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Starbucks completes $620m deal to acquire tea retailer Teavana

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US speciality coffee roaster and retailer Starbucks Corporation (NASDAQ:SBUX) said it had completed the acquisition of specialty tea retailer Teavana Holdings Inc (NYSE:TEA) for USD620m (EUR467.2m) in cash, or USD15.50 per share.

The transaction, which was agreed in the middle of November, serves Starbucks’ growth strategy to introduce new products, enter new categories and use new channels of distribution. It is also in line with its commitment to continue to grow its existing Tazo tea business, the buyer said previously.

Teavana, which was founded in 1997, currently has 300 mall-based stores that sell more than 100 varieties of loose-leaf teas, authentic artisan teawares and other tea-related merchandise. When announcing the deal, Starbucks unveiled plans to expand the tea retailer’s footprint by adding new neighbourhood locations in markets across North America and around the world.

The acquisition is seen to enhance the buyer’s earnings by USD0.01 per share in fiscal 2013.


Vehicle hire group Avis acquires car sharing company Zipcar

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US vehicle rental services provider Avis Budget Group Inc (NASDAQ:CAR) has reached an accord to buy domestic car sharing network Zipcar Inc (NASDAQ:ZIP) in a deal valued at some USD500m (EUR377.4m).

Avis Budget will pay a cash consideration of USD12.25 per share for Zipcar’s stock, which is 49% more than the closing price of Zipcar’s shares on 31 December 2012, using mainly debt, as well as existing cash resources.

The deal, which has been backed by both firms’ boards but has yet to be greenlighted by the target’s stockholders, is seen to be wrapped up in the spring. Upon closing, Zipcar will become a subsidiary of the buyer.

As a result of the addition of Zipcar, Avis Budget will considerably increase its growth potential in the United States and abroad, with car sharing being highly complementary to traditional car rental, Avis Budget’s CEO, Ronald Nelson, said, commenting on the move.

The buyer eyes synergies of USD50m to USD70m per year as a result of the acquisition as well as an increase in earnings per share in the second year after closing.

Citigroup Inc (NYSE:C) and Kirkland & Ellis LLP are providing financial and legal advice to Avis Budget on the transaction. Morgan Stanley (NYSE:MS) is serving as financial advisor to Zipcar and Latham & Watkins LLP is advising the target on the legal matters.

US fashion group Gap to acquire Intermix for $130m

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US fashion company The Gap Inc (NYSE:GPS) has agreed to acquire women’s fashion boutique Intermix Inc for USD130m (EUR98.8m), the Wall Street Journal (WSJ) reported.

The deal represents Gap’s first acquisition since 2008 when it bought women’s active apparel retailer Athleta Inc for USD150m.

The target operates 30 stores in the US and Canada and Gap plans to double them and expand the chain overseas, Art Peck, president in charge of new brands at Gap, told the WSJ.

Intermix’s private-equity owner, Goode Partners LLC, and Gap started takeover discussions in late October 2012 and completed them at the end of last year, Intermix founder and CEO Khajak Keledjian said. Goode Partners owned a 40% stake in the retailer, which generates annual sales of some USD130, according to a knowledgeable source.

As part of the deal, Keledjian will remain at the company as chief creative officer.

UPS hit with €200m termination fee as EC blocks deal to acquire TNT

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US package delivery group United Parcel Service Inc (NYSE:UPS) on Monday said the European Commission (EC) had notified it of plans to block its tie-up with Dutch express delivery company TNT Express NV (AMS:TNT) and will announce its formal decision in the coming weeks.

UPS, which agreed in March last year to take over TNT in a deal valuing the Dutch firm at some EUR5.16bn (USD6.9bn), said today that once the EC formalises its ruling against the deal, it will withdraw its offer for TNT and pay the Dutch target a EUR200m termination fee.

The US group proposed initial concessions on the transaction to the European regulator on 29 November 2012 and revised them twice since then. Its chairman and CEO Scott Davis said the proposed remedies were significant and tangible, while the merger would have transformed the logistics sector, providing important benefits to consumers and customers globally, supporting growth in Europe in particular.

Last week, the Financial Times cited EC’s commissioner Joaquin Almunia as saying that the planned merger of UPS and TNT posed serious competition problems, not easy to solve.

According to him, UPS needed to sell TNT assets to a player that could be an equivalent for TNT and had ground and air transport. French La Poste SA’s DPD unit, to which the US firm was trying to sell certain TNT assets, has no air transport of its own and therefore could not be an equivalent, Almunia has told the paper.

