Target: Avista Corporation (NYSE:AVA)

• Industry: Power & Utilities
• Acquirer: Hydro One Limited (TSX:H)
• Target: Avista Corporation
• Size: USD $5.3 billion
• Consideration: 100% Cash
• Source of Funds: Equity, Debt
• Sell Side Advisor: BofA Merrill Lynch
• Buy Side Advisor: Moelis
• Legal Advisors: Kirkland & Ellis LLP, Bracewell LLP
• Expected Close: Q2 2018

Hydro One Limited entered into a definitive merger agreement to acquire Avista Corporation for $5.3 billion on July 19, 2017. The offer includes a USD $3.4 billion consideration to shareholders and USD $1.8 billion of net debt.

The deal will offer $53 per each Avista common share, restricted stock unit, and/or performance award outstanding. The deal values Avista at an implied Enterprise Value of $5.3 billion, implied EV/EBITDA of 11.1x, and implied P/E multiple of 28.2x.

The deal will be financed using a combination of USD $1.1 billion of Hydro One common equity, USD $2.6 billion of debt, and CAD $1.4 billion in Contingent Convertible Debentures.

The deal will establish one of North America’s largest regulated utilities company with over USD $25 billion in pro forma assets. It will also provide Hydro One with geographic and asset diversification, provides exposure to more regulated and clean energy generation, and adds a complementary and growing gas division.

There is also potential for cost synergies due to potential efficiencies through the combined company’s enhanced scale, innovation, shared IT systems, and increased purchasing power. Avista has a track record in utility innovation, including projects such as Itron which is now a global supplier of smart meters.

Avista will continue to operate under its current name with the same management team and employees. Avista’s capital spending levels will remain the same with a continued focus on reliability, safety, and customer satisfaction. Avista will also have its own local subsidiary board to protect the interests of its service territories and communities that it serves.

Target: Lightower Fiber Networks LLC

• Industry: Technology, Media and Telecom
• Acquirer: Crown Castle International Corp. (NYSE:CCI)
• Target: Lightower Fiber Networks LLC
• Size: $7.1 billion
• Consideration: 100% Cash
• Source of Funds: Cash, Debt, Equity
• Sell Side Advisors: Evercore and Citigroup
• Buy Side Advisor: Morgan Stanley
• Legal Advisors: Cravath, Swaine & Moore LLP, Ropes & Gray LLP
• Expected Close: Q4 2017

On July 18, 2017, Crown Castle International Corp entered into a definitive agreement to acquire Lightower Fiber Networks LLC for $7.1 billion in cash.

The deal will be financed with a combination of cash on hand, equity financing and debt financing. Crown Castle will use its existing revolving credit facility and $7.1 billion from a new unsecured bridge facility from Morgan Stanley and BofA Merrill Lynch. The company also announced a concurrent public offering of its common stock with aggregate offering price of $3.25 billion and Series A convertible preferred stock of with aggregate offering price of $1.5 billion.

Crown Castle is the largest provider of shared wireless infrastructure in the U.S. It has approximately 40,000 towers, 50,000 small cell nodes on air or under development and 60,000 route miles of fiber in the U.S. pro forma for the acquisition. AT&T, T-Mobile, Verizon, and Sprint are all major tenants on Crown Castle’s cell towers.

Lightower owns or operates about 32,000 miles of fiber – a type of telecommunications cable that is said to transmit data in high speeds – located in big cities in the Northeast, including Boston, New York and Philadelphia. The major shareholders of Lightower are private equity firms Berkshire Partners and Pamlico Capital.

This transaction will dramatically increase Castle’s fiber footprint, resulting in Crown Castle owning or having rights to approximately 60,000 route miles of fiber, making it one of the largest owners of metro fiber in the U.S. By combining Lightower’s dense metro fiber footprint with Crown Castle’s industry-leading small cells platform, the deal will expand the small cell opportunities available to Crown Castle. It will also enhance its ability to meet the small cell deployment needs of its wireless carrier customers while reducing the time and capital required for such deployments.

