Notable Mergers and Acquisitions 10/3: (CAB) (JNS) (FLIR) (CATM) (FCF)/(DCBF)

October 3, 2016 9:56 AM EDT

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*** Bass Pro Shops and Cabela’s Incorporated (NYSE: CAB) announced that they have entered into a definitive agreement under which Bass Pro Shops will acquire Cabela’s for $65.50 per share in cash, representing an aggregate transaction value of approximately $5.5 billion.

In addition, upon closing Bass Pro Shops will commence a multi-year partnership agreement with Capital One, National Association, a wholly-owned national banking subsidiary of Capital One Financial Corporation (NYSE: COF), under which Capital One will originate and service the Cabela’s CLUB, Cabela’s co-branded credit card, and Bass Pro Shops will maintain a seamless integration between the credit card program and the combined companies’ retail operations and deep customer relationships. All Cabela’s CLUB points and Bass Pro Shops Outdoor Rewards points will be unaffected by the transactions and customers can continue to use their credit cards as they were prior to the transaction. Capital One intends to continue to operate the Cabela’s CLUB servicing center in Lincoln, Nebraska.

A driving force behind this agreement is the highly complementary business philosophies, product offerings, expertise and geographic footprints of the two businesses. The essence of both Bass Pro Shops and Cabela’s is a deep passion to serve outdoor enthusiasts and support conservation. The combination brings together three of the nation's premier sporting brands: Cabela’s, a leader in hunting; Bass Pro Shops, a leader in fishing; and White River Marine Group, a worldwide leader in boating, which is part of Bass Pro Shops.

Bass Pro Shops, Cabela’s and White River Marine Group represent the best of American entrepreneurship, innovation and devotion to customers. The combined companies will strive to provide a remarkably enhanced experience for customers, increased opportunities for team members and greater support for conservation activities.

CABELA’S

Founded in 1961 by Dick, Mary and Jim Cabela, Cabela’s is a highly respected marketer of hunting, fishing, camping, shooting sports and related outdoor merchandise. Today, Cabela’s has over 19,000 “outfitters” operating 85 specialty retail stores, primarily in the western U.S. and Canada. Cabela’s stores, catalog business and e-commerce operations will blend seamlessly with Bass Pro Shops and White River Marine Group. Over the past 55 years Cabela’s has built a passionate and loyal base of millions of enthusiasts who shop both at its retail stores and online.

MANAGEMENT COMMENTARY

"Today's announcement marks an exceptional opportunity to bring together three special companies with an abiding love for the outdoors and a passion for serving sportsmen and sportswomen," said Johnny Morris, founder and CEO of Bass Pro Shops. "The story of each of these companies could only have happened in America, made possible by our uniquely American free enterprise system. We have enormous admiration for Cabela’s, its founders and outfitters, and its loyal base of customers. We look forward to continuing to celebrate and grow the Cabela’s brand alongside Bass Pro Shops and White River as one unified outdoor family.”

"Cabela’s is pleased to have found the ideal partner in Bass Pro Shops," said Tommy Millner, Cabela’s Chief Executive Officer. "Having undertaken a thorough strategic review, during which we assessed a wide variety of options to maximize value, the Board unanimously concluded that this combination with Bass Pro Shops is the best path forward for Cabela’s, its shareholders, outfitters and customers. In addition to providing significant immediate value to our shareholders, this partnership provides a unique platform from which our brand will be extremely well positioned to continue to serve outdoor enthusiasts worldwide for generations to come."

"This opportunity would not be possible without the contributions of the many wonderful Cabela’s, Bass Pro Shops and White River team members,” Morris said. “All three companies are blessed to have been built by the extraordinary efforts of many tremendously talented, dedicated people throughout our respective histories, and we're thrilled to consider what the combined team can achieve going forward.”

Following the closing of the transaction, Bass Pro Shops intends to celebrate and grow the Cabela’s brand and will build on qualities that respective customers love most about Cabela’s and Bass Pro Shops. In addition, Bass Pro Shops recognizes the strength of Cabela’s CLUB Loyalty program and intends to honor Cabela’s customer rewards and sees potential over time to expand the program in the combined company.

