As we have noted since the Central Banksters started to rapidly raise interest rates, the decade’s long merger and acquisition spree is over.
However, as we have greatly detailed over the weeks and months, the “Bigs” keep getting bigger, as they buy out overleveraged companies that can’t afford to borrow at high rates to refinance and gobble up those they want to gain broader market share and/or eliminate the competition.
All the “Bigs” with big money want is to get bigger, and they will do what they can to buy out competitors and/or expand in new directions. The facts are there for all to see: Private equity groups, hedge funds and venture capitalists are running and owing the economic show.
PRIVATE INVESTORS OFFER $10.5 BILLION FOR AUSTRALIAN UTILITY
Toronto-based private equity firm Brookfield Asset Management is leading a group of investors that has bid $10.5 billion, or about $6.10 a share, to buy Australia’s Origin Energy. The offer is about $16.4 billion in Australian dollars.
Origin generates and sells electricity and also retails natural gas. It had revenues of AU$12.1 billion in 2021.
Origin’s shareholders had agreed in principle to the sale last March and will meet on 23 November to consider the details of the offer.
AustralianSuper, another utility that is Origin’s largest shareholder, has said it will vote against the sale because Origin is more valuable than the Brookfield group’s offer indicates.
Origin has said the offer represents the investment consortium’s “best and final” proposal. However, Origin’s share price rose after AustralianSuper objected, implying that investors expect Brookfield’s group to raise its bid.
DISNEY COMPLETES ITS TAKEOVER OF HULU
The Disney Co. has agreed to pay Comcast Universal at least $8.61 billion to buy Comcast’s share of streaming service Hulu.
Disney already owns two-thirds of Hulu; Comcast owns the other third.
As allowed under the terms of the partnership, Comcast exercised its option to sell its stake in the service.
The $8.61 billion amount has been agreed as a starting point for negotiations between the two partners to determine Hulu’s current value and how much more Comcast should be paid.
Hulu, one of the few profitable streaming services, had 48 million subscribers as of July.
Disney acquired its current share of Hulu in 2019 when it bought the entertainment assets of 21st Century Fox. The deal gave either Comcast or Disney the right to force a sale of Comcast’s share at a minimum value for Hulu of $27.5 billion.
That places Comcast’s stake at a current value of roughly $9.17 billion.
THEME PARK CHAINS MERGE
Six Flags and Cedar Fair Entertainment, two of the U.S.’s largest regional theme park chains, are merging in an all-stock deal worth about $2 billion.
Six Flags’ shareholders will receive 0.58 of a share in the new company for each Six Flags share; Cedar Fair stockholders will own one share of the new business for each of their Cedar Fair shares. The merged company will have a market capitalization estimated at about $3.2 billion.
Cedar Fair shareholders will own about 51 percent of the new business, which will retain the Six Flags brand.
The new entity is structured as a master limited partnership, a publicly traded entity that combines ease of buying or selling shares with the benefits of being taxed as a partnership instead of as a corporation.
The new Six Flags will operate 27 theme parks and 15 water parks across Canada, Mexico, and 17 U.S. states.
Theme parks struggled to survive the COVID War. Executives and analysts had hoped this year would mark a revival but the hottest summer on record kept too many visitors away, The Wall Street Journal said.
Six Flags’ share price plunged 45 percent in 2022 and has slid another 10 percent so far this year.
Combining the company will create operating efficiencies, cut shared costs, and also scale the enterprise to better compete with nationally marketed theme park giants such as Disney and Universal.
With the stock price so low, activist investor Jonthan Litt bought a stake in Six Flags last spring and had pushed the company to sell its real estate, arguing the properties’ total value is greater than the company’s market capitalization.
The merger with Cedar Fair seems to rebuff Litt’s idea. Litt, who owns 1 percent of Six Flags, has announced he will vote against the merger.
H Partners, Six Flags’ largest shareholder with a 14-percent stake, has said it will vote in favor.
Last year, Seaworld Entertainment made overtures to buy Cedar Fair but was rejected.
KKR CLINCHES PURCHASE OF PUBLISHING ICON SIMON & SCHUSTER
Private equity giant KKR has completed its $1.62-billion purchase of Simon & Schuster, the third largest U.S. publisher of general-interest books, from Paramount.
“They [KKR] plan to invest in us and make us greater than we already are,” John Karp, the publisher’s CEO, told The New York Times when news of the deal surfaced in July. “What more could a publisher want?”
The 99-year-old company publishes a stable of renowned authors, including Stephen King and Bob Woodward. Its profits have been increasing recently compared to many of its competitors.
Private equity firms generally, and KKR specifically, have a history of taking over companies, cutting staff, and loading on debt.