Chevron preps North Sea exit; Iberdrola strikes deal for Avangrid stake; Thoma Bravo puts Instructure on the block; and much more
Happy Friday!?
This week, my London colleague Ron Bousso scooped that Chevron is set to launch the sale of its remaining UK North Sea oil and gas assets, in a move that would mark the U.S. energy giant's exit from the ageing basin after more than 55 years.
The planned divestment, confirmed to Reuters on Thursday, comes as Chevron prepares for the $53 billion acquisition of rival Hess which it previously said will include $10 billion to $15 billion in asset sales around the world.
The exit will be the latest step in a steady retreat of top oil and gas companies from the declining British basin which pioneered deepwater production in the 1970s, as they focus on newer assets around the world.
Chevron's assets include a 19.4% stake in the BP-operated Clair oilfield in the West of Shetland region, the largest in the British North Sea with production of 120,000 barrels per day.
BP has said it is considering a third development phase for the field, known as Clair South, which is one of the largest remaining untapped fields in the North Sea.
UK oil and gas production has dropped from a peak of around 4.5 million barrels of oil equivalent per day (boed) in the late 1990s to around 1.2 million boed in 2023.
Chevron is also seeking to sell its marginal interests in the Sullom Voe oil terminal, as well as its stakes in the Ninian and SIRGE pipeline systems which are both linked to the hub, it said in a statement.
The sale could raise up to $1 billion excluding tax benefits. The process is expected to be formally launched in June. It will not impact the operations of Chevron's international headquarters in London or its technology centre in Aberdeen, the company said.
The exit follows a review of Chevron's global portfolio as CEO Mike Wirth seeks to focus on the firm's most profitable assets, Chevron said.
Earlier on Friday, David French beat the PR by about an hour to scoop that Spanish utility Iberdrola struck a deal to acquire the remaining 18.4% stake in its U.S. subsidiary Avangrid that it does not already own for about $2.6 billion.
Iberdrola agreed to pay $35.75 per share for the Avangrid shares it does not own, below the $37.53 level at which the stock ended trading on Thursday.
Iberdrola's previous offer of $34.25 per share, which it unveiled in March, represented at the time a premium of approximately 10% to the weighted average share price of Avangrid in the preceding 30 days.
The deal price is below the $37.53 level at which the stock ended trading on Thursday. Avangrid's stock dropped 4.7% to $35.78 when it restarted trading on Friday afternoon.
A few hours after David’s scoop, Milana Vinn broke news on Thoma Bravo exploring a sale of Instructure, a U.S. education software provider with a market value of $3 billion.
Thoma Bravo, which holds an 83% stake in the company, has tapped JPMorgan Chase to gauge the interest of potential buyers that include other buyout firms.
Shares in Instructure, which carried debt of close to $1.2 billion at the end of March, jumped 9% to $22 in afterhours trading in New York on the news.
Based in Salt Lake City, Instructure provides software to schools, colleges and universities. It has over 8,000 customers in more than 100 countries.
The company's flagship learning management system is called Canvas and competes with programs such as Google Classroom, Blackboard Learn and Schoology.
Thoma Bravo took Instructure private in 2020 for $2 billion before returning it to the stock market a year later through an initial public offering. Instructure's shares are still hovering around their $20 IPO price three years later, as a boom the company enjoyed from spending on remote learning during the COVID-19 pandemic fizzled when competition from rivals intensified.
Milana also produced an excellent interview with an executive recruiter who said the 35-year-old Bank of America investment banker who died from a blood clot earlier this month wanted to leave the U.S. bank because he was working more than 100 hours a week.
Junior banker Leo Lukenas III died of an acute coronary artery thrombus, a type of blood clot, the New York Office of the Chief Medical Examiner said last week.
Lukenas said in mid-March that he wanted to leave Bank of America because of the grueling hours, Douglas Walters, a managing partner at GrayFox Recruitment, told Reuters. GrayFox specializes in placing people in financial industry jobs, including investment banking and private equity.
In response to a question posed by Reuters, Walters said Lukenas, a U.S. Army veteran who was survived by his wife and two children, did not raise any health issues in their discussions about career options.
Reuters has no evidence that long hours at work contributed to Lukenas' death.
Elsewhere, Anousha Sakoui and Clara Denina were first to report that Anglo American is exploring an initial public offering of its diamond business De Beers, with London possibly being the preferred venue.
The potential listing was the default option, although the process is at an early stage.
