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Global M&A Roundup Nov 17, 2017 – Uber Technologies, GGP, Santos

Our previous Canadian Mergers & Acquisitions roundups can be found here. Our previous global M&A roundups can be found here.

Target: Uber Technologies Inc

  • Industry: Technology
  • Acquirer: SoftBank Group and Dragoneer Investment Group
  • Target: Uber Technologies Inc.
  • Size: $10 Billion
  • Consideration: Cash
  • Sell Side Advisors: Not Disclosed
  • Buy Side Advisors: Not Disclosed
  • Legal Advisors: Simpson Thacher & Bartlett

On November 13th, 2017 Softbank and Dragoneer investment group entered into a basic agreement to acquire a 17% to 20% stake in Uber Technologies for ~10 billion dollars at an implied equity value between $50 and $58 billion. The deal is contingent on governance changes at Uber and the number of interested sellers.

Uber announced that the investment would help fuel their investments in technology and expansion efforts while also strengthening their corporate governance. The deal also provides Uber with  some breathing room as Benchmark agreed to hold off on their lawsuit against Travis Kalanick, Uber’s former CEO who currently controls 3 of the 17 board seats.

Softbank is a well-connected Japanese technology company that has made a string of American technology investments such as an acquisition of Boston Dynamics earlier this year. Softbank is also a major investor in Ola and Grab, which are some of Uber’s major competitors in India and Southeast Asia. The announced $9 billion dollar secondary share purchase from existing investors is expected to be below the company’s current valuation of $70 billion.

Target: GGP Inc

  • Industry: Real Estate
  • Acquirer: Brookfield Property Partners
  • Target: GGP Inc.
  • Size: $27 Billion
  • Consideration: 50% Cash, 50% Equity
  • Sell Side Advisor: Citi
  • Buy Side Advisors: Not Disclosed
  • Legal Advisor: Sullivan & Cromwell

On November 13th, 2017 Brookfield Partners L.P. made a non-binding proposal to acquire GGP Inc. at an implied enterprise value of $27 billion and a 21% premium to the closing price of the company’s November 6th closing share price of $19.01. GGP shareholders may elect to receive cash or .9656 of a BPY limited partnership unit.

The deal will create one of the largest listed property companies in the world with $100 billion of premier real estate assets globally and annual net operating income of ~$5 billion. The deal will provide GGP with access to Brookfield’s large-scale capital and operating expertise across multiple real estate sectors while providing Brookfield with GGP’s high-quality retail assets.

When the deal closes GGP shareholders will own a 30% stake in the combined company. It is expected to be immediately accretive to FFO per unit and will provide an enhanced dividend to GGP’s shareholders who elect to receive BPY units. GGP is currently trading at $23.34 per share while BPY units are down 6% from its November 6th NAV.

Target: Santos Ltd

  • Industry: Energy
  • Acquirer: Harbour Energy Ltd
  • Target: GGP Inc.
  • Size: $9.9 Billion
  • Consideration: Cash
  • Sell Side Advisors: Not Disclosed
  • Buy Side Advisors: Not Disclosed
  • Legal Advisors: Not Disclosed

On November 16th, 2017 Santos announced a takeover offer from Harbour Energy Ltd, led by former Royal Dutch Shell executive Linda Cook, at an implied enterprise value of $13.1 billion AUD ($9.9 billion USD). Santos has rejected the deal and Harbour is preparing to make another cash offer of $5.30 AUD per share, representing a 21% premium to Santos’ closing price on November 15th.

Santos is one of the cheapest targets for companies looking to increase their exposure to GLNG and PNG as Santos suffered one of the largest hits from the collapse in crude oil prices as it fell from a 2014 peak of A$13.23 per share to a low of A$2.48 in 2016. Santos had a risky balance sheet in 2016 due to high debt levels for the construction of its Gladstone location; however it has emerged as stronger energy producer this year after cutting costs and receiving regular LNG revenues from its share in the GLNG plant.

Both Goldman Sachs and JPMorgan have lined up as lenders for Harbour’s potential revised offer for Santos. Harbour has also obtained a highly confident letter which would enable it to launch a takeover without the debt component of their financing being finalized.

To better understand our M&A write-ups, please refer to the following:

Mergers & Acquisitions
Typical M&A Process Walkthrough
Types of M&A Auctions
Cash or Stock Consideration for M&A
Accretion/Dilution Part I: EPS, Earnings Yield & All-Stock Transactions

Accretion/Dilution Part II: Math and Breakeven Premiums

Accretion/Dilution Part III: Using Debt for Acquisitions
Accretion/Dilution Part IV: Synergies & Sources of Funds

Bradley is an incoming 2018 summer analyst at Macquarie Capital in the metals & mining group in Toronto. He worked at Scotia Wealth Management for over a year in both full time internship and part-time positions. He will be graduating from UBC’s Sauder School of Business in 2019 with a major in finance and minor in statistics. Outside of academics he is studying for the CFA level 1 exam, an analyst for ACIIC—a student run investment organization—and a varsity baseball player.

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