UPS, which planned to cover the TNT deal with existing cash and new debt, said today it would make further announcements regarding the transaction once the EC publishes its formal decision.

Swatch acquires acquires Canadian watchmaker Harry Winston

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Swiss watches and jewellery maker The Swatch Group Ltd has inked an agreement to acquire the luxury brand diamond jewellery and timepiece division of Canada’s Harry Winston Diamond Corp (TSE:HW), the parties said on Monday.

The price tag of the takeover is USD750m (EUR560.4m), plus the assumption of up to USD250m of pro-forma net debt. Swatch will acquire US-based HW Holdings Inc and its unit Harry Winston Inc, as well as the production company in Geneva, Switzerland. It will add the business’ 535-strong global workforce.

The deal, which has yet to obtain the requisite regulatory approvals, does not include the mining business of Harry Winston Diamond Corp, which in connection with the transaction, has agreed to be renamed Dominion Diamond Corp.

The target is viewed as complementary to Swatch’s prestige segment, the buyer’s chariwoman Nayla Hayek noted.

The move represents a sound return on the original investment in the Harry Winston brand, the vendor’s CEO Robert Gannicott said.

Rothschild served as advisor to Harry Winston Diamond Corp on the deal.

Sponsor Silver Lake emerges as front runner to acquire Dell

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Led by US private equity group Silver Lake Partners, talks over the potential buy-out of US computer manufacturer Dell Inc (NASDAQ:DELL) have reached the advanced stage and at least four leading banks have been approached to arrange financing for the deal, Reuters reported.

Citing two sources familiar with the matter, the news agency said that Silver Lake had lined up Credit Suisse Group AG (VTX:CSGN), Bank of America Merrill Lynch , Barclays Plc (LON:BARC) and RBC Capital Markets LLC as funding agents. Michael Dell, the founder and chief executive of Dell, is expected to make an equity investment as part of the deal. An agreement could emerge presently but the situation remains fluid, the sources added.

Dell has chosen JPMorgan Chase & Co (NYSE:JPM) to advise it on a transaction that could rank among the biggest to take place since the global recession struck. According to the article, Dell is worth about USD19bn (EUR14.3bn).

Reuters went on to add that becoming a privately held company would allow Dell to proceed with its makeover without being subjected to public scrutiny. With the PC market progressively dwindling, Dell is looking to transform itself into an all-round provider of enterprise technology solutions.

Dell and the banks identified by the sources would not comment for Reuters, while calls to JPMorgan and Silver Lake were not immediately returned.

Steel giant ArcelorMittal favourite to acquire ThyssenKrupps Alabama plant

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Luxembourg-based steel and mining group ArcelorMittal (AMS:MT) is one of the two top bidders for German steelmaker ThyssenKrupp AG’s (ETR:TKA) steel business in the Americas, offering USD1.5bn (EUR1.1bn) for the company’s Alabama plant, according to a report by the Wall Street Journal.

Companhia Siderurgica Nacional (NYSE:SID), or CSN, is the other leading competitor with an offer of USD3.8bn for the Alabama plant and a stake in ThyssenKrupp’s mill in Brazil, but sources cited by the paper said CSN has less balance sheet flexibility and lacks supply of high-quality slabs and that limits the chances of its bid.

ThyssenKrupp expects binding offers by mid-February, with a decision regarding a buyer to be made this fiscal year to end September 2013. The Americas operations were offered for sale in 2012, with their parent targeting a price equal to their book value of USD8.86bn, it has said.

ArcelorMittal confirmed last week it had made an offer for the Alabama plant, which its CFO Aditya Mittal described as a world-class quality asset, the Wall Street Journal said. The Luxembourg steel group also said last week it had raised USD4bn from issuing stock and bonds.

This plant has some 1,500 employees, while the one in Brazil employs 3,500.

The German group announced last year plans to sell these operations or seeking partnerships with the view of putting an end to losses at the mills and focusing on its business in Europe.
It had also received offers from other suitors, but these are not seen as strong rivals to ArcelorMittal and CSN due to their weaker financial position, the Wall Street Journal said.

UK property group Land Securities closes £112m investment in X-Leisure

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UK real estate investment trust Land Securities Group Plc said today it had wrapped up the acquisition of a further 42% stake in the X-Leisure Fund and 100% of X-Leisure Limited and X-Leisure (General Partner) Ltd for GBP111.9m (USD179m/EUR134.6m).

