M&A wrap: F5, NGINX, Smith & Nephew, American Express, Mastercard

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F5 Networks Inc. (Nasdaq: FFIV) is buying NGINX for $670 million. NGINX offers open source web servers that are used by more than 375 million websites. Some of NGINIX customers include: McDonald's Corp. (NYSE: MCD), Nextflix Inc. (Nasdaq: NFLX) and Starbucks Corp. (Nasdaq: SBUX). The target is backed by Blue Cloud Ventures, e.ventures, Goldman Sachs, Index Ventures, MSD Capital, NEA, Runa Capital, and Telstra Ventures. “F5’s acquisition of NGINX strengthens our growth trajectory by accelerating our software and multi-cloud transformation,” says F5 CEO François Locoh-Donou. “We believe every organization can benefit from the agility and flexibility enabled by modern technologies without compromising on security, manageability, and reliability." F5's services helps businesses make sure their software and technology perform well. Advisors to F5 include: Foros and Wilson Sonsini Goodrich & Rosati. Advising NGINX is Qatalyst Partners and Gunderson Dettmer.

Technology M&A is thriving, and private equity firms are hot on the trail of innovations that will drive sustainable value to customers and make companies more efficient, more effective and less expensive to run. Among the developments appealing to PE investors are: artificial intelligence, data management, data virtualization, digital marketing, healthcare IT, industrial automation, the Internet of Things, machine-to-machine learning, payment processing and Software-as-a-Service. To gain more insights into what kinds of tech deals will dominate the field in 2019, Mergers & Acquisitions reached out to 10 private equity firms that are active investors in technology: Francisco Partners, Genstar, Great Hill, HGGC, Insight, LLR, Riverside, Silver Lake, TA and Vista.

Related: 10 private equity firms share strategies for tech M&A.

Deal news
TPG Capital, the PE arm of TPG, is buying a majority stake in water infrastructure company Goodnight Midstream from Tailwater Capital for $930 million. Advisors to TPG include: BMO Capital Markets and Kirkland & Ellis. Advisors to Goodnight Midstream include: Jefferies, Credist Suisse Securities and Vinson & Elkins.

Medical technology company Smith & Nephew plc (NYSE: SNN) is buying Osiris Therapeutics Inc. (Nasdaq: OSIR) for $660 million. The target researches, develops, manufactures and commercializes regenerative medicine products, including skin, bone graft and articular cartilage substitutes.

American Express (NYSE: AXP) is buying LoungeBuddy, a digital platform that allows travelers to discover, book and access airport lounges worldwide. Skadden, Arps, Slate, Meagher & Flom LLP is advising American Express.

PE firm Greenbriar Equity Group and aerospace repair services company First Aviation Services are buying Dart Aerospace, a maker of helicopter and airplane parts, from Eagle Copters and Era Group. Houlihan Lokey Inc. (NYSE: HLI) is advising the sellers.

Shorehill Capital-backed Tribus Aerospace has acquired Midwest Precision Holdings, a manufacturer of aerospace parts. Midwest Precision is the fourth acquisition since Tribus was founded in 2017. Antares provided debt and equity capital to Tribus; the legal advisor was Paul Hastings LLP; and the accounting and tax advisor to Tribus and Shorehill was Crowe LLP.

Arbor Contract Carpet, an installer of flooring products, has completed a management buyout that was supported by a non-control investment of preferred stock and subordinated debt from Cyprium Partners. The target is being advised Capstone Headwaters.

Mastercard (NYSE: MA) is buying Ethoca, a technology services provider that helps merchants and card issuers identify and resolve fraud in digital commerce.

PE firm Abry Partners has invested in dental services group Dr. Dental Managament. The target has 44 locations across Connecticut, Massachusetts, New Hampshire and New Jersey.

WJ Partners, a lower middle-market PE firm, has invested electrical infrastructure products distributor Power-Utility Products Co.

Network supplier Ericsson has acquired Kathrein SE's antenna and filters division. Ericsson was advised by Schoenherr.

People moves
Elinor Hiller has joined law firm Alston & Bird as a partner, where she is focusing on healthcare regulations. Hiller was most recently a senior advisor to Centers for Medicare & Medicaid services administrator Seema Verma.

Craig Menden has joined law firm Willkie Farr & Gallagher LLP as a partner. He was previously with Cooley, and represents technology and life companies in M&A.

