M&A wrap: Charles Schwab, TD Ameritrade, Bernard Arnault, LVMH, Tiffany, Novartis, Walmart, Kroger, StubHub, eBay
Charles Schwab Corp. (NYSE: SCHW) is buying TD Ameritrade Holding Corp. (Nasdaq: AMTD) in a multibillion-dollar deal that will reshape the retail brokerage business. Schwab agreed to acquire TD Ameritrade in an all-stock transaction the companies say is valued at $26 billion, or about $48.50 per share. The tie-up creates a mega-firm with $5 trillion in assets, a goliath that may attract the attention of antitrust regulators, analysts say. Smaller brokerages like E*Trade Financial Corp. (Nasdaq; ETFC) will have to contend with a much more formidable competitor. TD Ameritrade has relied more on commissions than some competitors, drawing 36 percent of its net revenue from commissions in 2018, compared to 7 percent at Schwab. Founder Charles Schwab hinted he was open to dealmaking in an interview with Bloomberg Radio in October. “I don’t know whether we’ll be successful in that pursuit, but in the industry you’re going to see more consolidation, more firms getting together,” he said. “You just have to have that scale and volume.” If the deal goes through, the combined company will have unparalleled clout as top custody service providers to independent financial advisers. Read the full story by Bloomberg News: Charles Schwab buys TD Ameritrade, extending brokerage industry sway.
RETAIL TECH M&A
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.
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.
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
France’s richest indvidual is adding the biggest jewel yet to his collection, as Bernard Arnault clinched a deal to buy Tiffany & Co. (NYSE: TIF) for $16.2 billion. If history is any guide, the LVMH chairman will move quickly to apply his tried-and-tested formula for growth to the tarnished U.S. brand: simultaneously expanding its presence across the world, especially in promising Asian markets, while boosting exclusivity and prices. Read the full story by Bloomberg News: LVMH acquires Tiffany in largest luxury good deals ever.
Novartis is buying the biopharmeuctial company the Medicines Co. (Nasdaq: MDCO), which makes drugs that are known for potentially lowering chloesterol, for $9.7 billion. Paul, Weiss, Rifkind, Wharton & Garrison LLP is representing the target.
Ticket marketplace site Viagogo is purchasing competitor StubHub from eBay (Nasdaq: EBAY) for about $4 billion."Bringing StubHub and viagogo together will allow us to drive further expansion and innovation, and create a more competitive offering for live event fans globally," says Stubhub presdient Sukhinder Singh Cassidy. Goldman Sachs (NYSE: GS), Wachtell, Lipton, Rosen & Katz and Quinn Emanuel are advising eBay. Skadden, Arps, Slate, Meagher & Flom LLP and Kirkland & Ellis LLP are advising Viagogo. J.P. Morgan (NYSE: JPM) is providing financing.
Wind Point Partners-backed Pestell Nutrition has bought Premier Ag Resources. The target is a distributor of pet food ingredients and feed additives. Kirkland & Ellis advised the buyers. BMO Sponsor Finance provided financing.
Levine Leichtman Capital Partners-backed cake producer Nothing Bundt Cakes has acquired six franchisee bakeries in San Diego.
Sun Capital Partners has purchased National Tree Company, an e-commerce whoesaler of seasonal and holiday decor.
For more deal announcements, see Weekly wrap: Advent, CD&R, PayPal.
To see which firms are fundraising, see PE fundraising scorecard: Balance Point, Bregal Sagemount, Insight Partners, TA.
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.
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.