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The Special Situation Report #2: 1/30 Roundup

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The Special Situation Report #2: 1/30 Roundup

Including: KKR takes a ride, energy bonanza, gambling heater continues with Bally's,

David Paolella
Feb 1, 2022
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The Special Situation Report #2: 1/30 Roundup

www.thespecialsituationreport.com

Welcome to The Special Situation Report! A free weekly newsletter covering the latest in mergers and acquisitions, activist campaigns and the takeover rumor mill.

If you like what you find, please click the heart button, share with others and encourage them to sign up. Feedback is welcome in the comments, or on Twitter @InvestedComms.


Overview of Announced M&A Transactions

Chesapeake Energy (CHK) announces acquisition of Chief E&D Holdings; sale of Powder River Basin assets to Continental Resources (CLR) [Press Release, Investor Presentation] | Sector: Energy

Biogen (BIIB) announces sale of Bioepis Stake to Samsung Biologics (207940.KS) for $2.3bn [Biogen Press Release, Samsung Biologics Press Release] | Sector: Pharmaceuticals

Accell Group (ACCEL.AS) to be acquired by KKR for $1.8bn [Press Release, Reuters] | Sector: Consumer

Enerflex (EFX.TO) announces merger with Exterran (EXTN) in all-stock transaction; implied combined enterprise value of $1.5bn [Press Release, Investor Presentation, Webcast] | Sector: Energy

UBS Group (UBS) announces acquisition of Wealthfront for $1.4bn [Press Release] | Sector: Financials

Others

  • Swedencare (SECARE.ST) announces the acquisitions of NaturVet and Innovet for ~$500MM [Investor Presentation, Video] | Sector: Healthcare (Pet)

  • IHS Towers (IHS) expands Brazilian operations with $315mm acquisition [Press Release, Investor Presentation] | Sector: Telecommunications

  • ConvaTec Group (CTEC.L) announces acquisition of Triad Life Sciences for $125mm [Press Release] | Sector: Healthcare

  • Wheels Up (UP) announces acquisition of Air Partner (AIR.L) for $107mm [Press Release] | Sector: Industrials (Transportation)

  • Cazoo (CZOO) announces acquisition of brumbrum for $90mm [Press Release] | Sector: Retail / Industrials (Transportation)

  • CBM Bancorp (CBMB) announces sale to Rosedale Federal for $64mm [Press Release] | Sector: Financials (Banking)

  • Victoria’s Secret (VSCO) sells stake in China business to Regina Miracle (2199.HK) for $45mm [Press Release] | Sector: Retail

  • The National Security Group (NSEC) announces sale to VR Holdings for $41mm [Press Release] | Sector: Financials (Insurance)

  • J.P. Morgan (JPM) to acquire a stake in Viva Wallet [Press Release, Reuters] | Sector: Financials

  • SAP (SAP) announces acquisition of Taulia [Press Release] | Sector: Technology (Software)

  • BJ’s Wholesale (BJ) to bring end-to-end perishable supply chain in-house with acquisition [Press Release] | Sector: Retail / Industrials (Transportation)

  • WeWork (WE) announces acquisition of Common Desk [Press Release] | Sector: Real Estate

  • Utz Brands (UTZ) expands New York delivery capabilities with two acquisitions [Press Release] | Sector: Consumer

  • NEC Corp (6701.T) announces acquisition of Blue Danube Systems [Press Release] | Sector: Technology / Telecommunications


Developments in Shareholder Activism

Quick hitters:

  • We previously noted that Trian was building a stake in Unilever (UL). Per the New York Post, changes are already being made (Article)

  • Maguire Investment delivers open letter to shareholders of Yatra Online (YTRA) criticizing governance and performance (Press Release)

  • Previously rebuked, Alden nominates its own candidates to the board of Lee Enterprises (LEE) (Press Release, Letter)

  • Catalyst Biosciences (CBIO) receives a letter from Julian Singer urging Board and governance changes (Filing)

  • Hedge fund Driver Management delivers another letter to Codorus Valley Bancorp (CVLY) after previously pushing a sale

