Merger with Aircel likely this week after Reliance Communications board meeting

The much-anticipated $6-billion merger between Anil Ambani-led Reliance Communications BSE 2.72 % (RCom) and Aircel is expected to be announced this week, paving the way for what would be the first in-market telecom merger of a national scale in the country, said officials in the know.

The matter is likely to come up for discussions at the RCom board meeting scheduled for Wednesday to consider and approve unaudited financial results for the quarter ended June.

As per the terms, RCom will hive off its wireless business into a separate arm, a special purpose vehicle, in form of a slump sale, leaving behind the tower and overseas arms. The arm, in turn, will get merged into the mobile business of Maxis-owned Aircel. Partners will have 50:50 ownership of this new entity that will remain unlisted in initial years and is likely to operate under a new brand name.

Both have agreed to bring in $580 million each to create a Rs 7,600-crore equity pool for the new entity to invest further in capex and grow business, said the sources mentioned above. Both will also transfer Rs 14,000 crore of their debt into it.

The merger comes in the backdrop of Reliance Jio Infocomm's launch, the country's only 4G technology network. Reliance Communications had started upgrading data customers to 4G on the back of Jio's network some months ago.

In January, RCom had paid Rs 5,384 crore to the exchequer to liberalize airwaves in the 850MHz band, leaving its 1800MHz band which were allocated rather than bought in auction. Aircel has more airwaves to be liberalised, said one of the persons. The additional cash infused may be needed for that, he said.

When contacted, RCom spokesperson declined to comment. Aircel did not revert on mails and messages seeking comments.

As per industry estimates, a 12% revenue market share could translate into an enterprise valuation of $6 billion for the merged company. However, analysts expect there is scope for it to go up by 40-50% in the next few years, once the operational synergies get fully optimised.

The merged entity is expecting approximately Rs 2,500 crore in earnings before interest tax depreciation and amortisation (EBITDA) after cost savings through synergies between the two operations.

Recast loans after the merger will bear a term of 20 years with a twoyear moratorium, said one of the persons quoted earlier. Loan instalments will rise progressively and can be serviced by the company as long as its EBITDA rises to Rs 4,000-5,000 crore in four years.

Consultants Booz Allen and AT Kearney are helping both parties in the exercise. Investment bank Goldman Sachs and Standard Chartered Bank are the financial advisors to the transaction. Lawyers include Khaitan & Co and Kirkland & Ellis & Slaughter & May.

The joint entity is expected to pull in 120 million active subscribers, though company officials say the number will actually be higher — at 150-160 million — along with a revenue market share of 6% each.

IIFL analysts estimate RCom-Aircel-Sistema will have 20% of spectrum market share and be in the top 3 by revenue market share in 13 out of the 22 circles. Additionally, it will plug GSM coverage gaps in three of five circles where RCom failed to renew 900MHz spectrum.

The merger should help the two improve revenue market share, deleverage balance sheets, optimise spectrum usage and streamline opex and capex synergies.

For the past three years, the two have had infrastructure-sharing agreements. They can also leverage Jio's 4G network, experts said. RCom and Jio are in spectrum trading and sharing alliances.

Parallely, the company is also in discussions with Canadian asset manager Brookfield to claim a majority stake in the tower arm Reliance Infratel for an enterprise valuation of $2.5-3 billion. The two transactions (wireless and tower) will help RCom cut its debt from Rs 42,364 crore to Rs 10,000 crore.

Courtesy : Ecnomictimes.Indiatimes.com

Dell Closes $60 Billion Merger with EMC

Dell completed its merger with EMC Corporation today. The new merged company pushes Dell farther on its trajectory away from its roots as a computer maker in Round Rock.

Michael Dell is one of the architects of the $60 billion acquisition – the largest deal in tech industry history. He is now the CEO the newly-named Dell Technologies. Dell's core computer business, the company we've known for years, will be based in Round Rock. It's new combined data center business, Dell EMC, will be based in EMC's Hopkinton, Mass. offices.

Dell Chief Financial Officer Tom Sweet projected annual revenue for Dell Technologies to be about $74 billion, making it the third largest private companies in the U.S. according to Forbes, behind Cargill and Koch Industries.

Technology expert Rob Enderle, who used to work on acquisitions at IBM, says this is a rare deal where Dell is the smaller company buying a bigger one. But the size of EMC and Dell’s enterprise plans going forward means the center of Dell’s universe may no longer be in Round Rock.

“It looks like much of the enterprise work, or the mass of Dell, will start reporting out of Massachusetts and no longer be in Texas,” says Enderle.

