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Each week, we report instances where the money junky hedge funds, private equity groups and the already big companies swallow another piece of the global economy.
Here are some more of what the BIGS have been gobbling up and how the Bigs keep getting bigger and the rich keep getting richer. It should be noted that when interest rates in the U.S. were floating at near zero, merger and acquisition hit an all-time high in 2021.
Now with rates rising, M&A activity is slowing down. And most importantly, a lot of these acquisitions were made with the belief of rising economic growth. Also, as economies go down and interest rates rise, the debt burden from these M&A’s will grow heavier, crashing many of them into bankruptcy and default on debt.
Yet, even when the economy goes down the Biggest of the Bigs will keep on their buying spree, buying up more companies and expanding their economic reach.
LAST OBSTACLE FALLS TO $10-BILLION SALE OF NIELSEN RATINGS SERVICE
The sale of Nielsen Holdings, the television ratings service, seems finally set to proceed after WindAcre Partnership, which owns 27 percent of Nielsen, has agreed to a $10-billion offer made by a consortium of private equity firms led by Brookfield Asset Management and Elliott Management.
In April, WindAcre opposed the sale, saying the offer undervalued the company, as we reported in “Private Equity Firms Buy Nielsen Ratings Service” (5 Apr 2022).
However, WindAcre now has agreed to the buyers’ original offer of $28 a share, The Wall Street Journal reported.
Earlier, WindAcre had said Nielsen’s value is closer to $40 a share and that it sees a strategy that could triple the stock’s value in three years.
On 9 August, Nielsen’s share price jumped 21 percent to $27.52 on news of the agreement.
Elliott, which has held Nielsen’s shares since 2018, has long been pressing for a sale of the company.
In 2019, Nielsen spun off its consumer analysis business as Global Connect, which was sold for $3 billion in 2021 to Advent International Corp., another private equity firm.
Nielsen has postponed a shareholder meeting scheduled for 16 August so WindAcre and the buyers could iron out details of their agreement.
WHIRLPOOL ADDS INSINKERATOR FOR $3 BILLION
Appliance giant Whirlpool will pay $3 billion to Emerson Electric to buy Insinkerator, which makes garbage disposals and other waste-handling equipment as well as hot water dispensers.
Whirlpool will fund the deal with cash and debt, it said.
Whirlpool sees a strong future for Insinkerator as new homes are built and existing houses are remodeled and refurbished, the company told analysts.
WSP BUYS ENVIRONMENTAL CONSULTING FIRM
WSP Global, a Canadian international engineering firm, will buy environmental consulting firm RPS Group for £591 million, according to the Financial Times.
RPS, headquartered in London, advises companies in the defense, energy, water, and property industries on environmental compliance and other issues.
The price is 76 percent above RPS’s 9 August share price.
RPS’s share price jumped to a three-year high on the news.
WSP’s diversification will help it weather any economic slowdown, the company said in a statement announcing the purchase.
“Five years ago, transportation, infrastructure, property, and building represented 80 percent of our business,” WSP CEO Alexandre L’Heureux said in announcing the sale.
“Now it’s down to 60 percent, with Earth and [the] environment making up a third,” he added. “We want to be a global leader in the green transition.”
RPS is the third U.K. company WSP has bought in the past three months, the FT noted, as WSP pursues an aggressive strategy of growth through acquisitions and diversification.
RPS’s pre-tax profits for the first half of 2022 grew 56 percent, year on year, reaching £11.1 million, the company announced.