Bass Pro Shops appreciates and understands the deep ties between Cabela’s and the community of Sidney, Nebraska. Dick, Mary and Jim Cabela founded their company in Sidney in 1961, and the company has flourished with its base of operations there ever since. Bass Pro Shops intends to continue to maintain important bases of operations in Sidney and Lincoln and hopes to continue the very favorable connections to those communities and the Cabela’s team members residing there.

Bass Pro Shops Founder and CEO Johnny Morris will continue as CEO and majority shareholder of the new entity, which will remain a private company with a continuing long-term view of supporting the industry and conservation. Morris earned a reputation as a leading retailer and conservationist. In 2008, the National Retail Federation named him as Retail Innovator of the Year. In 2015, the same organization named him as one of 25 People Shaping the Future of Retail in America. In 2012, The Association of Fish and Wildlife Agencies named Morris Citizen Conservationist of the Year.

“Conservation is at the heart and soul of Bass Pro Shops. Bass Pro Shops and Cabela’s share a steadfast belief that the future of our industry, and the outdoor sports we all love, depends - more than anything else - on how we manage our natural resources,” said Morris. “By combining our efforts, we can have a profound positive impact on the conservation challenges of our day and help foster the next generation of outdoor enthusiasts.”

PREFERRED FINANCING

Bass Pro Shops is proud to have secured preferred equity financing from the Merchant Banking Division of Goldman Sachs and Pamplona to facilitate the transaction. Goldman Sachs has committed $1.8 billion and Pamplona has committed $600 million for a total preferred financing commitment of $2.4 billion.

The Merchant Banking Division of Goldman Sachs is one of the leading private equity investors in the world, focusing on assisting large, high-quality companies with best-in-class management teams to achieve their growth objectives. The division brings significant experience and a strong track record of success in supporting industry-leading founder-led businesses. Pamplona Capital Management is a New York and London based specialist investment manager established in 2005. Pamplona is currently managing its fourth private equity fund, Pamplona Capital Partners IV, LP, which was raised in 2014. Pamplona invests long-term capital across the capital structure of its portfolio companies in both public and private market situations.

TRANSACTION DETAILS

The transaction provides Cabela’s shareholders with a premium of 19.2% to Cabela’s closing share price on Sep. 30, 2016, the day prior to announcement of the transaction, 39.7% to the closing share price on Dec. 1, 2015, the day before Cabela’s announced its exploration of strategic alternatives and 57.1% to the 90-day volume weighted trading average prior to Dec. 1, 2015. Immediately prior to closing, Capital One will acquire certain assets and assume certain liabilities of Cabela’s World’s Foremost Bank. The cash proceeds from this transaction will remain with Cabela’s until it is acquired by Bass Pro Shops.

The transaction agreements were unanimously approved by Cabela’s Board of Directors following a comprehensive review of strategic and financial alternatives.

The transaction, which is expected to close in the first half of 2017, will be completed through a cash merger and is subject to approval by Cabela’s shareholders, as well as regulatory approvals and other customary closing conditions.

J.P. Morgan served as exclusive financial advisor to Bass Pro Shops and Latham & Watkins served as Bass Pro Shops’ legal counsel, with expert assistance from O’Melveny & Myers. Goldman, Sachs & Co. served as financial advisor to The Merchant Banking Division of Goldman Sachs and Davis Polk & Wardwell LLP served as legal advisor. Goldman, Sachs & Co. also served as advisor to Bass Pro Shops on the bank transaction, and Morrison & Foerster served as legal counsel. BofA Merrill Lynch, Wells Fargo Securities LLC, Citigroup Global Markets Inc., RBC Capital Markets, UBS Securities LLC, and Goldman Sachs are providing debt financing to support the transaction.

Guggenheim Securities served as exclusive financial advisor to Cabela’s and Sidley Austin LLP and Koley Jessen P.C., L.L.O. served as Cabela’s legal counsel.