"We've got the Austin headquarters. We've got the Boston headquarters," said Dell EMC President David Goulden on a conference call this morning. "We're actually a dual-headquartered company, that's global in nature. We have significant number of strategic development, R&D, manufacturing sights around the world that form part of our critical ecosystem."

Round Rock staff are no strangers to scaling up a company, but Enderle suggests the magnitude of what Dell is trying to do with EMC may inevitably pull focus to its suburban-Boston office. But, he says, the company will not lose its presence here completely.

"It's not like Dell [Round Rock] is going to be wiped out, because Dell is Michael Dell's baby, so he's certainly going to take care of it," Enderle said.

When asked about a potential shift to the Northeast, Dell spokesperson Lon Levitan said the newly-formed company will maintain the Round Rock campus.

"Central Texas absolutely will continue as an important hub of innovation for the combined company," Levitan said. "For years Dell has operated with multiple locations around the globe.”

Courtesy : Kut.org

Chinese Consortium Acquires Media.Net For $900 Million In Third-Largest Ever AdTech Deal

AdTech pioneer Media.net, has been acquired by a Chinese consortium from serial internet entrepreneur Divyank Turakhia’s Starbuster TMT Investments in an all-cash transaction of $900 million.

The Consortium is led by Zhiyong Zhang, Chairman of Beijing Miteno Communication Technology, a technology, media and telecom (TMT) business listed on the GEM Board of the Shenzhen Stock Exchange. This completes the first step toward Media.net being acquired by, and integrated into, Beijing-based Miteno.

Media.net is a large, growing and profitable business with annual revenues of $232 million. It currently manages more than $450 million of annual advertising revenue via its platform, more than 50% of which is generated from mobile users.

More than 90% of Media.net’s total revenue comes from the U.S. With seven offices worldwide, including global headquarters in Dubai, and U.S. headquarters in New York City, the company has more than 800 employees.

“Our team has spent the last several years putting together one of the most comprehensive platforms for AdTech, and we are just getting started. The acquisition will enable us to be an even greater platform for innovation and investment on a global scale,” said Divyank Turakhia, Media.net’s founder and CEO.

A serial entrepreneur with a proven track record of performance, Turakhia has had considerable success with other exits. In 2014, Endurance International Group bought four brands that he co-founded with his brother, Bhavin Turakhia, for approximately $160 million.

He started his first internet business in 1996 at the age of 14, made his first million at 18, first $100 million at 23, and now crossed his first $1 billion at the age of 34.

Courtesy : Forbes.com

Hansa Cequity acquires Bengaluru -based D-Square Solutions

Hansa Cequity, a customer marketing company said it has acquired a majority stake in Bengaluru-based data science and analytics company, D-Square Solutions Private Limited, for an undisclosed sum.

Hansa hopes that the acquisition will help it scale the breadth of its analytics offerings and give it an entry into artificial intelligence and machine learning capabilities.


"D-Square will operate as a separate entity but will synergize its resources and offerings with Cequity," said Ajay Khelkar, COO and co-founder, Hansa Cequity said in a statement.

Hansa Cequity had raised around $5 million (Rs 30 crore) from private equity firm ASK Pravi in June last year.

Hansa Cequity is a customer marketing company which provides customer strategy, data services, analytics, campaign management, digital and customer relationship centre services for key clients across different verticals.

They company claims to have over 80 million unique customer profiles being hosted in their infrastructure and analyse over 70 terabytes of data & manage over 600 million one-to-one customer-intelligence interactions in a year.

Hansa Cequity is currently a team of about 700 professionals working in client consulting engagements.

"This acquisition would strengthen our data science expertise and help in building strong capabilities in building cutting-edge artificial intelligence and machine learning capabilities in addition to enhancing our analytics-driven marketing offerings," said, S Swaminathan, CEO and co-founder of Hansa Cequity.

"Founded in 2009, Bengaluru based D-Square Solutions brings together business analytics products and consultancy solutions to help optimise time spent on informed decisions," added Swaminathan.

D-square currently caters to clients in IT & networking, BFSI and other industries across markets.

"There has always been a growing appetite by decision makers for data science," said Anand Srinivasan, founder and chief executive of D-Square Solutions. (EOM)

 Courtesy : Business-Standard

Johnson Controls, Tyco Vote for Merger (JCI, TYC)

A tough government stance on inversion rules notwithstanding, shareholders approved the $14 billion merger between Johnson Controls Inc. (JCI) and Tyco International PLC (TYC). According to a press release issued by Johnson Controls, 97% of the votes (representing 81% of the company's shareholders) were cast in favor of the deal. Tyco shareholders had already approved the deal yesterday. The merger is expected to be completed by September 2. (For more, see also: Johnson Controls Trades Ex-Dividend.)

