M&A daily wrap: Flipkart, Amazon, Walmart, HGGC, TA Associates, InterGrowth
Flipkart, India’s leading e-commerce provider, has sparked a bidding war among U.S. companies seeking to dominate the retail markets throughout the world. Amazon.com Inc. (NASDAQ: AMZN) has reportedly offered to purchase a 60 percent stake, reports CNBC. The news follows reports that Walmart Inc. (NYSE: WMT) is close to finalizing a deal that would give the U.S. retailer a majority stake between 60 percent and 80 percent for at least $12 billion, valuing the company at about $20 billion. In that deal, Flipkart investors SoftBank Group Corp. and Tiger Global Management would sell most of their nearly 20 percent stakes, according to Bloomberg News. “Walmart is the world’s largest retailer, but it has struggled against Amazon as consumers migrate to online commerce,” explains Bloomberg. “India is the next big potential prize after the U.S. and China, where foreign retailers have made little progress against Alibaba Group Holding Ltd.”
HGGC, the Silicon Valley private equity firm led by founders CEO Rich Lawson and Steve Young, the former San Francisco 49ers quarterback, is acquiring RPX Corp. (NASDAQ: RPXC), a provider of patent risk and discovery management solutions. HGGC is paying RPX shareholders about $555 million cash. "We are big believers in RPX's mission to deliver patent risk and discovery management solutions to its clients,” Lawson says. “RPX's and Inventus's businesses begin and end with the trust of their clients, and we will continue to serve their best interests. We fully support the vision of the company to build a much-needed clearinghouse in the broader market for patents and will continue RPX's decade-long commitment to never assert patents." The RPX deal comes during a very active period in HGGC’s history. Between January 2017 and March 2018, the Palo Alto, California, firm closed seven platform investments and 16 add-on transactions, as well as conducting five liquidity events. Over the last five years, the firm has made nearly 50 portfolio investments, which is a 60 percent increase in deal volume from the previous five years. For RPX, GCA Advisors is the financial advisor and Skadden, Arps, Slate, Meagher & Flom is the legal advisor on the deal. For HGGC, Houlihan Lokey Capital Inc.'s Tech+IP Advisory Group and Jefferies are the financial advisors for the transaction. Jefferies Finance is the lead arranger for HGGC’s debt financing, and Kirkland and Ellis is legal advisor to HGGC.
TA Associates has completed an investment in Datix, a specialty healthcare patient safety software provider, for undisclosed terms. Existing investor Five Arrows Principal Investments, the European corporate private equity business of Rothschild Merchant Banking, will maintain a significant equity stake in Datix. Founded in 1986, Datix develops patient safety and healthcare risk management software. The company’s suite of software products enables over 20,000 sites among more than 800 customers to address daily incident management and regulatory needs through its interconnected modular solutions, according to Datix. The company is headquartered in London with approximately 160 employees across four offices in the U.K., the U.S. and Australia. TA managing director Naveen Wadhera and principal Ethan Liebermann are joining the Datix board of directors. Kirkland & Ellis LLP provided legal counsel to TA. Sidley Austin LLP provided legal counsel, and Arma Partners served as financial advisor to Datix.
Independent power company LS Power Equity Advisors has raised $2.25 billion for a new private equity fund to buy up power generation and related energy infrastructure assets. The new fund, LS Power Equity Partners IV, attracted investors from the U.S., Europe, the Middle East and Asia. New York-based employee-owned LS Power Equity Advisors, founded in 1990, has offices in New York, New Jersey, Missouri, California and Texas. The company is an investment manager that develops, owns, operates and invests in power generation and electric transmission infrastructure throughout the U.S. Since inception, LS Power has developed, constructed, managed or acquired more than 39,000 megawatts of power generation and 660 miles of transmission infrastructure, for which it has raised over $39 billion in debt and equity financing. LS power has raised $8.59 billion in equity commitments across four private equity funds. Evercore Private Funds Group was the global placement agent for the fundraising, with Magenta Capital Services supporting the effort in the Middle East and Asia. Kirkland & Ellis was the legal advisor.
U.S. Silica Holdings Inc. (NYSE: SLCA) is buying EP Minerals, a portfolio company of Golden Gate Capital, for $750 million. EP Minerals of Reno, Nevada, produces diatomaceous earth, calcium bentonite clay, perlite and other engineered materials derived from industrial minerals. Those materials are used as filter aids, absorbents and additives for the food and beverage, biofuels, swimming pools, oil and gas, farm and home, landscape, sports turf, paint, plastics and insecticides industries. The company’s mines are in Nevada, Oregon, Tennessee and Mississippi. San Francisco-based Golden Gate Capital is a private equity investment firm with more than $15 billion under management. U.S. Silica, based in Frederick, Maryland, produces commercial silica used in the oil and gas industry and in other industrial applications. Middle-market investment bank Harris Williams & Co. advised EP Minerals on the deal.