The Kessler Group and Credit Suisse acted as financial advisers to Capital One and Wachtell, Lipton, Rosen & Katz and Chapman and Cutler acted as legal advisers.

*** Henderson Group plc and Janus Capital Group Inc. (NYSE: JNS) announce that their respective Boards of Directors have unanimously agreed to an all-stock merger of equals. The combined company will be named Janus Henderson Global Investors plc.

The merger will be effected via a share exchange with each share of Janus common stock exchanged for 4.7190 newly issued shares in Henderson. Henderson and Janus shareholders are expected to own approximately 57% and 43% respectively of Janus Henderson Global Investors’ shares on closing, based on the current number of shares outstanding. The merger is currently expected to close in the second quarter of 2017, subject to requisite shareholder and regulatory approvals.

The combination of these two complementary businesses is expected to create a leading global active asset manager with significant scale, diverse products and investment strategies, and depth and breadth in global distribution. The result will be an organisation that is well-positioned to provide world-class client service, gain market share and further enhance shareholder value.

Andrew Formica, Chief Executive of Henderson, said, “Henderson and Janus are well-aligned in terms of strategy, business mix and most importantly a culture of serving our clients by focusing on independent, active asset management. I look forward to working side-by-side with Dick, as we create a company with the scale to serve more clients globally, as well as the strength to meet their future needs and the growing demands of our industry.”

Dick Weil, Chief Executive Officer of Janus, said, “This is a transformational combination for both organizations. Janus brings a strong platform in the U.S. and Japanese markets, which is complemented by Henderson’s strength in the U.K. and European markets. The complementary nature of the two firms will facilitate a smooth integration and create an organization with an expanded client-facing team and product suite, greater financial strength, and enhanced talent, benefiting clients, shareholders and employees.”

Benefits of the Merger

Expanded Client Facing Team

  • Increased distribution strength and coverage in key markets, including the U.S., Europe, Australia, Japan and the U.K., as well as a growing presence in the Asia-Pacific region, the Middle East and Latin America;
    • Janus Henderson Global Investors’ AUM by region on a pro forma basis will be approximately 54% Americas.; 31% EMEA and 15% in the Pan Asian region; and
  • Complementary brand attributes strengthen global market position.

Diversified Products and Investment Strategies

  • Diversified products and investment strategies to better address a broader range of contemporary client needs;
    • Between them, Henderson and Janus have both invested to satisfy future client needs for alternative sources of income and absolute return;
  • Combined organisation will have a broad array of outperforming strategies; and
  • Enhanced global investment footprint, portfolio management experience and depth of research teams each support even better outcomes for clients.

Enhanced Talent

  • Combining the talent from both firms creates a stronger organisation of approximately 2,300 employees, based in 29 locations around the world;
  • Complementary nature of the two businesses and expanded global footprint creates broader platform for professional development; and
  • Cultural compatibility driven by shared client-centric values and minimal overlap of investment strategies and client assets.

Financial Strength

  • Combined balance sheet creates greater financial stability through market cycles and allows Janus Henderson Global Investors to continue to grow and invest in new opportunities;
  • Combined group had revenue of more than U.S.$2.2 billion and underlying EBITDA of approximately U.S.$700 million for the year ended 31 December, 2015 (see Note);
  • Increased economies of scale expected to lead to greater efficiency and improved profitability; and
  • The Board of Janus Henderson Global Investors is expected to continue to operate a progressive dividend policy, growing the dividend broadly in line with underlying earnings growth over the medium term and with a payout ratio consistent with Henderson’s current practice.

Value Creation

  • Targeting annual run rate net cost synergies of at least U.S.$110 million weighted to the first 12 months following completion and expected to be fully realised three years post completion, representing approximately 16% of the combined group’s underlying EBITDA (see Note);
  • Synergies expected to drive double digit accretion to both companies’ earnings per share (excluding one-off costs) in the first 12 months following closing; and
  • Ambition to deliver 2-3 percentage points of additional net new money from the combined business post-integration.

Governance and Management

The Board of Directors will comprise equal numbers of Henderson and Janus directors, with Henderson Chairman Richard Gillingwater becoming Chair of the combined Board and Janus’ Glenn Schafer becoming Deputy Chair.