The vendors are UK property asset manager Capital & Regional Plc (LON:CAL) and AREA Property Partnership (UK) LLP. As part of the deal, Capital & Regional disposed of its 11.9% stake in the X-Leisure Fund and its 50% interest in X-Leisure, the fund’s management company.

The transaction was completed after securing approval from the vendor’s shareholders, bank consents and regulatory clearance.

Through the deal, Land Securities has increased its stake in X-Leisure Fund to 54%. X-Leisure will become a wholly-owned unit of Land Securities and will preserve its staff. Its CEO has decided to resign.

Capital & Regional previously said that it would use part of the disposal proceeds to buy back its own shares.


Virgin agrees $23bn merger with US-based Liberty Global

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US cable TV operator Liberty Global Inc (NASDAQ:LBTYA) has agreed to take over UK broadband andcommunication group Virgin Media Inc (NASDAQ:VMED, LON:VMED) in a cash-and-stock deal worth some USD23.3bn (EUR17.1bn), in a move that would create the world’s leader in broadband communications, the pair said.

Under the terms of the deal, Virgin Media’s shareholders stand to receive USD17.50 cash, 0.2582 Liberty Global series A shares and 0.1928 Liberty Global series C shares for each of their Virgin Media unit. The transaction reflects a value of USD47.87 per share for Virgin Media, based on the buyer’s closing on 4 February.

The combined business will have 25m customers and cover 47m homes in 14 countries, the companies said. The merged entity will concentrate on the strongest and most strategic markets in Europe.

The two companies, with complementary strengths in product portfolio and expertise across digital TV, broadband and telephony services, digital TV, expect the increased scale to generate significant synergies. Liberty Global said the acquisition, in line with its value creation strategy, will add to its free cash flow.

The buyer will issue some 86m own class A shares and 65m class C shares as part of the price, which gives Virgin Media an equity value of USD16bn. The cash component will amount to USD5.9bn and will be covered with debt and available liquidity, Liberty said. The share exchange will see Virgin Media’s shareholders controlling some 36% of Liberty’s pro forma shares outstanding and around 26% of its votes. Following the merger, Liberty Global will redomicile from Delaware to the UK and be listed on the Nasdaq, with plans to also seek a European listing.

Subject to shareholders approval, the transaction is expected to wrap up in the second quarter of 2013.

LionTree Advisors, Credit Suisse Group AG (NYSE:CS), Shearman & Sterling LLP and Ropes & Gray acted as advisors to Liberty Global. Virgin Media used the advisory services of Goldman Sachs & Co, JPMorgan Chase & Co (NYSE:JPM) Fried Frank Harris, Shriver & Jacobson LLP and Milbank, Tweed, Hadley & McCloy LLP.

Flybe’s expansion plans negatively impacted by EC’s expected decision to block Ryanair-Aer Lingus deal

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UK regional airline company Flybe Group Plc (LON:FLYB) said it is disappointed by the news that the European Commission (EC) will most certainly block Irish low-cost carrier Ryanair Holdings Plc’s (LON:RYA) planned buyout of Aer Lingus Group Plc (LON:AERL).

EC’s expected decision would not only prevent Ryanair from securing the 70% it does not already own in its smaller rival, but also hinder Flybe’s deal to acquire 43 Aer Lingus UK and European routes plus some aircraft for EUR1m (USD1.3m).

This latest agreement is part of Ryanair’s “unprecedented” remedies package in connection with the Aer Lingus bid. The company had also agreed to sell all of its and Aer Lingus’ London-Gatwick operations to International Airlines Group (LON:IAG).

Yesterday, Ryanair announced it was notified by the EC of its intention to ban the buyout despite the offered concessions. The company also noted it would appeal any prohibition decision to the European Courts. In its own statement, Flybe said it would wait to see the outcome of that process.

Ryanair is offering a price of EUR1.30 (USD1.75) per share to buy the remaining shares in Aer Lingus, thus valuing the company at EUR694m.

IBM acquires US-based cloud computing infrastructure group SoftLayer

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US information technology major International Business Machines Corp (NYSE:IBM), or IBM, said it had inked a final accord to acquire domestic cloud computing infrastructure provider SoftLayer Technologies Inc for an undisclosed sum.

The deal, which hinges on the receipt of the requisite regulatory approvals, is seen to be finalised in the third quarter of this year.

Upon closing, SoftLayer will merge with IBM SmartCloud into a global platform as part of a new cloud services division at the buyer, bringing a complementary suite of services to the existing portfolio, IBM said.

