M&A wrap: Carlyle, T&D, Fortitude, AIG, Kroger, Walmart, Blackstone, Palo Alto, Silver Lake

insurancedeals

The Carlyle Group LP (Nasdaq: CG) is doubling down on insurance assets, increasing its stake in an American International Group Inc. (NYSE: AIG)-owned firm. Carlyle and T&D Holdings Inc., the parent of one of Japan’s largest life insurers, are buying the majority of Fortitude Group Holdings from AIG for about $1.8 billion. Carlyle, with a small group of investors, agreed to increase their ownership to 71.5 percent. T&D also bought 25 percent. Carlyle is using a newly created fund for the deal. AIG will continue to retain a 3.5 percent stake. Carlyle has deep ties to AIG. The firm hired Brian Schreiber, the top dealmaker at AIG, three years ago as co-head of the financial services team. AIG CEO Brian Duperreault has been working to turn around the insurer, which had been battling higher than expected costs on old policies. The Fortitude transaction has helped segment off some of AIG’s policies that were held in runoff. The deal is another step in the process of separating Fortitude and helps AIG strengthen its balance sheet, according to Duperreault. Private equity firms including Carlyle, Apollo Global Management Inc. (NYSE: APO) and Blackstone Group Inc. (NYSE: BX) have been building their own insurance vehicles in recent years. Apollo helped turn annuity seller Athene Holding Ltd. into a business with a market value of $7.8 billion. Funds affiliated with Blackstone teamed up with other investors back in 2017 to buy annuity-seller Fidelity & Guaranty Life. Willkie, Farr & Gallagher LLP
is advising AIG. Debevoise & Plimpton LLC and Oliver Wyman are advising Carlyle. T&D is being advised by Citigroup Inc., Nishimura & Asahi, King & Spalding LLP and Appleby. Fortitude is being represented by Sidley Austin LLP. Read the full story by Bloomberg News: Carlyle, T&D buy majority stake in AIG firm.

RETAIL TECH M&A
Supermarkets are no longer just places for consumers to do their food shopping in person. Supermarkets are testing and rolling out smart warehouses, which use robots to fill online orders and deliver them. The robots and smart warehouses sectors are seeing a pickup in deal activity. Albertsons, Kroger Co. (NYSE: KR), Stop & Shop and Walmart (NYSE: WMT) are building automated mini-warehouses and "dark stores" to make deliveries and prepare pickup orders. Mini-warehouses are usually attached to existing stores, and in most cases, "dark stores" are completely separate. Both formats are closed off to customers, and are mostly automated. They use the assistance of robots for speed, save on labor, and get orders out faster. Kroger bought a five percent stake in robotics firm Ocado. Read our full coverage: Smart supermarkets become popular, as Kroger, Walmart add them.

As the retail industry's busiest season begins, Mergers & Acquisitions is covering many M&A trends in the sector. We've launched a weekly series on the 7 technologies retailers are investing in: The Internet of Things enables enhanced personalization, such as custom drive-thru menus. Artificial intelligence applications predict customers’ needs. Modern data centers and warehouses fill orders quickly. Robots assist with sorting and packing consumer goods. Voice- and text-assisted technology provides customers with hands-free shopping experiences. Analytics give retailers a better understanding of consumer behavior and habits. Mobile payment processing provides consumers with on-the-go convenience. This week, we're focusing on AI and Why Walmart and other retailers are buying artificial intelligence startups.

Online retailers, including Walmart Inc. (NYSE: WMT), are adding more fulfillment centers to meet consumer demands for faster shipping times. The owners of these properties along with the contractors that build them are becoming prime M&A targets. “It is no secret that e-commerce continues to enhance the attractiveness of high-quality and well-located warehouse and distribution properties,’’ notes Nicole Stagnaro, head of opportunistic and platform transactions at real estate investment firm Stockbridge Capital Group. For more see, Amazon and Walmart open more logistics centers, driving warehouse M&A.

MORE DEAL NEWS
Blackstone Group Inc. (NYSE: BX) is investing $400 million in a joint venture with Swiss pharmaceutial company Ferring to form a new company called Fergene. The latter will help treat patients with bladder cancer. Ferring is investing up to $150 million. Blackstone is making the investment out of the Blackstone Life Sciences group. Dechert is representing Ferring.