Janus Henderson Global Investors will be managed by a newly appointed Executive Committee, whose members will report jointly to Co-CEOs Dick Weil and Andrew Formica:

  • Janus’ Head of Investments, Enrique Chang, will become Global Chief Investment Officer
  • Henderson’s Global Head of Distribution, Phil Wagstaff, will become Global Head of Distribution
  • Janus’ President Bruce Koepfgen, will become Head of North America
  • Henderson’s Executive Chairman Pan Asia, Rob Adams, will become Head of Asia Pacific
  • Janus’ CFO, Jennifer McPeek, will become Chief Operating and Strategy Officer
  • Henderson’s Chief Financial Officer (CFO), Roger Thompson, will become CFO
  • Janus’ Chief Compliance Officer, David Kowalski, will become Chief Risk Officer
  • Henderson’s General Counsel and Company Secretary, Jacqui Irvine, will become Group General Counsel and Company Secretary

Janus’ subsidiaries, INTECH and Perkins will be unaffected by the merger. INTECH CEO, Adrian Banner, will continue to report to the INTECH Board of Directors and Perkins CEO, Tom Perkins, will continue to report to the Perkins Board of Directors.

Dividends and Share Buyback

Under the terms of the merger, Henderson and Janus have agreed that:

  • Prior to closing and subject to shareholder approval, Henderson shareholders will be entitled to receive a final dividend in the ordinary course for the year ending 31 December 2016. The timing of payment of any such dividend may be accelerated, so that it occurs prior to closing;
  • Prior to closing of the merger and subject to the Janus Board’s approval, Janus shareholders will be entitled to receive quarterly cash dividends in November 2016 and February 2017; and
  • After closing of the merger, Janus Henderson Global Investors’ shareholders will be entitled to receive an interim dividend for the three-month period ending 31 March 2017, in an amount to be determined by the Janus Henderson Global Investors Board.

The £25 million share buyback of Henderson shares, scheduled to take place in the second half of 2016, will no longer take place.

Relationship with Dai-ichi

  • Dai-ichi, the largest Janus shareholder, has committed to vote in favour of the merger and believes the combination will further strengthen its global partnership with Janus Henderson Global Investors;
  • Post-merger, Dai-ichi will hold approximately 9% of the combined group and intends to further invest in the combined company to increase its ownership interest to at least 15%;
  • To assist Dai-ichi in achieving its ownership ambitions, the parties have agreed, subject to the completion of the merger, to sell Dai-ichi options to subscribe for up to approximately 5% of new Janus Henderson Global Investors shares; and
  • Dai-ichi anticipates additional investments in the Janus Henderson Global Investors product range, post-closing, of up to U.S. $500 million, which would bring its total committed invested assets in Janus Henderson Global Investors to U.S. $2.5 billion.

*** FLIR Systems, Inc. (Nasdaq: FLIR) announced today that it has reached a definitive asset purchase agreement to acquire the business of Point Grey Research, Inc., a leading developer of machine vision cameras for use in industrial, retail, scientific, traffic, mapping, and other advanced imaging applications, for approximately $253 million in cash.

Founded in 1997 and based in Richmond, British Columbia, Point Grey is a global leader in the development of advanced visible imaging cameras and solutions that are used in industrial automation systems, medical diagnostic equipment, people counting systems, intelligent traffic systems, military and defense products, and advanced mapping systems. Point Grey designs, manufactures, and distributes its cameras and related software to a global base of customers that build systems for improving the efficiency, quality, analysis, and safety of a wide range of processes and products.

The addition of the Point Grey business will augment FLIR's existing OEM cores and components business by adding a broad range of visible spectrum machine vision cameras and solutions. Additionally, FLIR's thermal sensor technology, with its unique ability to remotely measure temperature, see through factory obscurants such as smoke and steam, and accurately detect and characterize human activity in retail settings, will further extend Point Grey's product range into new application spaces. The business will become FLIR's Integrated Imaging Solutions line of business operating within the OEM and Emerging segment.

