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Good morning! Here we go, one more week before people head to the slopes or beaches or anywhere but their cubicles for the holidays. We hope your week is going more like DocuSign - who ripped on the back of the announcement they are seeking a buyout - and less like Adobe, who shelved their $20Bn deal with Figma after hitting regulatory red tape.
This is the 6th edition of Buysiders, where we cover the best buyside news, insights, and the week’s top 3 deals:
Chobani acquiring La Colombe.
US Steel is being acquired by Nippon Steel.
Alteryx is being taken private by Clear Lake Capital and Insight Partners.
Bonus: scroll all the way down to watch the worst holiday video ever
Steady cash flows and inflation resilience–unlock this (and more) with MAG Capital Partners, your guide to the industrial real estate market.
DEAL OF THE WEEK
A Well Cultured Deal
Name a better way to start off your morning than a nice Chobani Greek yogurt and a cup of coffee. Well, Chobani is making that dream come true.
Last week, Chobani announced that it was going to acquire ready-to-go coffee maker La Colombe for $900 million to further expand its beverage business.
Chobani will use a $550 million term loan and cash on hand to acquire Keurig Dr. Pepper’s stake in the Philly based coffee company. Keurig Dr. Pepper (another one of those combinations that doesn’t make a ton of sense) invested $300 million into La Colombe over the summer, making this a pretty quick return of capital for them. While they aren’t in the investment business, certain PE managers have to be wondering how they got beat at their own game.
A lot of the beverage business is a distribution game. That was the benefit of the KDP investment back over the summer, allowing La Colombe to sell through its network, and is the rationale for the acquisition here. Given how hard distribution is, it makes sense that Chobani would look to add La Colombe to its distribution network to help achieve some economies of scale.
La Colombe employees will stand to gain some from the transaction as ~2,000 employees received ~10% ownership in the Company back in 2016. Going forward, La Colombe will continue to operate as an independent brand under the Chobani umbrella.
PRESENTED BY MAG CAPITAL PARTNERS
Investors: Follow This $2.4T Breadcrumb Trail
While most investors toe the line with standard markets, the savvy among us have zeroed in on what some experts call “the backbone of the American economy.”
Welcome to Industrial real estate (IRE).
The global supply chain disruption of 2020 revealed a clear need for domestic manufacturing solutions, fueling massive demand in the US.
While inflation riddled other sectors, IRE remained resilient, delivering instant cash flows, inflation protection, and asset appreciation for investors.
But here’s the kicker: Not all IRE investments are the same. MAG Capital Partners have over 50 year’s experience of accessing off-market investments that deliver consistent yields (while minimizing risk).
EXIT OF THE WEEK
End of an Era
One of the United States’ most iconic companies, US Steel, is set to be acquired by Nippon Steel (Japan’s largest steel producer).
US Steel was founded in 1901 by JP Morgan through the merger of Carnegie Steel, Federal Steel and National Steel for $492 million in 1901 dollars.
US Steel was at one point the world’s largest corporation as well.
Now that you have your US history lesson, time to dive into the deal. Nippon Steel has offered a total of ~$15Bn billion to acquire US Steel. Nippon will be acquiring US Steel in an all-cash transaction for $55/share, or a 40% premium to the current share price and the assumption of existing US Steel debt.
This deal comes four months after US Steel’s largest domestic competitor Cleveland Cliffs offered almost half of that upfront price, which was subsequently rejected by the US Steel board.
Given the strategic nature of steel, this deal is going to get a significant amount of scrutiny. Nippon has a pretty small presence in the US, so there won’t be a ton of anti-trust scrutiny; however, there is a US Treasury Committee that reviews foreign deals for critical American assets.
The positive side is that Japan is a US ally, so that will help, but US Steel and its predecessor companies have been critical suppliers to crucial US industries for hundreds of years.
The United Steelworkers Union has also come out against the transaction alleging that US Steel agreed to the transaction without consulting them. USW claims that any perspective buyer must agree to a new labor deal before any sale can be finalized. Between this and the government scrutiny, getting this deal over the line will take a good amount of convincing.
US Steel will retain its iconic headquarters in Pittsburgh and will continue to operate under its own name, just as a subsidiary of Nippon Steel.
While the structure of this deal is not that interesting, it shows an apparent trend in the US. The US has continued to lose its edge in heavy industry to other countries. As basic economics tells us, it’s time to focus on competitive advantage, which means we will likely see the US continue to exit some of these heavier industries.
BUYOUT OF THE WEEK
An Insightful, Clear Vision for the Future
On the final working Monday of 2023, a mega $40 billion in M&A was announced, with private equity firms actively participating.
Clearlake Capital and Insight Partners announced an agreement to take Alteryx private in a deal worth $4.4Bn including debt.
Alteryx shareholders will receive $48.25/share in cash, which is an almost 60% premium to the unaffected share price (the price before any rumblings of a takeover). That makes two deals this week coming in at north of a 40% premium, which is truly remarkable all things considered.
For those interested in the specifics of the deal, Alteryx's shareholder structure is quite centralized. Executive Chairman and Co-Founder Dean Stoecker holds approximately 49% of the voting power and has agreed to support the acquisition. The deal is straightforward, lacking any financing or minority consent clauses, and is expected to conclude in early 2024.
Alteryx has faced some pressure and competition from bigger players in the space - you know, the small family-owned businesses Oracle and Microsoft - and has had some difficulty getting new business, which led to the slight dip in valuation.
Despite the typical absence of synergies in private equity, this acquisition could provide Alteryx with increased working capital and operational flexibility, as they operate away from the public eye, positioning them to take on some of the big boys.
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