_{DEAL OF THE MONTH}

Sycamore Buys the Dip (And the Debt) on Walgreens

When the Oracle of Omaha loads up on T-Bills due to economic uncertainty, that’s usually a sign to play it safe. But apparently, it’s also the perfect time to buy a company whose five-year stock chart looks like an algebra lesson on downward slopes…at least according to Sycamore Partners.

Sycamore is betting big, dropping $23.7 billion to acquire Walgreens, the struggling U.S. pharmacy giant. Walgreens shareholders will receive $11.45 per share in cash at closing, plus up to $3.00 per share from future monetization events tied to Walgreens’ stake in VillageMD.

While the delayed proceeds might sound complicated, it's essentially an earnout capped at $3.00 per share for existing Walgreens shareholders. The catch? Walgreens gets its current debt back first—which, by the way, is PIK-ing at 19% (welcome to the golden age of private credit)—before any equity proceeds are distributed. Still, there’s a decent chance shareholders see that full payout.

You may be asking yourselves why Walgreens shareholders would be okay with something that caps their upside, let me remind you that the cash consideration on its own represents a 29% premium to the unaffected share price (which was all the way back in December 2024!), and the total consideration is a whopping 63% to the unaffected share price.

Since the announcement of the transaction, Walgreens’ share price has ripped, and is up 20% YTD to just below the transaction price.

For those of you who follow public M&A, you know that stocks typically trade to just below the acquisition price as there is always some uncertainty that the deal doesn’t get done, but it is highly likely that all Walgreens shareholders approve this one. 

For Walgreens, this is a long-overdue exit. The company has been looking to go private for a while, and Sycamore is finally making it happen. Turning it around won’t be easy, but with $24 billion on the line, you can bet they’ll find a way to make it work.

_{PRESENTED BY RYSE}

Smart Shades, Smarter Investment

Investment Opportunity: RYSE

Industry: IoT; Smart Home

Investment Terms: Equity - Class B Common Shares | Minimum Investment: $1000

Why Invest?

• Retrofit Capability: RYSE motorizes existing shades and curtains, eliminating the need for costly replacements.

• Existing Smart Home Compatibility: With RYSE SmartBridge, users can connect their shades to Google Home, Alexa, and Apple HomeKit for voice control and automation.

• Easy DIY Installation: RYSE devices are designed for easy, tool-free installation, making them renter-friendly and hassle-free.

• Market Growth Opportunity: Smart shades growing at 23% annually within the $158B smart home industry.

Funds Will Be Used For: 

• R&D and production of new products (RYSE Smart Tilt and Smart Blind)

• Marketing

• Adding retail and wholesale partnerships

Risks: The primary risk with investing in RYSE—like any early-stage company—is the time horizon and potential liquidity constraints. As a private company, RYSE shares are not traded on a public exchange, meaning investors may need to wait for an acquisition or IPO to realize a return.

Other Notes: Invest at $1.90 per share and earn up to 25% in bonus shares.

_{NEWS ROUNDUP}

Top Reads

• Pepsi Nears $1.5 billion deal for Poppi

• M&A, restructuring bankers spar at Perella Weinberg trial

• Private Equity AUM shrinks for the first time in decades

• PE funds now sit on $3 trillion of unsold assets

• Crown Castle sells its fiber business for $8.5 billion

• Klarna files for US IPO amid 24% revenue surge

• EQT to acquire Crown Castle’s small cells business for $4.25 billion

• Analysts downgrade banks as trade war concerns hinder capital market activities

• Berkshire Hathaway amasses record $300 billion war chest

• Bank of America cuts 150 investment bankers in latest round of layoffs

• Pokemon Go creator Niantic to sell game division to Scopely for $3.5 billion

_{INFRASTRUCTURE DEAL OF THE MONTH}

BlackRock Takes Back the Panama Canal

Since at least Inauguration Day—if not before—President Trump has been moonlighting as an M&A managing director in between tanking the stock market. He has set some lofty targets…the hostile takeover of Canada, an LBO of Greenland, and the spin out of the Panama Canal.

Larry Fink has delivered on one of those…sort of.

BlackRock announced that in conjunction with Global Infrastructure partners and Terminal Investment Limited, it will acquire CK Hutchison Holdings’ 90% interest in the Panama Ports Company for $22.8 billion.

The deal includes 199 berths across 43 ports in 23 countries but excludes CK Hutchison’s Chinese ports—which, unsurprisingly, is where things get complicated.

This acquisition is already facing pushback from multiple fronts. The Panamanian Government is retorting to the US Government that these ports are not part of the Panama Canal (they aren’t), and the Chinese Government is lambasting CK Holdings, which is listed in Hong Kong, for the deal as well.

The Chinese government has gone so far as to say that this deal is a betrayal of the Chinese people, even though the Chinese ports have remained controlled by CK Hutchison. It is unclear if the deal will require approval from Beijing, but shares of CK were down more than 6% after Beijing’s scathing review.

Overall, this is a huge infrastructure deal which should net ~$19 billion for CK Hutchison. While there are some regulatory hurdles involved, hopefully this one gets through for the sake of both CK Hutchison’s shareholders and BlackRock analyst who probably pulled 5 all-nighters making a model for each port.

_{STRATEGIC DEAL OF THE MONTH}

OMV and ADONC Go For Most Complex Deal of the Year

It was a relatively light deal flow month, but when deal flow is slow, you can always trust that some chemicals company somewhere is doing an acquisition to combine products that you don’t care about but use every day.

This month’s chemical megadeal? The OMV-ADNOC merger, which also includes the €13.4 billion acquisition of NOVA Chemicals. I’ll be honest—this deal is a messy, multi-step transaction, but I’ll do my best to break it down. So grab your take-out and strap in.

At a 30,000-foot level, here’s what’s happening:

1. First, OMV and ADNOC will merge and create Borouge Group International. Borouge will be jointly controlled by OMV and ADNOC after OMV injects €1.6 billion into Borouge.

2. Borouge merges with Borealis in an all-stock merger

3. Borouge acquires Nova Chemicals for €13.4 billion, funded mostly via acquisition debt.

Now, as promised, here is the transaction structure:

I won’t bore you with a deep dive into polyolefins, but the pro forma company will be the 4th largest in the industry—right behind Sinopec, CNPC, and Exxon. Not bad company to keep.

For the Nova Chemicals piece - which is why we are here - this deal is being done on a 7.75x LTM EBITDA basis, which is fairly reasonable. The deal will be funded via acquisition debt, which Borouge can raise without sacrificing its investment grade rating.

The pro forma company will generate ~$4.5 billion of EBITDA and ~$2.9 billion free cashflow, with annual synergies targeting ~$500 million per annum by 2030.

Given how complex and how many steps there are in this transaction, this deal has a pretty long path to closing, which isn’t totally surprising, and is expected to close entirely by Q1’26.

Look to be honest, I have no idea why this deal had to be so complicated. I am not even sure if I nailed all of the nuances, but this just goes to show that sometimes when your MD pitches you a 3-way merger with 4 spinouts, just know—it actually can happen. Somewhere, a banker is salivating over the fees on this one.