The acquisition of SoftLayer, which caters to some 21,000 clients through 13 data centres located in the US, Asia and Europe, is seen to cement IBM’s presence in cloud computing, the company noted. The target is seen to speed up IBM’s ability to integrate public and private clouds for its clients, the buyer added.

US Justice Department investigates planned merger of US Airways and American Airlines

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The US Justice Department is taking sworn testimony in the form of depositions under an investigation into the planned USD11bn (EUR8.4bn) tie-up between US Airways Group Inc (NYSE:LCC) and American Airlines, informed people told Reuters.

The move shows that the agency is concerned about antitrust issues that could arise from the merger. Such depositions preserve testimony if the Justice Department decides to challenge the all-stock transaction, Robert Doyle, an antitrust expert with Doyle, Barlow & Mazard PLLC, was cited as saying by Reuters.

There is a chance that the agency would force the merger partners to divest certain slots, take off and landing rights at the Reagan National Airport located outside of Washington DC. In the event that the combination is approved unconditionally, the enlarged group would hold 68% of the slots at the particular airport, a report by the US Government Accountability Office shows.

Gina Talamona, representative for the Justice Department, told the news agency that the investigation is ongoing, without providing more details. American Airlines and US Airways did not comment on the matter, Reuters added.

American Airlines is currently held by bankrupt AMR Corp (PINK:AAMRQ). The latter’s creditors, labour unions, stockholders and a portion of its staff will get a combined 72% stake in the new company, while US Airways’ shareholders will hold the rest. Following the merger, which is expected to close by the end of September, the resulting entity would retain the American Airlines name.

Growth in automotive supply chain M&A driven by increased UK car production

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Fast-growing UK car production is resulting in increased growth in automotive supply chain mergers and acquisitions (M&A), industry advisor KPMG reported on Wednesday.

KPMG, a provider of audit, tax and advisory services, said that annually, the British automotive industry contributes GBP60.5bn in revenue to the UK economy and accounts for 4% of GDP. The sector produced 1.6 million cars and commercial vehicles and 2.6 million engines in 2013. It employs 731,000 people and is reportedly the fourth biggest automotive industry in Europe, as well as being the second largest premium manufacturer.

In the last seven months, KMPG has reportedly acted as corporate finance advisor to vendors of automotive suppliers on five separate successful deals. According to John Leech, KPMG’s UK Head of Automotive, this activity is expected to increase and is being driven by the growth in UK car production, especially Jaguar Land Rover. As a result, automotive suppliers are looking to attract investment to expand capacity and set up overseas facilities.

M&A specialist at KPMG, Simon Heath, said UK car production is expected to reach two million vehicles in 2017, which has resulted in heightened interest from private equity. The UK automotive industry is also attracting buyers from automotive suppliers from countries such as US, China and Europe. An on-shoring trend is also said to be gathering momentum as UK car manufacturers have shown a desire to source over GBP3bn of parts onshore, which were previously supplied from overseas.

Heath added that “Overseas trade buyers are often under pressure to follow and co-locate with their manufacturers and so many pure Asian or North American suppliers are contemplating European acquisitions to grow their global footprint. At the turn of the year, Ford announced plans to cut its number of suppliers by 40% so the pressure to internationalise is intense.”

“The UK has risen up the list of favourable locations within Europe to invest in. We have a clear growth story, premium carmakers enjoying attractive margins and the most joined-up industry and government in Europe with a focus on supporting innovation such as low-carbon vehicles.”

According to KPMG, the most recent figures from from the Society of Motor Manufacturers and Traders (SMMT) show that demand from the EU resulted in car production growing by 12% in March this year.

UK’s Pace in early talks to acquire Google’s Motorola Home unit

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UK set-top boxes manufacturer Pace Plc (LON:PIC) confirmed it had made an indicative, non-binding proposal...

Mexican Coca Cola bottler Femsa acquires Coca Cola bottling unit in Philippines for $689m

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Coca-Cola Femsa SAB de CV (MXK:KOFL), the bottler of Coca Cola in Mexico, said on...

US fashion group Gap to acquire Intermix for $130m

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US fashion company The Gap Inc (NYSE:GPS) has agreed to acquire women’s fashion boutique Intermix...

Betfair and Paddy Power plan to merge

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UK betting and gaming company Betfair and Irish bookmaker Paddy Power have announced plans for possible...

Poundland gets green light to acquire 99p Stores

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British variety store chain Poundland has received formal clearance from the UK’s Competition and Markets Authority...

MOU signed in ThyssenKrupp/Tata Steel merger

GKN rejects hostile £7.4bn takeover bid from Melrose

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