“I am pleased our shareholders have voted in favor of this powerful strategic combination, which will unite two world-class companies with complementary capabilities" Alex Molinaroli, chairman and CEO of Johnson Controls, stated. The merger creates a building and equipment behemoth with over $30 billion in revenue. Leadership for the merged entity will rotate between chief executives at both companies. Molinaroli will lead the merged entity for the first 18 months and will be followed by Tyco CEO George Oliver for the next 18 months.

There are several benefits to the merger.

For starters, the combined company is expected to have annual tax savings of $150 million. This is because Tyco is domiciled in Ireland, which has a corporate tax rate of 12.5%, as opposed to the United States, which has a corporate tax rate of 35%. When you add that figure to the operational cost-cuttings and synergies worth $350 million that will be realized as part of the deal, the expected savings figure snowballs to $500 million at the end of the third year. (For more, see also: Analyzing Johnson Controls’ Returns On Equity.)

Second, the merger could bolster operations for both companies in multiple geographies. A large chunk of both companies’ revenues comes from overseas. For example, Johnson Controls reported a 49% jump in revenues for its automotive experience unit, which reported revenues of $344 million, in China. Similarly, Tyco has a strong presence in Europe.

Finally, the merger will result in a company that is better positioned to make the transition to the Internet of Things (IoT) ecosystem, where home devices and buildings are increasingly connected to the internet.

The merger has happened despite rhetoric from the Department of Justice against such transactions. The Obama government has unveiled a number of proposals and rules to curb takeovers of American multinational corporations by companies based in low-tax regimes. Last year, the government’s rules helped prevent one such merger between Chicago-based AbbVie Inc. (ABBV) and Shire PLC (SHPG).

Courtesy : Investopedia

Aditya Birla to merge Nuvo, Grasim

The Aditya Birla Group is merging two of its main companies, Aditya Birla Nuvo Ltd (Nuvo) and Grasim Industries Ltd, both of which also serve as holding companies, in an attempt to create a stronger entity, and unlock shareholder value by spinning off and listing one of Nuvo’s subsidiaries, Aditya Birla Financial Services Ltd.

The merger will create an entity with yearly revenue of Rs.59,766 crore, net profit of Rs.4,245 crore and earnings before interest, tax, depreciation and amortization, a measure of operating profitability, of Rs.12,000 crore.

The merger, announced on Thursday, will also mean the end of Nuvo’s existence. Aditya Birla Nuvo emerged in 2005 after the Aditya Birla Group decided to rename Indian Rayon and Industries Ltd (a company founded in 1956) and make it a vehicle to hold its businesses in the areas of finance, apparel and fashion, telecom and information technology (IT).

Today, around 80% of Nuvo’s revenue comes from three businesses: financial services, telecom, and fashion and apparel. It has exited the IT business, although it retains some of its older businesses such as linen, urea, viscose, and insulators.

Interestingly, it has spun off and listed its telecom business (Idea Cellular Ltd), and fashion and apparel business (Madura Garments was spun off and merged with Pantaloons Fashion and Retail that the Aditya Birla Group acquired from the Future Group).

Now, it plans to do the same with its financial business. If there is a pattern there, it is by design. Aditya Birla Nuvo was always seen as a vehicle for the larger group’s new businesses. The idea was to spin off and list those that succeeded, and sell those that didn’t look like they could become or challenge the No. 1 or No. 2 in their respective businesses (IT, for instance, was one business that Nuvo and the Aditya Birla Group exited).

The merger will make Grasim “one of India’s largest, well-diversified companies with a healthy mix of businesses with a steady cash flow and long-term growth opportunities,” said Kumar Mangalam Birla, chairman of the Aditya Birla Group. He added that it also simplifies cross-holdings.

Although the Birlas hold their stakes in the group’s companies through a clutch of investment and holding companies, larger companies within the group, such as Grasim, Hindalco Industries Ltd and Aditya Birla Nuvo, also hold stakes in each other and in other group companies.

Birla added that with “diverse businesses spanning manufacturing and services, the combined entity provides a play on India’s growth story”.

Shareholders didn’t agree. With news of the merger making the rounds for at least a few days ahead of the announcement, which came after market hours on Thursday, shares of Grasim took a beating. They ended at Rs.4,538.95 on the BSE, down 6.44%, on a day the benchmark Sensex rose 0.31%.

Courtesy : LiveMint