Berkshire Hathaway agrees $11.6bn Alleghany acquisition

BY Richard Summerfield

Berkshire Hathaway has agreed to acquire insurance firm Alleghany Inc in a deal worth $11.6bn. The acquisition, upon completion, would be one of the five largest deals in Berkshire’s history and will put some of the firm’s $146.7bn of cash and equivalents to work after a nearly six year wait for a large deal.

The all-cash acquisition of Alleghany will expand Berkshire’s already considerable insurance holdings, including brands like Geico auto insurance. Alleghany’s core businesses are property and casualty reinsurance and insurance.

Under the terms of the deal, Berkshire will pay $848.02 in cash for each outstanding share of Alleghany. The price represents a 25 percent premium over Friday’s closing price, the last day of trading before the deal was announced.

Upon completion, which is expected in the fourth quarter of 2022, pending regulatory and Alleghany shareholder approvals, Alleghany will operate as an independent unit of Berkshire. The company has 25 days to actively solicit and consider alternative acquisition proposals under a ‘go-shop’ provision.

“Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years,” said Warren Buffett, chairman and chief executive of Berkshire Hathaway. “Throughout 85 years the Kirby family has created a business that has many similarities to Berkshire Hathaway. I am particularly delighted that I will once again work together with my long-time friend, Joe Brandon.”

“My family and I have been significant shareholders of Alleghany for over 85 years and are proud that our ownership will culminate through this compelling transaction with Berkshire Hathaway,” said Jefferson W. Kirby, chair of the Alleghany board of directors. “Not only does this deal provide substantial and certain value to stockholders, but it provides a rare opportunity to join forces with a like-minded and highly respected investor and business leader. Berkshire Hathaway’s support, resources, and expertise will provide added benefits and opportunities for Alleghany and its operating businesses for many years to come.”

“This is a terrific transaction for Alleghany’s owners, businesses, customers, and employees,” said Joseph P. Brandon, president and chief executive of Alleghany. “The value of this transaction reflects the quality of our franchises and is the product of the hard work, persistence, and determination of the Alleghany team over decades. As part of Berkshire Hathaway, which epitomizes our long-term management philosophy, each of Alleghany’s businesses will be exceptionally well positioned to serve its clients and achieve its full potential.”

News: Buffett ends drought with $11.6 bln Alleghany purchase

AGL bats away Brookfield bid

BY Richard Summerfield

AGL Energy has rejected an unsolicited, sweetened $4bn takeover offer from tech billionaire Mike Cannon-Brookes of Grok Ventures and Canadian investment management firm Brookfield Asset Management. The offer, according to AGL, undervalued the company.

“The AGL Energy Board considers that the Revised Unsolicited Proposal is still well below both the fair value of the company on a change of control basis and relative to the expected value of the proposed demerger, and therefore is not in the best interests of AGL Energy shareholders,” noted AGL in a statement.

The revised proposal was for A$8.25 a share, a 15 percent premium to AGL’s share price on 18 February. The first proposal from the Brookfield-led consortium would have seen AGL shareholders receive A$7.50 per share.

“The revised unsolicited proposal continues to ignore the opportunity that AGL Energy shareholders have through our proposed demerger to realise potential future value,” said Peter Botten, chairman of AGL Energy. “It also ignores the momentum we have recently seen in the business through our solid half-year result, strong progress on the demerger, strong interest in our Energy Transition Investment Partnership and the improvements we are seeing in forward wholesale prices.”

The consortium’s proposal to spend between A$10bn and A$20bn in large-scale renewable energy and batteries to enable the early closures of AGL’s power stations that account for 8 percent of Australia’s overall greenhouse gas emissions “would have been the world’s biggest decarbonisation project”, according to Mr Cannon-Brookes. In response to AGL’s rejection of the offer, Mr Cannon-Brookes tweeted that the “Brookfield-Grok consortium looking to take private & transform AGL is putting our pens down, with great sadness”.

AGL owns three large coal plants, some gas and renewable assets, and one of Australia’s biggest energy retail business, with more than 4 million customers, according to its 2021 annual report.

Last year, AGL proposed splitting the company into separate publicly traded companies — AGL Australia and Accel Energy — aiming to cut greenhouse gas emissions by as much as 60 percent by 2034. The move would split the company’s retail and coal generation businesses to operate them as two separate divisions. The demerger is progressing well and on track for completion by June this year, the company said last month.

News: Australia's AGL Energy rebuffs sweetened $4 bln bid from Brookfield-led team

MoneyGram to be taken private in $1.8bn deal

BY Richard Summerfield

Private equity firm Madison Dearborn Partners has agreed to take MoneyGram International private in a deal worth $1.8bn.

Madison Dearborn will acquire all outstanding shares of MoneyGram for $11 per share in an all-cash transaction. The purchase price represents a premium of approximately 50 percent to MoneyGram's closing stock price on 14 December 2021, the last trading day prior to media speculation regarding a possible deal.

The transaction, which is expected to close in the fourth quarter of 2022, subject to customary closing conditions and regulatory approval, will see Madison Dearborn refinance MoneyGram’s outstanding debt, which was $799m as of 31 December 2021. Madison Dearborn has secured committed debt financing for the transaction from Goldman Sachs & Co. LLC, Deutsche Bank Securities Inc. and Barclays.

"We are excited to enter into this transaction with MDP, which will deliver immediate and compelling value to shareholders and enable us to accelerate the advancement of our digital growth strategy,” said Alex Holmes, chairman and chief executive of MoneyGram. “This transaction is the culmination of a thorough process by the MoneyGram Board to enhance shareholder value while positioning our business for continued growth and expansion."

