Posts in Deals and M&A
With $34-Billion Purchase of Red Hat, Grounded Tech Giant IBM Looks Towards a Future in the Cloud

International Business Machines Corporation (“IBM”) announced on October 28th of 2018 its plans to acquire American software company Red Hat, Inc. (“Red Hat”) for $34 billion. (Liana B. Baker and Greg Roumeliotis, Reuters). The deal, which is the software industry’s largest-ever acquisition, is expected to close in the latter half of 2019. Id. IBM is set to pay $190 per Red Hat share — a 63% premium on Red Hat’s closing share price on October 26, 2018. Id. IBM intends to maintain Red Hat’s headquarters, facilities, brands, and practices, as well as retain Red Hat’s management team and Chief Executive Officer Jim Whitehurst after the deal has closed. Id. This post provides an overview of the two companies, the deal, and its anticipated effects.

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Best Buy's Acquisition of Health Tech Startup Jitterbug May Trigger HSR Concerns

On August 15, 2018, Best Buy Co., Inc. (Best Buy) announced that it signed a definitive agreement to acquire GreatCall Inc. (“GreatCall”) for $800 million as part of its growing business selling health and wellness products specifically focused on the aging population. (Investor Relations, Best Buy). GreatCall is the maker of the senior focused Jitterbug cell phones along with other devices designed to allow elderly consumers to connect with caregivers and to facilitate communication with emergency services. (Barba, Wall Street Journal). The acquisition is projected to be neutral to Best Buy’s adjusted earnings in 2019 and 2020 as well as to increase its adjusted earnings by 2021. (Investor Relations, Best Buy). The acquisition is part of Best Buy’s 2020 strategy to use technology to address key human needs among the aging U.S. population. (Barba, Wall Street Journal). GreatCall headquarters will remain in San Diego and David Inns will remain as the company’s CEO. (Press Release, Market Watch).

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Instagram’s Founders Depart from Facebook, Inc.

On July 16, 2010, the CEO and co-founder of Instagram, Kevin Systrom, posted the very first photo to the social media platform, which depicted a golden retriever next to a taco stand. (Olivia Waxman, The New York Times). Within 18 months, Facebook, Inc. purchased Instagram, and nearly 8 years after Instagram’s inception, the co-founders of Instagram, Kevin Systrom and Mike Krieger, announced their resignation from Facebook, Inc. in a New York Times article. (Mike Isaac, The New York Times).

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JOBS Act 3.0 Expanding Pre-IPO Talks with Potential Investors

When a private company decides to “go public”, it does so through an Initial Public Offering (IPO). An IPO is the private company’s first sale of stock on the public market. Benefits of going public can include a permanent and liquid source of capital for the company, and the company can increase their brand and name recognition through broadcasting their corporate narratives, which suggests legitimacy and stability. (Joe Bou-Saba, Forbes). Although the number of domestic companies listed on U.S. stock exchanges increased in the mid-1990’s, that number has since dropped by nearly half. (Editorial Board, Bloomberg; Michael Wursthorn and Gregory Zuckerman, Wall Street Journal). A study by the Center for Research in Security Prices at University of Chicago’s Booth School of Business reported in the Wall Street Journal showed that in 1996 there were over 7,400 companies listed on U.S. stock exchanges, and today that number is less than half. (Michael Wursthorn and Gregory Zuckerman, Wall Street Journal).

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What Michael Kors’ $2.12-Billion Purchase of Versace Means for the Market, Fashion Industry

On September 20th of this year, fashion industry giants Michael Kors Holdings Limited (“Michael Kors”) and Gianni Versace S.p.A. (“Versace”) issued a joint press release announcing that Michael Kors would purchase Versace for $2.12 billion. (Katina Metzidakis, Business Wire). The transaction is expected to be completed in Michael Kors’ fourth quarter, which ends April 1, 2019. (Michael Kors Holdings Limited, 2018 Annual Report). When the transaction is complete, the company will be renamed Capri Holdings Limited (“Capri”), after the famed Italian island “long recognized as an iconic, glamorous and luxury destination.” (Katina Metzidakis, Business Wire). This post provides an overview of the transaction and its anticipated effects.

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Merger Control Rules for Vertical Mergers in the Wake of the AT&T-Time Warner Approval

Vertical mergers, unlike more-litigated horizontal mergers, are governed by few guidelines from antitrust regulatory organizations and, until recently, had never been challenged in federal court. The approval of a vertical merger between AT&T and Time Warner (“The Merger”), despite protests from the Antitrust Department of the U.S. Department of Justice (DOJ), has shed some light on merger control rules for vertical mergers. This post provides an overview of: (1) vertical merger laws; (2) The Merger; and (3) the governing principles that have emerged since the approval of the AT&T transaction. (Noah Brumfield, Antitrust & Trade Regulation Report (BNA)).

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