In terms of financials, with Lightower’s earnings adding to Crown Castle’s net income, Crown Castle plans to increase its common stock dividend to between 15 cents and 20 cents per share after the deal closes. In the first full year after the deal closes, Crown Castle expects Lightower would contribute $850 million to $870 million in network site rental revenue.

Target: Frenchs Food companies and Tigers Milk LLC

• Industry: Consumer & Retail
• Acquirer: McCormick & Company, Incorporated (NYSE:MKC)
• Target: Frenchs Food companies and Tigers Milk LLC
• Size: $4.2 billion
• Consideration: 100% Cash
• Source of Funds: Debt, Equity
• Sell Side Advisor: Not Disclosed
• Buy Side Advisor: Credit Suisse
• Legal Advisors: Cleary Gottlieb Steen & Hamilton LLP, Davis Polk & Wardwell LLP
• Expected Close: Q3 or Q4 2017

On July 18, 2017, McCormick & Company signed a definitive agreement to acquire Frenchs Food companies and Tigers Milk LLC for $4.2 billion.

The all-cash transaction values Frenchs Food companies and Tigers Milk LLC at an implied EV/Revenue of 7.4x.

The transaction will be financed with a combination of debt and equity financing. McCormick obtained $3.7 billion of new debt and $500 million in equity through a follow-on offering. In addition, McCormick entered into a commitment letter with BofA Merrill Lynch and Credit Suisse for a senior unsecured 364-day bridge loan facility of up to $4.2 billion.

McCormick will retain the brand names acquired through the deal, including French’s, Frank’s RedHot, Cattlemen’s, and Tiger’s Milk, which are known throughout Canada and the United States. McCormick is also looking to expand the French’s and Frank’s RedHot brands globally through their existing international infrastructure.

The deal is expected to generate $50 million in cost synergies by 2020 as a result of the company’s increased scale that will help them save on SG&A expenses and cost of goods sold. McCormick also hopes that the deal will provide additional strategic benefits as it increases their exposure to Millennial consumers and adds a little more flavour to their spice portfolio.

RB Food’s is refocusing their strategy on consumer healthy and hygiene products. They will also use the proceeds from the sale to reduce their outstanding debt. The sale attracted other potential buyers including Hormel and Unilever.

Target: Paysafe Group Plc (LSE:PAYS)

• Industry: Technology, Media and Telecom
• Acquirers: CVC Capital Partners Limited and The Blackstone Group L.P. (NYSE:BX)
• Target: Paysafe Group Plc (LSE:PAYS)
• Size: £3.1 billion
• Consideration: 100% Cash
• Source of Funds: Cash, Debt
• Sell Side Advisors: Deutsche Bank, Lazard, and RBC Capital Markets
• Buy Side Advisor: Credit Suisse
• Legal Advisor: Not Disclosed
• Expected Close: Not Disclosed

CVC Capital Partners and Blackstone offered to acquire Paysafe Group for £3.1 billion on July 21, 2017. The transaction includes a £2.9 billion consideration to shareholders, £51 million in options, and £193 million in net debt.

The offer will pay £5.9 in cash for each share of Paysafe Group Plc with an implied EV/EBITDA of 15.9x and an implied P/E multiple of 16.7x.

The consortium will dispose of non-core assets, such as the Asia Gateway business, to fund a portion of the transaction. The sale of Asia Gateway to a third party buyer is a non-waivable pre-condition that must be satisfied for the deal to go forward.

The deal follows a recent trend in the payments sector as banks and other financial firms continue to invest in mobile payments in order to keep up with changing consumer preferences. CVC has previously owned investments in the payments sector, including Skrill, and Paysafe believes they can add further value to the firm.

The deal has already gotten approval from Paysafe’s largest shareholder, Old Mutual Global Investors, who currently owns 10.3% of the company.

Concurrently, Paysafe entered into a definitive agreement to acquire Delta Card Services Inc for $470 million on July 21, 2017. The Delta Card acquisition will add 60,000 merchant clients with $14 billion in annual sales processing volume to Paysafe’s customer base.

Thanks for contributions from Tim Chen for Lightower Fiber Networks LLC