"We're excited to add the broad range of innovative products from Point Grey to FLIR as together we have a unique capability to create advanced sensing solutions for the broad machine vision market," said Andy Teich, President and CEO of FLIR. "Thermal imaging technology provides vision systems customers an alternative imaging spectrum that offers a rich, largely untapped layer of information that can be further leveraged. Point Grey's global presence and credibility in industrial vision systems provides a strong platform for us to integrate our leading thermal technology. Point Grey is a proven, high-performing business with an impressive set of products, customers, processes, and people, all of which we see as being highly synergistic and strategically significant to FLIR. We welcome the Point Grey employees to FLIR and look forward to creating highly valuable solutions for a wide array of intelligent imaging applications."

The transaction is expected to be completed in the fourth quarter of 2016. FLIR anticipates the business and related transaction costs will be approximately $0.01 dilutive to its 2016 earnings per share and accretive for 2017.

*** Cardtronics plc (Nasdaq: CATM) and DirectCash Payments Inc. announced a definitive agreement under which Cardtronics would acquire DCPayments. The purchase price of CAD$19.00 per share includes the assets of First Data Corporation’s Australian retail ATM and managed services ATM portfolio (“First Data ATM portfolio”), which was acquired by DCPayments on September 30. DCPayments is a leading global ATM services provider with approximately 25,000 ATMs (inclusive of its First Data ATM portfolio acquisition) with primary operations in Australia, Canada and the United Kingdom. The combination will leverage Cardtronics’ existing infrastructure and relationships, and drive substantial operating synergies. The combined companies would serve approximately 225,000 ATMs in North America, Europe and Asia-Pacific.

Cardtronics Chief Executive Officer Steve Rathgaber commented:“Our proposed combination with DCPayments will enhance our global presence by adding Australia as an anchor market in Asia-Pacific, in addition to New Zealand. It also would grow Cardtronics’ existing ATM estates in Canada, the United Kingdom and Mexico. The combination will further position us to be the preferred global provider of ATM solutions to retailers and financial institutions. This acquisition would broaden our exposure to helping financial institutions reevaluate their physical presence as part of the bank transformation trends we are seeing worldwide.”

Expansion into Asia-Pacific

The acquisition of DCPayments would establish Australia as a new platform for growth, alongside Cardtronics’ existing presence in North America and Europe. DCPayments is a leading independent ATM operator in Australia, with approximately 11,000 ATMs owned or managed, inclusive of its recent First Data ATM portfolio acquisition.

Enhanced Scale and Capabilities in Canada

This combination would result in Cardtronics managing more than 11,000 ATMs in Canada, a leadership position in the independent ATM market that would also create opportunities to service additional Canadian financial institutions to add convenient points of presence to their ATM networks.

United Kingdom Expansion

DCPayments would add more than 5,700 ATMs to the company’s existing footprint in the United Kingdom, providing an opportunity to deliver Cardtronics’ service level excellence and cost efficiency to these additional ATMs.

DCPayments President & Chief Executive Officer Jeffrey J. Smith commented:“The combination of DCPayments and Cardtronics creates a unique platform that is ideally suited to maximize customer value for both organizations. There is a tremendous fit between our two organizations, and I am confident that the combined businesses will perform at even higher levels for customers and employees.”

Cardtronics Chief Executive Officer Steve Rathgaber added:“The acquisition of DCPayments marks a significant milestone for Cardtronics, taking us into Asia-Pacific and growing our presence in existing geographies. Combining these two strong businesses will offer exceptional opportunities for everyone that we serve – customers, employees, partners and shareholders. I am particularly excited about the implications for our customers, who will benefit from our expanded global footprint as well as our combined expertise, talent and capabilities.”

