Storage, Smackdown, and Soap – This Week’s M&A Main Event | |
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Q1 of 2023 is in the books and for M&A, this may be a chapter dealmakers want to forget. Axios’ Kate Marino reports that M&A value for Q1 continued to disappoint from record highs in 2021. However, Q2 kicked off with signs of life this week that may require dealmakers to cut their spring breaks short. Extra Space Storage, the second-largest storage provider in the U.S. and a beneficiary of pandemic trends, announced that it would acquire Life Storage in a $12.4 billion all-stock deal. Breakingviews’ Jennifer Saba points out that should the deal be completed, it would create the largest storage provider, surpassing Public Storage, which attempted a hostile takeover for Life Storage in February.
Speaking of steel cages, World Wrestling Entertainment (WWE) agreed to merge with Endeavor-owned Ultimate Fighting Championship (UFC) to form a “sports and entertainment powerhouse” valued at $21 billion. As part of the deal, WWE shareholders will have their equity transferred into the merged company, that will then be listed on the NYSE, in lieu of cash.
Following those “Merger Monday” announcements, cosmetics giant L’Oreal made its largest acquisition in decades with a $2.5 billion deal for luxury beauty brand Aesop. Hilary Milnes of Vogue Business highlights that it was a monthslong, competitive bidding process involving Puig and LVMH, among others. The divestiture of Aesop by Brazilian conglomerate Natura & Co. follows a growing trend of companies selling assets to pay down debt and shore up balance sheets amidst rising interest rates.
Meanwhile, though M&A may have struggled in Q1, shareholder activism reached new highs not seen since before the pandemic. 135 campaigns were launched in the first quarter of 2023; 52 of those launched in March alone. Bloomberg’s Abigail Gampher notes that just 13% have escalated to a proxy fight but expects that number to double based off historical data as we enter proxy season.
Financial and healthcare companies were the top two targets among activists, which tracks with this week’s news. The European financial services giant HSBC on Monday refuted an activist investor calling for to spin off its Asia business – the company’s biggest market. The company argued a spinoff would result in uncertainty for clients, employees and shareholders.
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Happy Passover and Easter to those celebrating!
GPP Team
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Breakingviews: Storage Merger War Gets a Little Extra
On Monday, Extra Space Storage made a successful $12.4 billion bid for Life Storage, outdoing Public Storage’s February bid for $11 billion. Read More
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Bloomberg: UFC Parent Endeavor to Acquire WWE in $9.3 Billion Deal
Kamaron Leach, Michelle F Davis and Lucas Shaw report on Endeavor’s purchase of WWE and the plan to create a $21-billion “sports and entertainment powerhouse.” Read More
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Vogue Business: L’Oréal to Acquire Aesop in $2.5 Billion Deal
Several companies have expressed interest in the popular soap seller Aesop, but L’Oréal has announced it will acquire the brand for approximately $2.5 billion. The deal now awaits regulatory approval. Read More
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Bloomberg Law: SVB Collapse, Proxy Preparation Kept Q1 Activists Busy
The first quarter of 2023 saw the most activist campaigns launched since before the pandemic, Abigail Gampher reports, with the financial sector and biotech companies taking the most heat from activists. Read More
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Reuters: HSBC Brushes Aside Hong Kong Investor's Asia Spin-Off Proposal
HSBC has refuted the activist demands of one of its largest individual shareholders, Ken Lui. Selena Li reports that Lui has called for restructuring of the bank, as well as an increase in the dividend. Read More
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The Wall Street Journal: China’s New Tech Weapon: Dragging Its Feet on Global Merger Approvals
Chinese antitrust authorities have been making it harder for multinational mergers to gain approval, not by striking down deals, but by slowing down the approval process. However, this strategy in the U.S.-China battle for advancing technologies could backfire in the slowing economy, Lingling Wei and Asa Fitch write. Read More
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The Financial Times: Teck Rebuffs Glencore’s Hostile Bid
Harry Dempsey and Leslie Hook discuss Canada’s Teck Resources’ rejection of Glencore’s hostile takeover bid. While the bidder claims the $19 billion all-stock offer would benefit both shareholder bases, Teck remains committed to its earlier announced restructuring plans. Read More
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The Deal: Primo, Legion Clash Over Dissident Nominees