This week, the London-listed miner set out its plans for a potential break-up via a demerger or sale of some of its assets, as it fights off a $43 billion takeover bid from BHP Group.
CEO Duncan Wanblad said the plan was to spin out or sell De Beers, without giving further details. Anglo holds 85% of De Beers, while the government of Botswana, the location of its biggest mines, owns the remainder.
And finally, I teamed up with my Delaware colleague Tom Hals to take a closer look at recent controlled-company take-privates and how controllers are increasingly denying minority shareholders the ability to veto deals and risking lawsuits to avoid paying a higher deal price.
At stake is a corporate governance safeguard that reassures minority investors they are getting a fair price and protects companies' stock market valuations from taking a hit on concerns a deal would undervalue them, corporate lawyers and investment bankers say.
Endeavor agreed last month to be taken private by a consortium of its investors, led by private equity firm Silver Lake, which holds 71% of the voting stock in the company. It inked the deal without agreeing to hold a vote where a majority of the investors not participating in the consortium would have to approve it.
Without such a "majority-of-the-minority-investors" threshold, a deal vote becomes a formality, since the shareholders that control the company are also the ones buying out the minority investors.
A special committee of independent board directors that negotiated the deal on behalf of Endeavor tried unsuccessfully to convince Silver Lake to sign off on a majority-of-minorities shareholder vote, people familiar with the matter told Reuters.
Nearly a dozen lawyers and bankers told Reuters there is a growing realization among the controlling investors of companies that the financial benefit of depriving minority shareholders of a deal veto outweighs the legal risks.
"(The shareholder vote) opens the door to an activist who can say, 'I know you're negotiating with the special committee, but now you're going to negotiate with me, and I'm going to squeeze a second bite'," said Phillip Mills, an M&A partner at law firm Davis Polk.
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Endeavor, run by Hollywood power broker Ari Emanuel, is well-known for representing film and television talent. It has grown to become a sports and entertainment behemoth through more than 20 acquisitions.
At least three other U.S. companies were taken private by majority shareholders over the last two years without seeking approval by minority investors.
These include buyout firm Thomas H. Lee's $2.5 billion deal in February to take medical equipment management company Agiliti private, grill maker Weber's controlling shareholders led by BDT Capital acquiring it last year for $3.7 billion, and TPG’s $1.1 billion take-private of Convey Health Solutions in 2022.
If this trend of controlled companies denying minority shareholder vetoes to take-private deals continues, it could weigh on these companies' valuations as investors bet they would be sold at a lower premium, investment bankers and analysts say.
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And here’s the best of the rest from the Reuters investment banking file this past week:?
Anglo American has suspended hiring globally, it said, as it gets plans underway to simplify itself and build value - and avert a $43 billion takeover bid by Australia's BHP Group.
Waste management firm WM is exploring a sale of its renewable natural gas business that could be worth about $3 billion, according to people familiar with the matter.
Private equity firm Roark Capital is exploring a sale of Primrose Schools that could value the U.S. education franchise at nearly $2 billion, including debt, people familiar with the matter said.
There’s plenty of risky cleanup to do among public technology companies mired in a post-Covid-19 funk. The $6.6 billion buyout of website builder Squarespace by Permira, announced on Monday, might seem to fit the mold. But a punchy headline price is much more cautious than it appears.
Private equity firm Cinven is preparing to explore a sale of Jaggaer that it hopes will value the maker of supply chain software at about $3 billion, including debt, according to people familiar with the matter.
British boards are facing a deluge of takeover interest. Bids for UK companies have hit $87 billion so far this year – the highest since 2018, according to Dealogic data. With one eye on a yawning valuation discount that plagues British shares, boards seem generally inclined to resist approaches. John Wood Group offers a lesson in why that’s a mistake.
Goldman Sachs told Reuters it has hired two investment bankers from rival banks as part of a push to advise on more smaller deals worth up to $2 billion.
Spanish oil company Repsol is in negotiations to sell a stake in its renewable energy unit, a move to help fund its strategic plan through 2027, according to four sources with knowledge of the talks.
The private equity owner of Good Sportsman Marketing Outdoors is exploring a sale of the hunting and fishing gear maker that could value it at about $1.5 billion, including debt, according to people familiar with the matter.
Pilates studio operator Solidcore is exploring options including a potential sale that could value the fitness chain at more than $750 million, including debt, people familiar with the matter said
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Have a wonderful weekend!
Best,
Anirban?
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Anirban Sen
Editor in Charge, U.S. Mergers & Acquisitions
Reuters News
Thomson Reuters