Transaction Details

Under the terms of the agreement, Cardtronics will acquire all of the outstanding equity of DCPayments for CAD$19.00 per share in cash, representing a transaction value of approximately $460 million in U.S. dollars, including approximately $53 million of debt incurred by DCPayments to finance its purchase of the First Data Australian ATM portfolio on September 30, 2016. The First Data Australian ATM portfolio acquisition is expected to contribute more than $10 million of annual Adjusted EBITDA. Cardtronics intends to fund the DCPayments acquisition with cash on hand as well as fully committed debt financing. Cardtronics has received commitments from banks to expand the size of its credit facility upon the completion of the transaction. Subject to satisfaction of certain closing conditions, including the approval of DCPayments’ shareholders and court approval as required by applicable law, the transaction is expected to close early in the first quarter of 2017. After closing, we expect the acquisition to be accretive to non-GAAP adjusted net income per share. After completion of the transaction, the financial impact will be reflected in our fiscal 2017 guidance, expected to be issued in the first quarter of 2017.

RBC Capital Markets, LLC is serving as financial advisor and Baker & McKenzie is serving as legal counsel to Cardtronics. BMO Capital Markets is serving as financial advisor to DCPayments, and Bennett Jones is serving as legal counsel.

*** First Commonwealth Financial Corporation (NYSE: FCF) and DCB Financial Corp (OTC: DCBF) jointly announced the signing of a definitive Agreement and Plan of Merger providing for the merger of DCB Financial with and into First Commonwealth in a stock and cash transaction valued at approximately $14.50 per share, or approximately $106 million in the aggregate. Following the merger of the parent holding companies, DCB Financial's subsidiary, The Delaware County Bank & Trust Company, will merge with and into First Commonwealth's subsidiary, First Commonwealth Bank.

The acquisition of the Delaware County-based bank will provide First Commonwealth with approximately $556 million in total assets, $467 million in total deposits, $397 million in total loans and nine full-service banking offices in the Columbus MSA. The transaction represents a continuation of First Commonwealth's Ohio growth strategy, and builds upon its recently announced acquisition of 13 branches in northern Ohio and its acquisition of Columbus-based First Community Bank in 2015.

Under the terms of the Agreement and Plan of Merger, which has been unanimously approved by the board of directors of both companies, DCB Financial shareholders will be entitled to receive either 1.427 shares of First Commonwealth common stock or $14.50 in cash for each DCB Financial common share. Subject to proration to ensure that the aggregate merger consideration is comprised of 80% First Commonwealth common stock and 20% cash, DCB Financial shareholders may elect to specify the number of their shares to exchange for the cash consideration and the number of their shares to exchange for the stock consideration. The merger is expected to qualify as a tax-free reorganization. The merger is expected to be completed in the second quarter of 2017, subject to certain closing conditions, including approval by DCB Financial shareholders and approval by appropriate bank regulatory authorities.

"We could not be more pleased to welcome DCB Financial's customers and employees to First Commonwealth," said T. Michael Price, First Commonwealth's Chief Executive Officer. "DCB Financial's customer-focused culture is a perfect fit with First Commonwealth's core values. This expansion into central Ohio will enable us to help a broader range of central Ohio families and businesses reach their financial goals."

"First Commonwealth, like us, is the bank that works for you," said Ron Seiffert, President and Chief Executive Officer of DCB Financial. "We are happy to be partnering with a bank that is just as committed to our community banking philosophy and our core markets as we are. Our customers will enjoy a broader range of products and services, while still receiving the same high level of community bank service to which they've been accustomed."

Excluding certain one-time merger charges, the transaction is anticipated to be approximately 4% accretive to First Commonwealth's earnings in 2017, and approximately 7% accretive to earnings in 2018 once anticipated cost savings are fully phased in. Estimated tangible book value dilution at closing of less than 4% is expected to be earned back in less than 5 years using the "cross-over" method, including estimated one-time charges.

As a result of the merger, First Commonwealth will add one DCB Financial director to its board of directors.

ADVISORS

FBR Capital Markets & Co. served as financial advisor and Squire Patton Boggs (US) LLP served as legal counsel to First Commonwealth. Keefe, Bruyette & Woods, Inc. served as financial advisor and Porter, Wright, Morris & Arthur LLP served as legal counsel to DCB Financial.

To keep up on all the Mergers & Acquisitions data in real-time, go to our M&A Insider page.



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