M&A wrap: CommScope, Arris, Carlyle, Evonik, PeroxyChem, OEP, Ford, Spin


Photo credit: Bloomberg News

CommScope (Nasdaq: COMM) is acquiring Arris International plc (Nasdaq: ARRS), an entertainment and communications technology provider, for $7.4 billion including debt. To help finance the deal, the Carlyle Group LP (Nasdaq: CG) is investing $1 billion in CommsCope for a 16 percent stake. Facing a spending slowdown in network gear used by phone and cable customers, the two companies are combining efforts to address the challenges and expand into new markets, including high-speed fifth-generation mobile networks, reports Bloomberg News. “CommScope and Arris will bring together a unique set of complementary assets and capabilities that enable end-to-end wired and wireless communications infrastructure solutions that neither company could otherwise achieve on its own,” says CommScope CEO Eddie Edwards. Allen & Co., Deutsche Bank, J.P. Morgan Securities LLC, and BofA Merrill Lynch are serving as financial advisors to CommScope, and Alston & Bird LLP, Latham & Watkins LLP, Cravath, Swaine & Moore LLP, Pinsent Masons LLP and Skadden, Arps, Slate, Meagher & Flom LLP are serving as legal counsel. Evercore Inc. (NYSE: EVR) is serving as financial advisor to Arris. Troutman Sanders LLP, Herbert Smith Freehills LLP and Hogan Lovells LLP are serving as legal counsel to Arris. Simpson, Thacher & Bartlett LLP is representing Carlyle.

The private equity industry will focus on educating lawmakers newly elected in the mid-terms. “As an industry, we will work to educate the nearly 100 new members of Congress about private equity’s positive impact in their communities and their constituents’ lives,” Pam Hendrickson, the chief operating officer of middle-market private equity firm the Riverside Co., tells Mergers & Acquisitions in a Q&A. “We will be talking with them about jobs, investment, and retirement security. We need to make the personal case to each of the new members as well as top leadership in both the House and the Senate. As an example, the incoming chair of the Ways and Means committee Richie Neal is from the State of Massachusetts which had a 15.4 percent annualized return from its PE portfolio over 10 years.” Hendrickson is currently a member of the board of the American Investment Council and a member of the advisory board of the Kenan Institute for Ethics at Duke University. In the past, she has testified before Congress on behalf of the private equity industry. Read the full interview: Post-election priority for private equity: educating 100 new members of Congress. For more on how the mid-term election results are playing out in the middle market, including how former PE professionals Mitt Romney, Bruce Rauner and J.B. Pritzker fared Tuesday night, see Dealmaker’s post-election guide: Mitt Romney, J.B. Pritzker, Dodd-Frank, Pam Hendrickson, Gretchen Perkins.

Deal news
Ford Motor Co. (NYSE: F) has acquired scooter-sharing company Spin. The deal comes as more commuters use alternative transportation options to get to work and other places more quickly and less expensively. Scooters help “reduce urban traffic congestion, parking limitations and pollution,” according to Ford. “The fast-paced, often experimental mobility sector requires businesses to keep up with agile and adaptable customers,” Ford adds in a release. “Spin is working hand-in-hand with cities and universities to implement micro-mobility solutions responsibly, safely and sustainably as they expand their operations.”

The Carlyle Group LP (Nasdaq: CG) and JPMorgan Chase (NYSE: JPM) have invested in financial technology firm iCapital Network. The two firms join existing investors BlackRock (NYSE: BLK), the Blackstone Group (NYSE: BX), BNY Mellon (NYSE: BK), Credit Suisse Group AG, Morgan Stanley Investment Management (NYSE: MS), and UBS Financial Services Inc. (NYSE: UBS).

German chemical maker Evonik Industries AG is buying PeroxyChem from One Equity Partners for $625 million. PeroxyChem produces hydrogen peroxide and peracetic acid for the food safety, electronics, environmental and energy sectors. Barclays and Dechert are advising OEP.

Industrial Opportunity Partners-backed Union Corrugating Co. has invested in Reed’s Metals. The target is a manufacturer of metal roofing systems and pre-engineered metal buildings. VRA Partners and McDermott Will & Emery advised IOP and Union. Generational Equity advised Reed’s. Regions Bank and Patriot Capital provided financing.

Flower Foods Inc. (NYSE: FLO) is acquiring Canyon Bakehouse, a maker of gluten-free breads, buns, bagels and English muffins, for $205 million. Deutsche Bank and Jones Day are advising Flower Foods. Integris Partners and Brownstein Hyatt Farber Schreck are advising Canyon.

Hicks Equity Partners-backed Drilling Tools International has acquired RIK Inc. The latter rents drilling tools to drilling companies mainly in the energy and oil sectors.

