’s premarket decliners Monday, after the securities trading, clearing and listing company announced an agreement to buy software company Adenza for $10.5 billion in cash and stock from Thoma Bravo. The terms of the deal include $5.75 billion in cash and 85.6 million shares of Nasdaq common stock, which will be issued to the owners of Adenza after closing of the deal, expected to occur within six to nine months. The number of shares represents 17.4% of Nasdaq’s shares outstanding. Nasdaq plans to issue 5.9 billion of debt for the cash portion of the deal. “With Adenza, we will have a more complete suite of essential software and technology solutions that make managing risks and complying with regulations simpler and more efficient for our clients,” said Tal Cohen, president of market platforms at Nasdaq. Adenza is expected to have $590 million of revenue in 2023, with annual recurring revenue growth of 18%. Nasdaq’s stock has lost 5.7% year to date through Friday, while the S&P 500
    
        SPX,
    
        +0.11%
    
       has gained 12.0%.
    

    

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    7 Strategies to Conquer Mergers and Acquisitions | Entrepreneur
    
			
    7 Strategies to Conquer Mergers and Acquisitions | Entrepreneur
    
			
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    Opinions expressed by Entrepreneur contributors are their own.  
    

    

    Mergers and acquisitions (M&A) are complex transactions that require careful negotiation and due diligence. Negotiating for M&A involves a variety of considerations, including valuation, deal structure, financing, legal and regulatory compliance and post-merger integration.
    

    Let’s explore some key strategies and best practices for negotiating successful M&A deals.
    

    1. Conduct thorough due diligence
    

    Before entering into any negotiation, conducting thorough due diligence on the target company is essential. Due diligence helps to identify potential risks and opportunities associated with the acquisition, including financial and operational risks, legal and regulatory compliance issues, intellectual property rights and customer and supplier relationships. This information is critical to determining the target company’s value and identifying any deal breakers.
    

    For example:
    

      

    • You’ll want to clearly understand and have documentation substantiating the capitalization of the target. The last thing you want is for an unknown stockholder to come out of the woodwork after the deal closes.
      • 

    • You want to ensure the target owns all of its intellectual property (or has sufficient license rights, as applicable) and there are no major risks of infringement claims against the target.
      • 

    • Has the target been involved in litigation? Or is someone threatening litigation?
      • 

    

    2. Determine the deal structure
    

    The deal structure refers to how the acquisition will be financed and structured. The most common types of deal structures include stock purchases, asset purchases and mergers. Each structure has different legal and tax implications, and it is important to consult with legal and financial advisors to determine the most advantageous structure for the deal.
    

    Related: We Can’t Rely on Venture Capital Funding to Build a Just and Thriving Entrepreneurial Economy. Here’s What to Do Instead
    

    3. Set realistic valuation expectations
    

    One of the most challenging aspects of negotiating an M&A deal is determining the value of the target company. Both the buyer and the seller will have different valuation expectations based on their respective financial models and industry market conditions.
    

    To reach a successful negotiation, both parties must be willing to compromise and adjust their valuation expectations. Having a thorough understanding of the target company’s financials, market position and growth potential is essential to developing a realistic valuation.
    

    4. Establish clear goals and objectives
    

    Successful negotiations require clear goals and objectives. Both parties should identify their respective priorities and interests as well as their areas of flexibility and non-negotiables. The parties should work together to develop a mutually beneficial agreement that satisfies their respective goals and objectives.
    

    For example:
    

      

    • Both the buyer and target need to decide how important risk mitigation is to them. A risk-averse buyer will want tight indemnification rights for future liabilities arising from issues with the target. A risk-averse target will want less onerous indemnification obligations and low caps on such obligations. If the target is more willing to take risks, they may agree to buyer-friendly indemnification terms in favor of some other ask on other terms.
      • 

    • Some deals are a mix of cash and stock — which gets more complicated if the buyer is a private company. In such deals, as the target, you need to decide what you care about more — cash or stock. If you value one more than the other, where certain consideration is contingent, you will want the consideration you value more not to be subject to as many contingencies.
      • 

    • If the deal has earnouts, as a target, you will want to negotiate protections. For example, if the earnout requires specific revenue goals post-acquisition, what if the buyer stops selling your product/service? Or stops putting resources into it? There are deal terms that would protect you in such events. As a buyer, on the other hand, how much do you want your hands tied to help the target receive earnouts? You want as much freedom as possible.
      • 

    

    Related: 7 Deadly Sins of Merger and Acquisition Negotiations
    

    5. Develop a negotiation strategy
    

    Developing a negotiation strategy is critical to achieving a successful M&A deal. The parties should identify their respective bargaining strengths and weaknesses, as well as the potential risks and opportunities associated with the deal. As discussed in our last article on negotiations, it’s paramount to identify an alternative to the agreement if it cannot be reached.
    

    The parties should also consider the timing and sequencing of negotiations, the use of concessions and trade-offs and the importance of maintaining good working relationships throughout the negotiation process. From a timing perspective, it often makes sense to get big-ticket items out of the way early so that no one wastes their time on details when no deal is possible.
    

