The SVB meltdown; Ritchie Bros-IAA deal gets thumbs-up from investors; SoftBank sets stage for Arm IPO; and much more
Happy Friday!
The big story that everyone’s talking about is obviously Silicon Valley Bank – the startup-focused lender became the largest bank failure since the financial crisis, in a sudden collapse that roiled global markets and stranded billions of dollars belonging to companies and investors.
California banking regulators closed the bank, which did business as Silicon Valley Bank, on Friday and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for later disposition of its assets.
The main office and all branches of Silicon Valley Bank will reopen on March 13 and all insured depositors will have full access to their insured deposits no later than Monday morning, the FDIC said.
But 89% of the bank's $175 billion in deposits were uninsured as the end of 2022, according to the FDIC, and their fate remains to be determined.
Companies such as video game maker Roblox and streaming device maker Roku said they had hundreds of millions of deposits at the bank. Roku said its deposits with SVB were largely uninsured, sending its shares down 10% in extended trading.
Technology workers whose paychecks relied on the bank were also worried about getting their wages on Friday. An SVB branch in San Francisco showed a note taped to the door telling clients to call a toll-free telephone number.
The FDIC said it would seek to sell SVB's assets and that future dividend payments may be made to uninsured depositors.
At times in the past, the FDIC has moved quickly, even striking deals to sell major banks over the weekend.
BREAKINGVIEWS had an interesting take on this subject – “Nearly three years with no U.S. bank failures just came to an unseemly end. Silicon Valley Bank, which counts among its customers half of all U.S. venture-capital backed startups, was taken into receivership by the Federal Deposit Insurance Corp on Friday after a slide in deposits and a hasty capital raising failed to restore confidence. By acting quickly, regulators have stopped one crisis, but may have laid the groundwork for more.
Customers in American banks typically don’t have to worry about what happens if a lender goes under, thanks to a guarantee from Uncle Sam to pay back depositors if an institution fails. But there’s a big exception. Balances over $250,000 aren’t covered. Above that level, customers must fight with other creditors for scraps.”
Here are the other highlights of our SVB coverage:
Elsewhere, my colleague Svea Herbst Bayliss was first to report that a majority of Canada's Ritchie Bros shareholders have voted in favor of the company buying U.S. auto retailer IAA in a deal valued at roughly $7 billion.
The cash and stock deal, first announced in November, has become one of the year's most contested.
IAA's stock price jumped 10% on the news of a majority of Ritchie Bros investors voting for the deal.
Proxy advisory firms Institutional Shareholder Services and Glass Lewis earlier this week recommended that Ritchie Bros shareholders vote against the takeover. Smaller proxy adviser Egan-Jones recommended that shareholders vote for it.
Ritchie Bros has argued that the acquisition would unlock substantial value that neither Ritchie Bros nor IAA could achieve alone.
And finally, Echo Wang and I scooped that Arm Ltd, the British chip designer owned by Japan's SoftBank, is likely to aim to raise at least $8 billion from what is expected to be a blockbuster U.S. stock market launch this year. Our story was widely picked up by competitors.
Arm is expected to confidentially submit paperwork for its initial public offering in late April. The listing is expected to happen later this year and the exact timing will be determined by market conditions.
SoftBank has picked four investment banks to lead what is expected to be the most high-profile stock market flotation in recent years. Goldman Sachs Group, JPMorgan Chase, Barclays and Mizuho Financial Group are expected to be the lead underwriters for the deal - no bank has been picked for the much-coveted "lead left" position yet.
A successful listing for Arm this year would provide a boost to the IPO market, which has been largely frozen since Russia's invasion of Ukraine in February 2022 triggered market volatility and a huge sell-off in tech stocks.
The IPO market briefly flickered back to life last month as a number of companies including solar tech firm Nextracker and Chinese sensor maker Hesai Group listed their shares on U.S. stock exchanges, but investors still remain wary of betting on new stocks.
IPO advisors are not expecting a full-blown recovery in capital markets until the latter half of this year.
And here’s a quick recap of the other highlights of the Reuters corporate finance file this week:
The U.S. Justice Department filed suit to stop JetBlue Airways from buying Spirit Airlines, saying the planned $3.8 billion merger "will lead to higher fares and fewer seats, harming millions of consumers on hundreds of routes."
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The U.S. Federal Trade Commission said it would take action aimed at stopping New York Stock Exchange parent Intercontinental Exchange from acquiring mortgage data vendor Black Knight in a $13.1 billion deal.
Software maker Qualtrics International said it has received a $12.4 billion go-private offer from private equity firm Silver Lake Management and Canada Pension Plan Investment Board (CPPIB).
Quotient Technology, the parent of Coupons.com, is exploring options that include a sale of the company as it grapples with a collapse in advertising revenue, according to people familiar with the matter.
Paramount Global is mulling the possible sale of a majority stake in BET Media Group, which includes the BET cable network, BET Studios and VH1, a source with knowledge of the matter told Reuters.
Altria Group said it would buy startup NJOY Holdings Inc for about $2.75 billion in cash, in a fresh bet by the Marlboro maker on the e-cigarette market after losing billions through its investment in Juul.
Specialty chemicals maker Solenis will buy disinfectant maker Diversey Holdings in an all-cash deal valued at $4.6 billion including debt, the companies said.
Activist investor Legion Partners Asset Management is pushing for four new directors to join Primo Water’s board, arguing they could help the water company's share price triple over five years.
C. H. Robinson Worldwide, the largest U.S. freight broker, is in advanced talks to name former United Parcel Service Inc (UPS) chief operating officer Jim Barber as chief executive officer after the departure of Bob Biesterfeld, two sources familiar with the discussions said.
Thank you for reading this week’s edition! Please do share the newsletter with anyone you think might be interested – feedback will be most welcome.
Have a great weekend!
Warm regards,
Anirban?
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Anirban Sen
Editor in Charge, U.S. Mergers & Acquisitions
Thomson Reuters
Twitter: @asenjourno