Notable Mergers and Acquisitions 11/4: (ITT) (SPTN) (MGTI) (GLUU)
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The acquisition will be highly complementary to ITT’s legacy KONI brand as Axtone produces energy absorption solutions such as springs, buffers and coupler components that are critical safety technologies.
“Expanding our strong positions across the transportation industry – including railway, aerospace and automotive – is key to ITT’s strategy,” said ITT CEO and President Denise Ramos. “The addition of Axtone’s high-quality portfolio and leading technologies will serve to further position our growing Motion Technologies business as a global transportation leader with strong capabilities and reach to provide a premier experience to our customers.”
Motion Technologies President Luca Savi said, “This agreement reflects our strategic commitment to enhancing our global leadership position in railway components. Axtone will complement our current portfolio, expand our global railway presence and grow our position in the profitable aftermarket. It will also provide another opportunity to deploy our Motion Technologies management system to create value through operational excellence. We look forward to the opportunity to bring together two outstanding teams with a shared commitment to innovation, quality and unrivaled performance.”
The transaction represents a cash consideration of approximately $118 million that will be primarily funded from the company’s foreign cash (assumes $1.09 USD per €1 Euro). The final purchase price is subject to a customary net working capital adjustment. The transaction is expected to close in the first quarter of 2017, subject to customary closing conditions, including appropriate regulatory approvals. Axtone anticipates full-year 2016 revenues of approximately $80 million and adjusted EBITDA of approximately $14 million. The transaction is expected to be accretive to ITT earnings in the first full year after closing. Axtone is headquartered in Kańczuga, Poland, and has approximately 660 employees and six manufacturing locations.
*** SpartanNash (Nasdaq: SPTN) and Caito Foods Service announced they have entered into a definitive agreement under which SpartanNash will acquire certain assets of Caito Foods Service (“Caito”) and Blue Ribbon Transport (“BRT”). Under the terms of the agreement, SpartanNash will acquire Caito’s produce distribution business, fresh cut fruits and vegetables business, the company’s newly constructed Fresh Kitchen facility which is designed to process and package fresh-prepared foods, and the logistics business of BRT.
The acquisition will strengthen SpartanNash’s product offerings to its existing customer base by expanding into the fast-growing freshly prepared centerplate and side dish categories.
Founded in Indianapolis in 1965, Caito Foods Service is a leading supplier of fresh fruit and vegetables to grocery retailers and food service distributors across 22 states in the Southeast, Midwest and Eastern United States. Caito and BRT, which generate combined annual revenues in excess of $600 million, currently service customers from facilities in Indiana, Ohio and Florida. Caito also has a central fresh cut fruit and vegetable facility in Indianapolis and is completing construction on its new 118,000 square foot Fresh Kitchen facility, also in Indianapolis. The $32 million Fresh Kitchen will process, cook and package fresh protein-based foods and complete meals; it is expected to be fully operational in the first quarter of 2017. The company offers temperature-controlled distribution and logistics services throughout North America through its affiliate Blue Ribbon Transport.
“We are excited about this opportunity to expand our presence in serving some of the fastest-growing categories in grocery, including fresh produce, value-added fruits and vegetables and protein-based prepared food,” said Dennis Edison, SpartanNash’s CEO and Chairman of the Board. “Caito Foods Service is a premier distributor with best-in-class food processing facilities, including its new Fresh Kitchen. In addition, Caito’s service area is complementary to our current distribution footprint, and we look forward to serving customers in new areas in addition to enhancing our offerings to existing customers. In short, this acquisition further strengthens our platform and enhances our ability to help our customers serve their consumers, benefiting our associates and the communities we serve, as well as delivering value for shareholders.”
Caito and BRT will become part of SpartanNash’s food distribution segment following the close of the transaction. Caito’s senior leadership team, including Caito President Robert Kirch and Blue Ribbon Transport President David Frizzell, will join SpartanNash upon completion of the transaction. Mr. Kirch will report to Dave Staples, SpartanNash President and Chief Operating Officer; Mr. Frizzell will report to Derek Jones, SpartanNash Executive Vice President, President of Wholesale and Distribution Operations. Both will continue in their roles and oversee the acquired operations which will remain based in Indianapolis.
Kirch noted, “With our long history and family tradition of processing and distributing fresh, convenient, healthy foods, we are excited and proud to join an organization that shares our passion and commitment to serve customers with the freshest foods. We are looking forward to joining the SpartanNash family to expand and enhance our combined ability to deliver high quality fresh products efficiently to a greater number of customers across the country.”
Under the terms of the transaction, SpartanNash will purchase certain assets of Caito Foods Service and Blue Ribbon Transport for approximately $217.5 million in cash, in addition to reimbursing Caito for certain transaction costs and providing two earn-out opportunities that have the potential to pay the sellers an additional $12.4 million collectively if the business achieves certain performance targets. The transaction is expected to be accretive to full year 2017 earnings. The purchase price will be funded with proceeds from SpartanNash’s asset-based lending facility.
SpartanNash expects to close the acquisition by early January 2017, subject to regulatory approval and customary closing conditions.
Deutsche Bank acted as financial advisor and Morgan Lewis acted as legal counsel to SpartanNash.