  • Edenbrook Capital increased its position in ServiceSource (SREV) to 21% (Filing)

  • VOSS Capital continues to tango with Griffon Corp. (GFF)


Peloton’s (PTON) recent poor performance has awoken an activist:

Twitter avatar for @InvestedComms
Takeover Tango @InvestedComms
$PTON activist Blackwells Capital suggests a sale and management shakeup. Suggested buyers: $AAPL, $NKE. Very low probability of a deal happening at these levels. Stock would need to season for a year+ before the Board considered selling.
cnbc.comActivist investor Blackwells calls on Peloton to fire CEO, explore saleActivist Blackwells Capital is pushing Peloton to fire its chief executive officer and consider a sale as its share price has plummeted.
3:14 PM ∙ Jan 24, 2022

The Takeover Rumor Mill

Quick hitters:

  • Ecovyst (ECVT) is working with Goldman Sachs (GS) to explore a sale, Dealreporter says (The Fly)

  • Centene (CNC) fielded potential takeover interest from Cigna (CI) in recent months (Bloomberg)

  • Lionsgate (LGF-A) exploring a deal for STX Entertainment (Variety)

  • Some Playtech (PTEC.L) investors support Aristocrat (ALL.AX) takeover, JPMorgan (JPM) forecasts deal collapse (Article)

  • Walgreens (WBA) is said to kick off Boots sale as Sycamore joins fray (Bloomberg)

  • Icahn acts to remove regulatory roadblocks in Southwest Gas (SWX) offer (Bloomberg)

  • Kering (KER.PA) is shedding its watch division – could it finally be time for a tie-up with Richemont (CFR.SW)?

  • Shipper MSC wants lead role in deal for ITA Airways (Reuters)

  • Tencent (0700.HK) plans to take DouYu (DOYU) private, sources say (Reuters)

  • Rumblings on Robinhood (HOOD) percolate after recent poor performance


Bally’s received an unsolicited proposal from Standard General:

As you know, Standard General is the largest stockholder of Bally’s with an equity interest representing more than 20% of the outstanding shares. As a result of our long-term involvement with the Company and its predecessor, we have a detailed understanding of Bally’s, its business and assets, which will enable us to move quickly to finalize a transaction. We intend to fund the transaction through sale and lease back and other long-term financing arrangements.

Here is more on the proposed takeover via CNBC: Bally’s chairman on proposed takeover.


Last week we discussed Kohl’s (KSS) and the involvement of Macellum Advisors and Starboard Value. Subsequently Sycamore Partners emerged as an interested party:

Twitter avatar for @InvestedComms
Takeover Tango @InvestedComms
$KSS Kohl's fields an offer from retail-focused PE shop Sycamore Partners (previously: Staples, Belk). Head Stefan Kaluzny is a shrewd retail operator. Good chance a deal gets done here and + I think Sycamore has a few extra $ per share in their pocket
reuters.comKohl’s shares surge on takeover interest from Sycamore, AcaciaKohl’s Corp shares soared 36% on Monday after a Reuters report that private equity firm Sycamore Partners had approached the department store chain with a potential takeover offer of $9 billion.
2:54 PM ∙ Jan 24, 2022

The discussion continues on gaming M&A:

Twitter avatar for @InvestedComms
Takeover Tango @InvestedComms
$SONY deal for $EA would be too big a bite to handle, IMO ( $MSFT is 20x the size of Sony). Game development will not be winner take all. If Sony doubles down on ecosystem quality (user experience + developer experience), they will remain competitive in console w/ no acquisition https://t.co/aKKExUM8m8
Twitter avatar for @NextGenPlayer
Hunter 🎮 @NextGenPlayer
Sony’s favorite acquisition target is likely EA, says analysts. PlayStation could also be looking to buy Ubisoft or Take-Two 👀🔥 https://t.co/NjXFNGvmaJ https://t.co/wZAhYB0RCF
1:40 AM ∙ Jan 31, 2022

That’s all for this week - we will be back next Sunday. As mentioned from the jump, please sign up. Feedback is welcome in the comments, or on Twitter @InvestedComms.

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