Notable Mergers and Acquisitions 9/15: (FN) (ACN)
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Exception EMS, founded in 2005, provides contract electronics manufacturing services to the global electronics industry with innovative solutions, adding value to the design, manufacture and testing of printed circuit board assemblies. Its customers include industrial, energy, aerospace and defense companies, with approximately 80% of its revenue derived from customers in Europe.
“Fabrinet has enjoyed exceptional growth over the past several years, primarily with customers in the U.S. and Japan, and there are tremendous opportunities for growing our business in Europe,” noted Tom Mitchell, Chairman and CEO of Fabrinet. “With this acquisition, we are establishing a strong foothold in Europe, which will allow us to grow our business with European customers, and give them access to our advanced low-cost manufacturing services in Thailand, particularly in our new facility in Chonburi that is coming on-line and ramping in the next several months.”
In February 2015, Fabrinet established Fabrinet West, Inc., a new product introduction (NPI) center in Santa Clara, California, to better serve its U.S. customers with advanced NPI services, particularly those in Silicon Valley. With the acquisition of Exception EMS, Fabrinet will now provide the same advanced NPI services to European customers, along with the low-volume manufacturing services Exception EMS provided historically. Going forward, as NPI projects in Fabrinet West and Exceptions EMS transition to volume manufacturing, these intra-company relationships will facilitate the transfer of the volume manufacturing to Fabrinet’s Thailand facilities.
Total consideration for the transaction was approximately $13.5 million in cash. Fabrinet anticipates that the transaction will have an immaterial impact on revenue and net income in the first quarter of fiscal 2017. The Company will provide additional details on the transaction’s financial impact during its first quarter fiscal 2017 conference call.
*** MidOcean Partners (“MidOcean”), a premier middle market private equity firm, and Wasserstein & Co. (“Wasserstein”), a leading independent private equity and investment firm, today announced that they have entered into a definitive agreement to sell Penton, an innovative professional information services company, to Informa plc (“Informa”) for $1.56 billion. The consideration will consist of $1.46 billion of cash (plus adjustments) and $100 million of Informa stock.
Under MidOcean and Wasserstein ownership, Penton has been significantly transformed from predominantly a print business into a preeminent professional information services company. Penton has successfully completed 13 acquisitions, creating scaled positions in growth-oriented sectors—including agriculture, transportation, natural products/food, infrastructure, and industrial design/manufacturing sectors. Today, Penton has seven of the top 250 largest trade shows in the U.S., which have helped drive an event revenue CAGR of over 20% over the last four years. Additional significant investments have been made to create an industry leading team that has built a state of the art digital platform, launched numerous SaaS products and built a scaled and fast-growing digital content marketing services business.
“We are very pleased by the transformation we have helped Penton achieve. The business has successfully transitioned from a traditional business-to-business publisher into a premier professional information services business over the last few years,” said Anup Bagaria, Co-Managing Partner of Wasserstein and Co-Chairman of Penton, and Michael Struble, Partner of Wasserstein and Director of Penton. “The management team has done an excellent job establishing scaled, leadership positions in Penton’s core verticals. Through continuous improvement of its core offerings, new product launches and strategic M&A, Penton has grown impressively in recent years and positioned itself to accelerate growth in the years to come.”
Barrett Gilmer, Managing Director of MidOcean and Co-Chairman of Penton, said, “We are incredibly proud of our partnership with Penton and the Company’s success under CEO David Kieselstein. This investment exemplifies the value we bring to our portfolio companies by working closely with management teams to identify attractive areas for expansion, enhance operations and drive growth. In this case, under David’s leadership, and in particular over the last four years, Penton achieved a dramatic shift in its business mix, completed a number of highly strategic acquisitions and nearly doubled EBITDA from $77 million to $140 million. The entire Penton team played a role in this transformation and we wish them continued success as part of the Informa team.”
“MidOcean and Wasserstein are seasoned, hands-on investors and have been invaluable partners in supporting Penton and allowing us to execute on our strategy,” said David Kieselstein, CEO of Penton. “Their strategic insight, resources, flexibility and experience in the media services sector have been essential to our transformation by enabling our organic growth through new investment initiatives and sourcing and coordinating multiple accretive acquisitions.”
The transaction, which is subject to approval by Informa shareholders and customary regulatory and closing conditions, is expected to close in the fourth quarter of 2016.
Kirkland & Ellis LLP served as legal advisor to Penton and MidOcean. Jones Day served as legal advisor to Wasserstein.
*** Accenture (NYSE: ACN) has agreed to purchase a 47.4 percent shareholding in OCTO Technology, a technology consultancy specializing in digital transformation and software development, with the intention to acquire the remaining shares.
Under the terms of the agreement, Accenture will purchase the shareholding in OCTO from François Hisquin, founder and CEO of OCTO, other OCTO partners and Financière Arbevel at a price of €22.50 per share and €1.7222 per equity warrant. Following the closing of the acquisition, Accenture will make a voluntary cash tender offer to acquire the remaining shares and equity warrants at the same prices.
The price of €22.50 per share represents a 43.8 percent premium over the closing share price of OCTO on September 14, 2016 and a 76.2 percent premium over the volume-weighted average share price during the last 12 months. The tender offer values 100% of the issued ordinary shares of OCTO (on a fully diluted basis) at approximately €115 million.
The supervisory board of OCTO unanimously supports the transaction and has appointed Ledouble SAS to act as independent expert to issue a formal statement confirming the fairness of the tender offer. In accordance with applicable regulations, the supervisory board of OCTO will issue its formal recommendation on the tender offer once it has received the report of the independent expert and the opinion of OCTO’s works council has been obtained. The transaction is subject to customary closing conditions and is expected to close in early Q1 of CY2017.
Following successful completion of the tender offer, OCTO will join Accenture Digital to expand its capabilities and operations in France. OCTO’s clients will have access to the global scale, broad capabilities and deep industry experience of Accenture for their major projects.
“OCTO has built an extremely talented, enthusiastic workforce that will significantly enhance the existing capabilities of Accenture Digital in France,” said Pascal Delorme, Accenture Digital lead, France and Benelux. “With its flexible working culture, OCTO will invigorate Accenture’s operations in this region. OCTO’s leadership have demonstrated their firm support for the acquisition. Together, we can focus on delivering the greatest possible returns for clients locally and globally, applying our shared pragmatic and agile approach to technology to drive digital transformations.”
“We have always been a firm with international ambitions,” said François Hisquin, CEO and founder of OCTO, who will remain in his role post-acquisition. “The proposed sale of my shares and those belonging to OCTO’s partners demonstrates the value of the transaction and a strong belief that in becoming part of Accenture Digital, we can pursue a joint ambition to offer end to end digital transformation capabilities to clients. OCTO people are passionate digital natives, and our commitment to fostering innovation and being trusted to deliver a range of digital solutions will continue when working alongside Accenture Digital, where we intend to take full advantage of the global reach and deep industry knowledge available.”
“The proposed addition of OCTO to our business in France demonstrates that we are committed to building a digital powerhouse for the country and the region,” said Christian Nibourel, country managing director for Accenture in France and Benelux. “We recently launched an Innovation Centre in Paris, which along with this acquisition will give our clients in France access to the strongest skills, most strategic thinkers and the latest transformational technologies available. Together, we will help our clients rotate to the New to drive operational efficiency, adapt business models, and implement new capabilities for success.”
In addition, Sycomore Asset Management has irrevocably committed to tender its 4.6 percent ownership in OCTO to Accenture, once it launches its offer.
Rothschild & Cie and Société Générale are acting as financial advisors to OCTO and Accenture, respectively.
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