*** MGT Capital Investments, Inc. (OTC: MGTI) announced that it plans to move ahead with the shareholder approved Asset Purchase Agreement (the "Agreement") for D-Vasive, which includes the acquisition of Demonsaw. Per the closing conditions of the Agreement, the Company will also execute employment agreements with John McAfee and Eric "Eijah" Anderson as Chief Executive Officer and Chief Technology Officer, respectively.
The Agreement was overwhelmingly approved by MGT's shareholders at the Company's Annual Meeting held on September 8, 2016. The terms of the Agreement are described in detail in MGT's definitive proxy statement for the meeting, which was filed with the Securities and Exchange Commission on August 15, 2016. This document can be accessed via the Company's website, www.mgtci.com or at www.sec.gov. In spite of the shareholder vote, a unilateral decision by the New York Stock Exchange prevented the Company from issuing the shares necessary to consummate the deal.
MGT's Board of Directors is determined to not permit the actions of the NYSE to derail the Company's commitment to building an innovative cybersecurity company. Therefore, the Board has decided not to appeal the decision of the NYSE to delist MGT's common stock, and to instead move forward with the acquisitions of D-Vasive and Demonsaw. This decision is based on our belief that an appeal would have little likelihood of success given the lack of transparency the NYSE provided prior to the appeal deadline. Furthermore, the Board anticipated that the appeal process would be costly and time consuming, further delaying the Company's business initiatives. The Company expects to be listed on OTCQB as soon as the acquisitions close.
Robert Ladd, President of MGT, stated, "Due to its apparent subjectivity, we still do not fully understand the unilateral decision or circumstances that led the NYSE to delist our common stock from the Exchange. Our Board of Directors doesn't believe the Company has received fair treatment from the NYSE, nor would it expect to receive fair treatment in an appeal process. Instead, we will focus on building MGT's business to prove our value to shareholders."
MGT's acquisitions of the D-Vasive and Demonsaw assets are at the core of the cybersecurity directive for the Company as established by technology pioneer John McAfee. These technologies will complement the Company's current commercialization plans for its Sentinel technology, a network intrusion detector, and its E-Tagged technology, a mobile device tracking platform. In addition, the Company's bitcoin mining operations are expanding, allowing MGT to leverage blockchain technologies as it advances its cybersecurity offerings.
John McAfee, Executive Chairman and incoming CEO explained, "This long delayed acquisition places MGT solidly among the frontrunners in the race to create the next generation of cybersecurity products. No area of research and development is more critical to the survival of our economy and even our way of life. The cyber weapons of the hacking world are gaining daily in sophistication and power, already outmatching most existing cybersecurity products. At MGT, we understand the urgency of this threat and must act accordingly. This acquisition is happening not a moment too soon."
"We are dedicated to our strategy and will establish MGT as a truly innovative cybersecurity company. Eijah and I are here to win. Watch us now," concluded Mr. McAfee.
*** Glu Mobile Inc. (Nasdaq: GLUU) announced that it has acquired a controlling interest in Crowdstar, a global leader in mobile and social gaming, developing entertainment for women all around the world, in an all-cash transaction valuing Crowdstar at approximately $45.5 million. The combination of Crowdstar and Glu positions Glu to become the leader in the growing fashion game category as Glu continues to diversify its content portfolio.
“We are excited to welcome Crowdstar’s talented team into the Glu family,” said Nick Earl, newly named CEO of Glu Mobile. “Crowdstar is an innovative company that we have long respected, with a proven track-record of building highly social and interactive mobile community platforms. By joining forces through this strategic and complementary transaction, we plan to leverage Crowdstar’s valuable IP and veteran team, which is based right here in the Bay Area, to continue creating exciting cross-platform content that captures and resonates with even more users.”
As a leading developer in the fashion games space, Crowdstar’s portfolio currently features Covet: Fashion, a fashion entertainment app that allows users to style head-to-toe looks with actual brands. Having achieved over 30 million downloads worldwide, Covet: Fashion has consistently held a position in the top 125 on the U.S. Top Grossing charts for all iPhone apps over the past two years. On November 2, 2016 Covet: Fashion held the #80 Top Grossing position for all iPhone apps on Apple’s App Store in the U.S. Crowdstar currently has approximately 90 employees and is headquartered in Burlingame, California.
Crowdstar’s forthcoming platform product, Design Home, utilizes the advanced Covet engine and features platform capabilities targeted toward the interior and home design app markets including photo-realistic graphics. Design Home is currently in beta testing in Canada and reached #54 Canada App Store Top Grossing chart position for all iPhone apps on November 2, 2016. We expect Design Home to be launched in early 2017.
“I am proud of our team for consummating such an exciting transaction that we believe offers significant growth opportunities for Glu in the fashion and home categories,” said Niccolo de Masi, Glu’s Executive Chairman. “Specifically, the Crowdstar acquisition brings to Glu a leadership position in the fashion category and a potential long-term annuity in Covet: Fashion. In addition, Design Home is exhibiting promising potential in early beta results as a platform, and we are optimistic that it can be a significant growth driver for the company in 2017.”
Glu also believes it has the potential to realize significant user acquisition, advertising revenue and celebrity partnership synergies by integrating Crowdstar.
For a more detailed discussion of the terms of Glu’s acquisition of a controlling interest in Crowdstar, see the Current Report on Form 8-K that Glu file with the SEC today.
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