Target: Scripps Networks Interactive, Inc. (NasdaqGS:SNI)
- Industry: Technology, Media & Telecom
- Acquirer: Discovery Communications, Inc. (NasdaqGS:DISC.A)
- Target: Scripps Networks Interactive, Inc.
- Size: $14.6 billion
- Consideration: 70% Cash, 30% Equity
- Source of Funds: Cash on hand, Debt, Stock
- Sell Side Advisors: Evercore Partners, J.P. Morgan, Allen & Company LLC
- Buy Side Advisors: Goldman Sachs, Guggenheim Securities,
- Legal Advisors: Weil, Gotshal & Manges LLP, Debevoise & Plimpton LLP, Kirkland & Ellis LLP
- Expected Close: Early 2018
On July 31st, 2017, Discovery Communications entered into a definitive agreement to acquire Scripps Networks Interactive for a total transaction value of $14.6 billion. Post-closing, Scripps will own 20% of Discovery’s fully diluted common shares.
Discovery will offer a consideration of $90 per Scripps share, comprised of $63 in cash and $27 in Class C shares of Discovery stock (which is equal to a value between 1.2096 and 0.9408 of Series C shares). The equity portion of the deal is subject to a collar between $22.32 and $28.70.
If the average Discovery price is less than $22.32, Scripps shareholders will receive 1.2096 Series C shares of Discover stock. If the average price is greater than $28.70, shareholders will receive 0.9408 Series C Shares. Lastly, if the average price is between $22.32 and $25.51, Discovery will have the option to pay additional cash instead of issuing more equity.
The deal values Scripps at an implied EV/EBITDA of 9.3x and an implied PE multiple of 16.8x. The cash portion of the deal will be financed with a combination of cash on hand and a new $9.6 billion 364-day senior unsecured bridge facility committed by Goldman Sachs.
The deal will create a leading portfolio of owned and controlled intellectual property in Real Life Entertainment, including key networks such as TLC, HGTV and the Food Network, across different viewer channel segments. The combined company will produce ~8,000 hours annually of original programming with a library of 300,000 hours of content. Popular shows include Shark Week, Iron Chef, Property Brothers, and House Hunters.
The combined company’s will have significant audience share in various ad-supported C3 segments, including:
- 20% share of People 25 to 54 years old viewership,
- 6% share of Women 25 to 54 years old Primetime viewership,
- 2% of People 2 years old and up Primetime viewership,
- and 18.8% of People 25 to 54 years old Total Day viewership.
The exposure to these different viewer segments will create new opportunities for advertisers to buy targeted audiences across the combined company’s platforms and access to Scripps Lifestyle Studios to create customized solutions for advertisers.
The deal will provide $350 million in annual run-rate cost synergies by 2019 with 50% of these synergies realized by year end 2018. These synergies are derived from savings in the Domestic Operations, Corporate, Technology and Operations and International areas of the business. Discovery will focus its resources on further growing its Intellectual Property, Digital and Talent.
Discovery plans to extend the Scripps Brand internationally by bringing its lifestyle content to Latin America and other new markets. Discovery also plans to accelerate digital and mobile innovation to meet evolving consumer demand. This will provide more opportunities to monetize their mobile video content platforms and build on growing digital revenues.
Target: CH2M HILL Companies, Ltd.
- Industry: Industrials
- Acquirer: Jacobs Engineering Group Inc. (NYSE:JEC)
- Target: CH2M HILL Companies, Ltd.
- Size: $2.85 billion
- Consideration: 60% Cash, 40% Equity
- Source of Funds: Cash on hand, Debt, Stock
- Sell Side Advisors: Credit Suisse, BofA Merrill Lynch
- Buy Side Advisors: Morgan Stanley, PWP
- Legal Advisors: Latham & Watkins LLP, Richards, Layton & Finger, Fried, Frank, Harris, Shriver & Jacobson LLP, Wachtell, Lipton, Rosen & Katz LLP
- Expected Close: Q1 2018
Jacobs Engineering Group Inc entered into an agreement and plan of merger to acquire CH2M HILL Companies for a total Enterprise Value of $2.85 billion on August 1, 2017. The transaction will include a $423 million payment of existing net debt. Post-closing, CH2M HILL will own 15% of Jacobs.
The deal will offer CH2M HILL shareholders a consideration of $52.85 in cash and 0.6677 Jacobs shares, or $88.08 in cash, or 1.6693 Jacobs shares per each CH2M HILL common stock. Overall, the total consideration will consist of 60% cash and 40% equity.
The deal values CH2M HILL at an implied EV/Adjusted EBITDA of 6.9x. The cash portion of the deal will be financed with cash on hand, an existing revolver, and a new committed $1.2 billion three-year term loan arranged by BNP Paribas and The Bank of Nova Scotia.
The deal will significantly increase Jacobs’ exposure to high margin business segments, including Buildings & Infrastructure and Aerospace & Technology. Jacobs’ will focus its growth strategy on US government services, environmental, nuclear, and weapons sustainment under its Aerospace & Technology segment. Under its Buildings & Infrastructure, it will focus on expanding its products and services in water, transportation, aviation, highways & rail, and social infrastructure.
The deal is expected to produce annual cost synergies of $150 million through Real Estate consolidation opportunities, optimization of corporate operations and procurement, alignment of organizational structures, and consolidation and migration of IT systems. Jacobs’ also expects to derive additional cost and cash opportunities from project delivery excellence, utilization of high value service centers, and working capital improvements.