Chris Springer was hired by PE firm Edgewater Capital Partners as an operating partner, where is helping the firm source potential deals in the specialty materials sector. Springer was previously an operating partner with Alliance Holdings.

Raiko Stelten and Thorsten Weber were promoted to managing directors at investment bank GCA Altium.

Featured content
Just nine bank merger pacts were announced in February, down from 17 in January. But they included the biggest deal in years and some other interesting storylines.

Related: Bank M&A: Few deals, but much drama.

Cannacord Genuity's purchase of Petsky Prunier, Cisco's acquisition of Luxtera, and Platinum Equity's backing of sprinkler maker Pro-Mark were among the mid-market deals that closed in February.

Related: February M&A buyers: Canaccord Genuity, Cisco, Platinum Equity

Mergers & Acquisitions profiles the top 28 investment banks of 2018, with KPMG, Houlihan Lokey, Goldman Sachs (NYSE: GS), William Blair and Lincoln International ranking as the five most active in M&A. The list is based on volume of completed deals, with PitchBook as the data provider. It was a good year for dealmaking, with activity in the U.S. middle market exceeding $400 billion, the first year to achieve the milestone.

Related: Top investment banks: KPMG, Houlihan Lokey, Goldman Sachs, William Blair.
Related: M&A soared in 2018; companies confident about dealmaking in 2019.

In Mergers & Acquisitions' annual look at strategic buyers, we see significant deals aimed at enhancing the customer relationship, including Amazon.com Inc.'s (AMZN) purchase of PillPack, Nike Inc.'s (NYSE: NKE) acquisitions of Invertex Ltd. and Zodiac Inc. and Target Corp.s' (NYSE: TGT) acquisition of Shipt. Technology plays a key role in many transactions. But while technology is enabling developments, it’s not an end unto itself for many corporations. Instead, strategic buyers are using innovations as a means to achieve goals. Based on analyzing hundreds of recent deals, Mergers & Acquisitions has identified seven goals corporate dealmakers hope to accomplish through M&A transactions today: Integrate data with software; improve the customer experience and relationship; expand and improve distribution; process payments more efficiently; leverage tech trends, like autonomous vehicles; make manufacturing processes more efficient; and achieve better outcomes and efficiencies in healthcare. “Strategics have been really active,” says John Neuner, managing director, Harris Williams. “They are aggressive in pursuing the assets they want, as long as it fits within their strategy. Scale is critical to them, and they have to meet consumer demands by adding new capabilities.”

Related: 7 reasons why smart companies Amazon, Nike, Target are doing M&A.

Independent sponsors must rely on others for the capital to close deals. Having a working relationship with a PE firm provides the independent sponsor with an ally and leverage while negotiating the best deal possible. Read the full guest article by Boyne Capital Partners' Derek McDowell: How to structure a winning PE-independent sponsor partnership.

Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital's Sarah Bradley, Kayne Anderson Capital Advisors' Nishita Cummings and Pelham S2K Managers' Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women.

Related: Meet the 2019 Most Influential Women in Mid-Market M&A.

Mergers & Acquisitions has closed the nomination process for the 2018 M&A Mid-Market Awards. We look forward to announcing the winners later in March. The Awards are one of three special reports we produce each year to celebrate deals, dealmakers and dealmaking firms. The other two are The Rising Stars of Private Equity and The Most Influential Women in Mid-Market M&A.

Related: Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

Events
ACG Philadelphia is hosting its 2nd annual Industry Tour focused on SaaS & Tech-Enabled Services on March 12 at the Union League of Philadelphia. Last year's event brought together 200 PE investors, investment bankers, operating companies and industry advisors from around the country.

The Women's Private Equity Summit is being held at the Monarch Beach Resort in Dana Point, California, March 13-15. The Summit will bring together more than 550 female professionals in private equity and venture capital.

The ACG Chicago Women’s Network is hosting a lunchtime conversation with Dorri McWhorter, the CEO of YWCA Metropolitan Chicago, on March 19 at the University Club in Chicago.

ACG New York's Women of Leadership is hosting a golf event and reception on March 21 at Konnect Golf in Manhattan. The event brings together female dealmakers from private equity firms, investment banks and lenders.

Exponent Women LLC is hosting an evening of networking and conversation with leading economists at the New York office of Alliance Bernstein on April 4. Speakers include Lindsey Piegza, chief economist, Stifel Fixed Income, and Kathleen Fisher, head of wealth and investment strategies, Alliance Bernstein.

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