“MoneyGram has undergone a rapid transformation over the last several years to expand our digital capabilities and adapt to the evolving needs of our customers,” he continued. “By partnering with MDP and becoming a private company, we will have greater opportunities to innovate and transform MoneyGram to lead the industry in cross-border payment technology and deliver a more expansive set of digital offerings, while leveraging our global platform for new customers and use cases. This transaction provides exciting opportunities for our dedicated MoneyGram team and partners, and I'm incredibly excited about the path ahead.”

“MoneyGram is a leader in cross-border payments with one of the strongest brands and reputations in the industry, and we are excited to partner with Alex and his leadership team as they continue to lead MoneyGram's digital growth strategy,” said Vahe Dombalagian, a managing director at Madison Dearborn. “We are looking forward to applying our substantial experience growing digital businesses and deep payments knowledge to help MoneyGram further strengthen its market-leading cross-border capabilities and enhance its digital platform.”

MoneyGram was almost acquired in 2017 by China’s Ant Financial but the $1.2bn agreement was blocked by the Committee on Foreign Investment in the United States.

News: Buyout firm Madison Dearborn to take MoneyGram private in $1.8 billion deal

Temasek acquires Element in $7bn deal

BY Fraser Tennant

In one of its largest-ever deals, Singapore state-backed investor Temasek has agreed to buy the global leader in testing, inspection and certification (TIC) services Element Materials Technology Group from private equity firm Bridgepoint for an estimated $7bn. 

Element generates annual revenues of around $1bn and has grown at over 20 percent a year over the last 10 years. Temasek has been a minority shareholder in Element since 2019.

Tracing its origins back 190 years, London-based Element now operates a global network of more than 200 laboratories across 30 countries, servicing thousands of customers in life sciences, connected technologies, aerospace, transportation, energy transition, built environment and beyond.

Moreover, the company works with customers across a wide spectrum – from testing the next generation of aircraft and autonomous vehicles, to vaccine component testing in its US pharmaceutical laboratories, and from the certification of smartphones and wearable technologies, to providing cellular carrier approvals and testing connected robots.

“Element has a highly talented management team and exceptional people across our offices and laboratories around the world,” said Allan Leighton, non-executive chair of Element. “This transaction is a testament to their skills and commitment and creates the launchpad for the next exciting horizon of growth for the company.”

Operating in technically demanding and highly regulated sectors, Element is well-positioned to further accelerate its growth as it builds stronger positions in end-markets, such as life sciences and connected technologies.

“We are pleased to continue our relationship with Element as it works with its customers and explores greater opportunities to be part of their decarbonisation and sustainability journeys,” said Uwe Krueger, head of the portfolio management group at Temasek. “As a leading TIC business, Element is at the forefront of enabling innovative solutions across various industries.”

The transaction is subject to customary regulatory approvals.

“The acquisition of Element by Temasek is a landmark transaction in the TIC sector, and a critical step in the development of the Group,” concluded Jo Wetz, chief executive of Element. “We are delighted to expand our relationship with Temasek – their intimate understanding of the Group and their track record of enabling businesses with sustainability at their core will help to accelerate the growth of our business in the years ahead.”

News: Temasek buys Bridgepoint's Element Materials in $7 bln deal

KKR-led consortium agrees €1.56bn Accell acquisition

BY Richard Summerfield

A consortium led by private equity giant KKR has agreed to acquire Accell Group in a deal worth €1.56bn.

Under the terms of the deal, the consortium will pay €58 per share for all shares in Accell Group, representing a total consideration of approximately €1.56bn. The offer price represents a premium of 26 percent over the closing price on 21 January 2022, a premium of 42 percent over the last three months volume-weighted average price per share, and a premium of 21 percent to Accell Group’s all-time high closing price of €48 per share.

The group’s two largest shareholders, Teslin and Hoogh Blarick, which hold 10.8 percent and 7.5 percent of shares respectively, said they would support the transaction. The deal is expected to close in late Q2 or early Q3 2022.

Accell Group’s existing board, comprised of chief executive Ton Anbeek, chief financial officer Ruben Baldew and, as of 1 February 2022, chief supply chain officer Francesca Gamboni, will continue to lead the group.

“Today’s announcement marks an important step for Accell Group,” said Mr Anbeek in a statement. “With the Consortium as our new shareholder we will have a financially strong and knowledgeable partner to accelerate the roll-out of our existing strategic roadmap, enhance our global footprint, explore suitable acquisitions and further leverage our scale. As such, the Transaction will enable us to take a leap forward as a group which also brings along enhanced career opportunities for our employees.”

He added: “We continuously strive to be a leader in the bicycle industry by combining smart design and innovative technology with the best value and customer experience. With KKR coming on board as majority shareholder, and with the continued support of Teslin, we would be able to accelerate the execution of our strategic agenda, launch new innovations for green mobility and support to the benefit of people and communities.”

“With Accell Group, the Consortium is committed to further developing the Netherlands as the global capital of cycling by building on the company’s leading position in the European e-bike market and continuing to grow its strong heritage brands,” said Daan Knottenbelt, partner and head of Benelux at KKR. “This investment in Accell Group would build on KKR's significant experience of investing in the Netherlands. KKR has the capabilities to support high quality Dutch businesses to accelerate their domestic and global growth ambitions, and to overcome challenges such as those Accell Group faces in the competitive global bike market.”

News: KKR buys Sparta, Raleigh bike maker Accell for $1.77 bln