In a slow market for acquisitions, a four-deal Monday is something to marvel at. Today, four relatively large mergers were announced.
In the largest proposed acquisition, Verizon agreed to buy Yahoo’s core internet business for $4.8 billion in cash. The sale marks the end of Yahoo as an operating company, and gives Verizon, which bought AOL’s internet business in 2015, Yahoo’s advertising business and its consumer search, mail, and messenger businesses.
The deal excludes Yahoo’s cash, its holdings in Alibaba and Yahoo Japan, and its non-core patents. These will be spun off into a separate company. The deal with Verizon is expected to close in the first quarter of 2017.
In another large deal, Outerwall, owner of the Redbox DVD and video game kiosks, announced it would be taken private by Apollo Global Management for $1.6 billion. Apollo is paying $52 a share in cash, an 11% premium to Outerwall’s closing price on Friday. From March 14 through Friday, shares in Outerwall had jumped 36%.
In financial services, ETrade Financial agreed to acquire Aperture New Holdings, the parent company of OptionsHouse, for $725 million. The deal boosts ETrade’s capabilities in derivatives trading “while expanding its customer profile with the addition of OptionsHouse’s highly active, derivative-centric traders,” ETrade said.
OptionsHouse had 27,000 daily average revenue trades for the 12-month period ending June 30, of which 63% were in options. OptionsHouse, which merged with tradeMONSTER in 2014, has 154,000 customer accounts with $3.6 billion in customer assets, including $1.4 billion in cash.
ETrade intends to finance the transaction through the issuance of up to $400 million of non-cumulative perpetual preferred stock, with the balance paid in cash.
ETrade said it expects the acquisition to be neutral to earnings in 2017 and accretive in 2018, and it expects to generate $65 million in annual synergies.
Finally, in the world of international fashion, French luxury group LVMH is selling Donna Karan International, the parent of New York label DKNY, to U.S. firm G-III Apparel Group, which owns such brands as Vilebrequin and Andrew Marc.
The deal values the brand at $650 million. G-III plans to fund the acquisition through new debt, $75 million of newly issued G-III common stock to LVMH, and a $75 million seller note. In connection with the acquisition, G-III has obtained financing commitments from Barclays and JPMorgan Chase Bank for a $525 million ABL credit facility and a $450 million, 6-year term loan.
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