Cybersecurity company Palo Alto Networks (NYSE: PANW) is buying Aporeto Inc. for $150 million. Aporeto identifies workloads and applies microsegmentation across infrastructures, helping customers secure their applications. Microsegmentation is a method of creating secure zones in data centers and cloud deployments that allows companies to isolate workloads from one another and secure them individually. Sidley Austin LLP is representing Palo Alto.

Silver Lake is acquiring First Advantage, a provider of background screening services for employers, from Symphony Technology Group. J.P. Morgan (NYSE: JPM) and Paul Hastings are advising First Advantage. Stifel and Simpson Thacher & Bartlett LLP are advising Silver Lake.

Z Capital Group-backed Xperience Restaurant Group has acquired restaurant brands SOL Mexican Cocina and Solita Tacos & Margaritas. XRG, which owns the El Torito and Chevys Fresh Mex chains, now operates a total of 62 restaurants.

Siemens has acquired MultiMechanics, a modeling and simulation software company, from Anzu Partners.

PEOPLE MOVES
Stuart Cable was named global chair of M&A in a newly created role at law firm Goodwin. Cable, who also serves as vice chair, will focus on introducing Goodwin's industry-focused M&A practice, that includes ife sciences, technology, real estate, private equity and financial services, to a broader set of clients.

Mark May was hired by Stifel Financial Corp. (NYSE: SF) as a managing director where is he focusing on the technololgy sector. May was most recently with Citigroup.

FEATURED CONTENT
Esteemed M&A attorney Martin (“Marty”) Lipton was honored at a black-tie event hosted by the Institute of International Education at The Pierre in New York on Oct. 30. Called the “the king of M&A,” the co-founder of New York law firm Wachtell, Lipton, Rosen & Katz, is well known to dealmakers as the architect of the anti-takeover defense strategy known as the “poison pill.” Lipton was awarded the IIE Stephen P. Duggan Award for Mutual Understanding “in recognition of his lifetime of extraordinary achievement and his lasting contribution to international higher education. Read the full story: Martin Lipton, inventor of the “poison pill” anti-takeover defense honored by IIE.

It’s a milestone year for the Blackstone Group Inc. (NYSE: BX), which transitioned from a publicly traded partnership to a corporation on July 1. The New York firm announced the final close of its latest global real estate fund recently. With $20.5 billion of total capital commitments, Blackstone Real Estate Partners IX is the largest real estate fund ever raised. Mergers & Acquisitions spoke with Stephen A. Schwarzman, the firm’s co-founder, chairman and CEO. Read the full story: "Complete control" is the beauty of private equity, says Blackstone's Stephen A. Schwarzman.

The private equity model has held up very well over the decades, continuing to outperform the public markets, even as economic cycles come and go. But the rate of growth has slowed, leading PE firms to seek adjacent areas of business to expand. As PE firms face increased pressure to produce higher returns on their investments, many of them are turning to a familiar area of business: lending. Adams Street Partners, Balance Point Capital, Carlyle and VSS are all actively engaged in lending. Read the full story: Private equity firms are becoming lenders. Here’s why.

Prokanga is a unique recruiting firm that offers full-time and flexible recruiting services. Prokanga is managed by co-founders Jamie Cheney and Lesley Finer (pictured). Mergers & Acquisitions spoke with Finer, who has more than 10 years of recruiting for the finance industry and leads the finance practice at Prokanga. For more, see Why financial services pros need flexibility.

Looking for a glimpse of what’s to come in the private equity industry? Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity. As the PE industry undergoes a generational shift, and many firm founders retire, it’s well worth getting to know these emerging leaders, including Branford's Austin Collier, Sterling Partners' Shawn Domanic and Summit Partners' Sophia Popova. For profiles and video interviews, see Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity. For Q&As, see 10 Rising Stars of Private Equity tell their tales.

To celebrate deals, dealmakers and dealmaking firms, Mergers & Acquisitions produces three special reports every year: the M&A Mid-Market Awards; the Rising Stars of Private Equity; and the Most Influential Women in Mid-Market M&A. For more on the timeline and nomination process for each, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
CB Insights hosts The Collective, featuring 30-plus fireside chats, at New World Stages Dec. 10-11. Mergers & Acquisitions editor-in-chief Mary Kathleen Flynn is slated to interview Lance Barton, head of corporate development for dating site developer Match Group.

The Annual AM&AA Winter Conference is taking place in Scottsdale, Arizon fron Jan. 8-10.

Deal Wave is being hosted by ACG Orange Country at the Ritz-Carlton-Laguna Niguel in Dana Point, California on Jan. 9.

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