Jaguar Growth Partners has invested in Brazilian industrial real estate company Bresco.

Featured content
Cam Newton and the Carolina Panthers take on the Pittsburgh Steelers Thursday night to kick off NFL Week 10. Off the field, football stars team to build companies. New England Patriots quarterback Tom Brady recently teamed with former Giants defensive end Michael Strahan, who is the co-host of ABC’s Good Morning America, to launch a sports media startup called Religion of Sports Media, which has raised $3 million in venture capital funding from CourtsideVCand Advancit Capital. Many NFL players invest in companies. Muhsin Muhammad, who played wide receiver for the Carolina Panthers and the Chicago Bears, is a managing director of private equity firm Axum Capital Partners. Steve Young, former San Francisco 49ers quarterback, is a co-founder of private equity firm HGGC. Mergers & Acquisitions takes a look at star players who invest in companies through private equity, venture capital and other investment vehicles.

U.S. middle-market dealmaking in the first three quarters of 2018 surpassed the same period in 2017, according to PitchBook. If the pace continues in the fourth quarter, middle-market deal value may surpass $400 billion for the first time ever. One important question: Will the momentum continue now that the power has shifted in Congress? Mergers & Acquisitions asked Matthew O’Loughlin, partner and co-chair of the mergers and acquisitions practice with Manatt, Phelps & Phillips LLP, to share his thoughts on how the mid-term elections will affect M&A. Read the full story: It’s been a good year for M&A. Will momentum continue post election?

Mergers & Acquisitions asked Dan Shea, a managing director at BDO Capital Advisors, to share his thoughts on the election results. Read the full story: Infrastructure investment is an area of potential agreement in Washington.

Mergers & Acquisitions asked Michael Gruber, managing partner at Salveo Capital, to share his thoughts on how the mid-term elections will affect M&A and the cannabis sector. Read the full story: Cannabis investments will likely benefit from new House leadership, Jeff Sessions’ departure.’

Mergers & Acquisitions identifies 15 cities as fertile communities for dealmaking. We look at metropolitan areas from Austin (where Michael Dell launched a PC business out of his dorm room back in the day and where thousands gather every year for SXSW) to St. Louis (home of private equity firm Thompson Street Capital Partners). Be sure to check out Milwaukee (with private equity firm Robert W. Baird & Co. and investment bank Clearly Gull) and Minneapolis (home of strategic buyers 3M, Best Buy, General Mills, Hormel and Target). And don’t forget Boston, Chicago, New York, San Francisco and Los Angeles and more. See our list, Dealmaker’s guide to 15 cities where M&A thrives.

Events
ACG Chicago’s Family Office Conference, held Nov. 8, at the Westin Chicago River North, brings deamakers together for a “deep dive” into family offices. The event features a keynote by Laurent Roux, Gallatin Wealth Management, and panels, including: Current State of Family Office Direct & Co-Investment Activity, with Gary Levenstein, Nixon Peabody; and Impact of Millennial Generation on Family Office Investment Strategy including Social Impact Investing, with Adam Lieb and Tony Oommen, Fidelity Family Office Services.

ACG Florida Capital Connection, held Nov. 12-14, at the Vinoy Renaissance St. Petersburg Resort & Golf Club, puts “sun and fun” into dealmaking for the middle market, bringing together hundreds of dealmakers. The keynote speaker is Forbes Media CEO Steve Forbes, and the featured speaker for the Women’s Forum is Valerie Crites Fowler, who served as a diplomat in the U.S. Foreign Service for over 29 years, reaching the rank of Minister Counselor in the Senior Foreign Service.

Middle Market Week, hosted by ACG New York and held Nov. 26-30 at various locations throughout New York, brings together leading global middle-market dealmaking professionals to develop and enhance their dealmaking activities, strengthen their long-term relationships, and provide numerous opportunities for networking all week long. Mark your calendar for the Private Equity Annual Wine Tasting Gala on Nov. 28 at Gotham Hall. The building was constructed in the 1920s as the headquarters of the Greenwich Savings Bank. The gala brings together the leading middle market private equity firms for an evening of fine wines and networking.


Demitri Diakantonis

Demitri Diakantonis

Demitri Diakantonis joined SourceMedia in 2015 and serves as Managing Editor of Mergers & Acquisitions. He covers all aspects of middle-market deamaking, with a focus on strategic buyers and the consumer and retail sectors, and writes The Buyside column.


Mary Kathleen Flynn

Mary Kathleen Flynn

Mary Kathleen Flynn joined SourceMedia in 2011, serving as the Editor-in-Chief of Mergers & Acquisitions. MK oversees the brand’s content on all media platforms, including website, e-newsletters, video, slideshows, podcasts and print.