Thousands of dealmakers are heading to sunny San Diego for three days of networking at the Association for Corporate Growth’s InterGrowth 2018 May 2-4. Mergers & Acquisitions will be there, shooting video interviews with M&A leaders. Jeff Immelt, who served as CEO and chairman of General Electric Co. (NYSE: GE) from 2001 to 2017, is the keynote speaker. In February, Immelt was named chairman of Athenahealth Inc. (NASDAQ:ATHN), a provider of network-enabled services for hospital and ambulatory clients. While his legacy at GE is currently being reexamined by some observers, his bio argues that “Immelt transformed GE into a simpler, stronger and more focused digital industrial company. He revamped the company’s strategy, global footprint, workforce and culture, positioning GE for the future." In the middle market, the divestiture of GE Capital assets under Immelt's watch launched a highly competitive process for prolific lender Antares Capital, which ultimately was won by the Canada Pension Plan Investment Board in a $12 billion deal that closed in August 2015. The discussion with Immelt will be moderated by Jay Jester, a dealmaker well known in the private equity industry. Jester joined Audax Private Equity at its inception in 2000. As a managing director, Jester leads the Boston firm’s marketing and business development efforts. Jester also serves on the board of ACG Global.
ParkerGale recently applied its technology investment focus close to home, acquiring CultureIQ, a provider of software that surveys employee engagement and culture. The Chicago-based private equity firm had used the software with its portfolio companies for several years and was impressed. ParkerGale also backed CultureIQ’s acquisition of the workforce surveys and analytics (WS&A) division of Corporate Executive Board, a subsidiary of information technology research firm Gartner (NYSE: IT). The firm’s portfolio includes: Aircraft Technical Publishers, OnePlus Systems, Ipro Tech LLC, Profisee, WorkWave, The Tie Bar and 2Checkout. The investment team includes co-founders and partners Kristina Heinze, who is one of Mergers & Acquisition’s Most Influential Women in Mid-Market M&A; Devin Mathews; Jim Milbery; and Ryan Milligan. We asked ParkerGale partner Devin Mathews about the CultureIQ/Corporate Executive Board deal, market trends and the firm’s podcast. Read the full Q&A here.
“Business owners and CEOs of companies have a lot of choices as to who their investors are,” explains LLR Partners managing director Michael Sala. “They’re constantly being contacted for discussions and dialogues about how a private equity fund or growth investor could invest in them and bring value.” To stand out from the crowd, LLR has pioneered a digital strategy that involves embracing social media and devising new ways of connecting with prospective and existing portfolio companies, including content series called GrowthBits. A recent GrowthBits article outlined “must-have technologies for growth-focused companies,” written by Bill Sweeney, the chief technology officer of Kemberton Healthcare Services, a portfolio company LLR backed in 2017. The point of GrowthBits is so that when CEOs who are looking for an investor research the firm and visit its website, “they’ll start to see the value that LLR can bring around five main drivers: sales, marketing, technology, finance and leadership,” says Sala. “We’re not just trying to bring people to our site, we’re trying to convey why LLR can be a good partner that can add value over the long term.” LLR won Mergers & Acquisitions’ M&A Mid-Market Award for 2017 Private Equity Firm of the Year. It is one of the most active private equity firms in the middle market, having racked up 28 transactions in 2017, including four new platform investments, 18 add-on acquisitions and six exits. To discover more about the Philadelphia firm's strategy, watch our video interview with managing director Michael Sala. Check back later in the week for a second video with Sala, focused on the firm's use of social media.
Chicago-based GTCR recently sold Callcredit, a U.K. provider of real-time credit reports, to TransUnion (NYSE:TRU) for about $1.4 billion. GTCR acquired Callcredit in 2014, recruited CEO Mike Gordon to lead the company and built the business through organic expansion and three acquisitions. GTCR focuses on financial services and technology, healthcare, technology, media and telecommunications, and growth business services, and the firm touts its approach to finding and partnering with seasoned executives, dubbed The Leaders Strategy, as the core of its investment approach. Read our Q&A with managing director Aaron Cohen about the development of Callcredit and The Leaders Strategy.
KKR, LLR Partners, the Riverside Co., Shore Capital Partners, TA Associates and other private equity firms and strategic buyers, including Cognizant (Nasdaq: CTSH), are investing in eye doctors, dentists and veterinarians, plus revenue cycle management providers and other areas of healthcare that are ripe for consolidation, as Mergers & Acquisitions explores in our in-depth feature, Why private equity firms like veterinarians, opthamologists and dentists, and slideshow, 6 healthcare specialties driving M&A deals.
As Americans plan road trips and other summer vacations, car deals are thriving, especially in the nascent self-driving tech sector. Intel bought Israel's Mobileye for about $15 billion. Meanwhile, in a much smaller deal, Delphi bought NuTonomy. As the industry readies for autonomous driving, there's a big wave of consolidation going on among makers of traditional car parts. Buyers include CenterOakPartners, Clearlake Capital Group and Wabash National. Meanwhile, Carl Icahn is among the sellers. Check out our slideshow on the rush of activity.
Read full coverage of Mergers & Acquisitions' 11th annual M&A Mid-Market Award winners: Campbell Soup, Huron Capital, Idera CEO Randy Jacops, LLR Partners, McGuireWoods, Stryker, Twin Brook and William Blair.