Activist Legion Partners Asset Management has put forth a pair of director candidates at Primo Water Corp ahead of a May 3 shareholder vote. The company noted dissident nominee Henrick Jelert has been criminally tried for bribing a government official, and other nominee, Lori T. Marcus, also has a pending cause for fraud. Read More
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Reuters: Investors Join Activists to Press TotalEnergies on Climate Targets
The French-based energy company faces 18 investor groups that are calling for more ambitious targets on emissions cuts to align with goals of Paris Climate Deal. Read More
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Harvard Law School Forum on Corporate Governance: Corporate Democracy and the Intermediary Voting Dilemma
Legal scholars Jill Fisch and Jeff Schwartz argue that institutional intermediaries ought to pay closer attention to the preferences of their beneficiaries and model their voting accordingly. Read More
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MIT Sloan Management Review: How Diversity Can Boost Board Effectiveness
Wharton professor Stephanie J. Creary and Deloitte’s Janet Foutty, and Kwasi Mitchell explain why it is more important than ever to communicate the effectiveness of diverse boards. Read More
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Fortune: The Evolving Role of the Board of Directors in a Post-Pandemic World
Reporter Chris Morris talks to directors at several companies about the evolving demands in the current environment of remote work, A.I., and more. Board members say they are meeting more frequently, tracking the financials more closely, and considering customers over competitors more than ever. Read More
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JPMorgan’s Jamie Dimon: Chairman & CEO Letter to Shareholders
Despite high inflation, the collapse of SVB and recession fears among investors, Dimon expressed optimism about the financial outlook in his annual letter to shareholders. Read More
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The David Rubenstein Show: Jane Fraser
CEO of Citigroup Jane Fraser discusses the tumult in the banking industry, from SVB to the acquisition of Credit Suisse by UBS. Despite this, Fraser remains confident in the integrity of the financial system at large. Watch Here
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WSJ Pro Sustainable Business: At Least 10,000 Foreign Companies to Be Hit by EU Sustainability Rules
Companies in the U.S., Canada, Britain and more will be required to report on EU sustainability standards as soon as 2025. This may indicate if the EU can set global precedent on climate regulation, similar to chemicals and data privacy, Dieter Holger writes. Read More
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CLS Blue Sky Blog: Do Political Anti-ESG Sanctions Have Any Economic Substance?
Columbia Law School’s Blog examines Texas’ anti-ESG legislation, finding that the new law will not accomplish the goal of shifting retirement funds toward the energy sector. Banning pro-ESG companies does more for political rhetoric than economic yields, Shivaram Rajgopal, Anup Srivastava, and Rong Zhao report. Read More
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Harvard Law School Forum on Corporate Governance: The Directors’ Role Amid Debates over Corporate Purpose, Stakeholders and ESG
Ross Clements and Lawrence Cunningham of Mayer Brown LLP discuss director responsibility in the current climate of pro and anti-ESG pressures. They write that directors ultimately should always lead corporate strategy by serving their corporation’s shareholders, and corporate norms evolve accordingly. Read More
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FROM OUR DESK TO YOURS
We Stand with Evan
We would like to express our support and concern about Evan Gershkovich, The Wall Street Journal reporter taken hostage in Russia. We join the industry and the country in demanding for his release and praying for his safe return. Watch more about Evan’s story here and learn how social media can be used to help raise awareness.
At our CEO Steve Lipin’s Passover Seder, an empty chair was left for Evan to keep him in mind during these troubling times.
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PEOPLE MOVES
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Alec Ellison will lead the Fintech Group at Houlihan Lokey. Ellison was previously a senior tech banker at Jeffries. Read More
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Michal Lev-Ram, Fortune Editor-at-Large, will join Alan Murray on the Leadership Next podcast as Ellen McGirt transitions away from hosting to focus on other projects. Read More
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Divya Balji has been appointed the Managing Editor, Breaking News Americas at Bloomberg. She was previously Team Leader of the Equities Americas team. Read More
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Simone Foxman of Bloomberg TV has relocated from Doha back to New York in her role as an on-air reporter. Read More
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