    In addition, using advisors like lawyers and bankers to do a lot of the negotiating can help preserve relationships. Let your lawyer play bad cop for a while, and you can swoop in at the end. This mitigates the harm from you as the principal having fights over the entire process.
    

    6. Focus on post-merger integration
    

    The success of post-merger integration often determines the success of an M&A deal. A comprehensive integration plan developed by both parties should address key issues such as culture, leadership, communication, technology and operations. The parties should also consider successfully retaining key employees, maintaining customer relationships and ensuring a smooth transition for all stakeholders.
    

    From an employee perspective, this can take different forms. Sometimes you can negotiate re-vesting of deal consideration for some key employees, which requires them to stay employed for some time post-acquisition. Also, non-compete agreements, common in M&A, can incentivize key employees to remain employed with the buyer post-acquisition.
    

    Those, of course, are “stick” approaches rather than “carrot” approaches. Buyers are often much more well-resourced than their targets. So, higher salaries and bonuses and post-acquisition equity issuances can provide positive incentives to retain employees.
    

    Clear and unified messaging is important for customer and vendor relationships. Providing prompt notice and assurances of continuing dedication to the relationship is often enough. Of course, individual outreach is often recommended for particularly sensitive situations or priority partners/customers.
    

    Related: How to Avoid Post-Merger Identity Crisis
    

    7. Consider alternative dispute resolution mechanisms
    

    In some cases, disputes may arise during the negotiation or implementation of an M&A deal. To avoid costly and time-consuming litigation, the parties should consider alternative dispute resolution mechanisms such as mediation or arbitration. These mechanisms can help to resolve disputes in a timely and cost-effective manner while preserving the relationship between the parties.
    

    Negotiating for M&A requires a strategic approach, which involves complex legal and financial issues requiring specialized expertise. It is essential to seek the advice of experienced legal and financial advisors to navigate these complexities and ensure the deal is structured and executed properly. However, by following these best practices, parties can increase the likelihood of reaching a successful M&A deal that benefits all stakeholders.
    

    

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     Mital Makadia
    

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    Circor’s stock rockets toward 4-year high after buyout deal with KKR valued at $1.6 billion, including debt
    
			
    Circor’s stock rockets toward 4-year high after buyout deal with KKR valued at $1.6 billion, including debt
    
			
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    Shares of Circor International Inc.
    
        CIR,
    
        +8.46%
    
       rocketed 49.2% toward a four-year high in premarket trading Monday, after the flow control products company announced a deal to be acquired by KKR & Co. Inc.
    
        KKR,
    
        +2.29%
    
       in a cash deal valued at $1.6 billion, including debt. KKR’s stock was still inactive ahead of the open. Under terms of the deal, Circor shareholders will receive $49 for each Circor share they own, which represents a 54.7% premium to Friday’s closing price of $31.67, and implies a market capitalization for Circor of $999.1 million. The deal, which is expected to close in the fourth quarter of 2023, follows a strategic review Circor initiated in March 2022. “We believe that this transaction and the immediate cash value it will provide to Circor’s stockholders best achieves the Board’s goal of unlocking the significant incremental value within Circor for its stockholders,” said Circor Chairman Helmuth Ludwig. Circor’s stock has soared 32.2% year to date through Friday, while KKR shares have run up 15.5% and the S&P 500
    
        SPX,
    
        +1.45%
    
       has advanced 11.5%.
    

    

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    UBS Expects to Complete Credit Suisse Acquisition, Delisting as Early as Next Week – Update
    
			
    UBS Expects to Complete Credit Suisse Acquisition, Delisting as Early as Next Week – Update
    
			
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    By Pierre Bertrand
    

    UBS Group said it expects to complete its acquisition of Credit Suisse Group and have the shares of the Swiss peer delisted as early as next week.
    

    Upon completion, Credit Suisse will be merged into UBS and its shares and American depositary shares will be delisted from the SIX Swiss Exchange and the New York Stock Exchange, UBS said in a statement Monday.
    

    

    If the acquisition is finalized before the opening of trading in the U.S. on June 12, Credit Suisse will de delisted in New York on June 12 and delisted in Switzerland on June 13, UBS said.
    

    If the deal is finalized after the opening of trading in the U.S. on June 12, the delisting on the NYSE and the SIX will both occur on June 13, UBS added.
    

    UBS, which received the European Union’s clearance for its takeover of Credit Suisse last month, said Credit Suisse shareholders will receive one UBS share for every 22.48 outstanding shares held and that it will assume all Credit Suisse Group assets and liabilities.
    

    It added that Credit Suisse Group’s obligations under its outstanding debt securities will become UBS obligations.
    

    UBS agreed to take over Credit Suisse as part of an emergency measure in March to shore up the troubled lender and restore confidence in the global banking system.
    

    Write to Pierre Bertrand at pierre.bertrand@wsj.com
    

    

    

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