Historical Deal Review - M&A Division (Spring 2023)

Deal Review

Executive Board

Ariel Dasgupta

Co-President and Co-Head of Mergers & Acquisitions

Boris Bukchin

Co-President and Co-Head of Mergers & Acquisitions

Abhishek Murli Editor-in-Chief

Luc Boesch-Powers Editor-in-Chief

IBM & RED HAT

By: Rohith Gudati

International Business Machines Corporation

(NYSE:IBM)

is a multinational technology company with a market cap of $118 billion that specializes in producing and selling computer hardware, middleware, and software On October 28, 2018, IBM announced its plans to acquire Red Hat Software (NYSE:RHT) Red Hat Software is a leading provider of open source software, providing reliable, scalable, and secure solutions for businesses. On July 9, 2019, IBM announced its acquisition of Red Hat for $34 billion, making it the largest software acquisition in history at the time. Prior to the announcement of the deal, Red Hat's share price was $11668 IBM paid a significant premium of approximately 63% to acquire Red Hat, valuing the company at $190 per share IBM’s stock fell 2% after the deal was announced from $11919 to $114.28, as investors were concerned that it had overpaid for the acquisition, with the deal valued at 10x its projected 2019 sales. Additionally, IBM suspended its share repurchase program after the deal closed in July 2019. The deal was financed with both cash and debt, with IBM having to sell $20 billion in bonds to fund the acquisition Goldman Sachs, JP Morgan, and Lazard advised IBM on the deal, while Morgan Stanley and Guggenheim advised Red Hat.

IBM’s rationale behind the acquisition was to bolster its cloud capabilities and tap into the growing hybrid cloud market With Red Hat's expertise in Kubernetes container management and open source technologies, IBM could enhance its cloud offerings and accelerate innovation in the cloud space The synergies expected from the deal were both hard and soft. On the hard side, IBM sought to leverage Red Hat's technologies to enhance its cloud offerings and drive growth. On the soft side, the companies aimed to foster a collaborative culture to accelerate innovation and improve customer experiences. These synergies were expected to be realized over time as the companies worked together and integrated their technologies and processes.

The acquisition up to this point has been fairly successful for IBM. Currently, IBM is trading at $13117, with a P/E ratio of 2168,

and an EPS of $609 The acquisition has bolstered the “Open Hybrid Architecture Initiative” of the company and IBM is now likely to alter the dynamics of “the cloud market for business.” Specifically, IBM hopes to leverage Red Hat to help it become the world’s largest hybrid cloud platform provider. Since the acquisition in 2019, Red Hat’s revenue has jumped at least 15% every fiscal quarter. Over the last couple of quarters, IBM has produced slow but steady single-digit growth, and these positive results were led by the Red Hat Business. In the past, revenue growth at IBM has been challenged by the sheer size of its business However, with the added solutions of Red Hat, the company established a medium term model (2022-2024) of mid-single-digit revenue growth and high-single-digit free cash flow growth (~$35B cumulatively). Revenues actually increased by 12% (or 3% adjusting for external sales to Kyndryl and a stronger USD) to $60.5 billion in 2022. Furthermore, IBM has continued to moderately grow its dividend, paying out approximately $5.9 billion in dividends in 2022

In the near future, IBM anticipates the Red Hat buyout to improve revenue growth by a CAGR of approximately 2% over a five-year period. IBM Cloud remains the key to winning back investors’ optimism regarding strength of the company’s business model More than 4,000 clients are utilizing Red Hat and IBM’s hybrid cloud platform, with Red Hat’s expanding foothold across Asia Pacific also anticipated to bolster IBM’s TAM. In my opinion, to best utilize Red Hat’s technologies moving forward, IBM should continue to focus on integrating Red Hat's expertise and technologies into its cloud offerings, and explore new opportunities for joint development. Additionally, IBM should consider expanding its presence in the open source community to further drive growth and innovation Overall, it is too early to tell whether the acquisition was a success, but early indications and results should give IBM optimism moving forward.

RAYTHEON & UNITED TECHNOLOGIES

By: Maximilian Zwiener

On April 3rd of 2020, Raytheon Company (NYSE: RTN) and United Technologies Corporation (NYSE: UTX) finalized their agreement for an all-stock merger of equals into $166 billion multinational aerospace and defense behemoth: Raytheon Technologies (NYSE: RTX) Raytheon shareholders received 43% of the combined company while United Technologies shareholders received 57%. Although United Technologies was still larger than Raytheon by $60 billion in market cap, the deal conditions stated that United Technologies would spin-off its extraneous elevator division Otis (NYSE: OTIS) and HVAC division Carrier (NYSE: CARR) before the merger’s closing Raytheon Company common shares were converted to 23348 Raytheon Technologies shares each and this exchange was structured so that no acquisition premium would occur; despite this, both companies’ stock prices jumped in pre-market trading after the deal was announced. However, United Technologies stock -just before the merger- dipped significantly to $4993 due to Covid-19 pressures on the commercial aviation sector

From an advisory standpoint, Citigroup Global Markets Inc. served as Raytheon’s financial advisor while Morgan Stanley & Co. LLC, Evercore, and Goldman Sachs & Co LLC served as United Technologies’ financial advisors. Additionally, RBC provided a fairness opinion for the price of the deal. In terms of individual specializations, United Corporations is a multi-industry conglomerate with diversified offerings catered to commercial platforms; Raytheon is more specialized in supplying the U.S. government with military aircraft and missile equipment. While they are both leaders in aerospace and defense, they have limited business overlap due to United Technology providing commercial equipment as opposed to militarygrade equipment Because of this, they believed they would be able to increase their

market share and R&D without increasing anti-trust scrutiny Raytheon also rationalized that because of their different market focuses but highly complementary technology, they could expect roughly $1 billion in gross annual cost synergies alongside their revenue growth. By combining their expertise in commercial and military technology, Raytheon will strengthen its ability to invest in different business cycles and to lead innovation in A&D

Raytheon is currently trading at $100.58 per share with a TTM P/E multiple of 28.74 and TTM EPS of $3.50. The merger has proven to be successful so far, helping the share price rise 100% since the deal was announced in 2020. Because their primary strategic synergies are based on global innovation leadership goals increased R&D and cost-effectiveness the combined company’s defense segments (Raytheon’s contribution to the merger) have had better earnings relative to their commercial counterparts. For instance, from 2020 to 2022, Raytheon’s Intelligence & Space and Missiles & Defense segments have seen net sales growth of 30% while United Technologies’ Collins Aerospace and Pratt & Whitney segments have only seen 14% growth Because of this imbalance, I believe that there are still more synergies to be

realized by Raytheon Technologies. One primary rationalization of the merger was the fact that their commercial and defense technologies complement each other, and although there is a roughly 50/50 split between the two, only the defense component has seen major growth- likely due to trends of increased military funding. Despite this disparity, there is a bright future for Raytheon Technologies; this

is especially since Raytheon’s RIS and RMD segments will further merge, which will likely create more cost synergies Overall, Raytheon has superb experience with cost synergies in past acquisitions, and in the case of this one, have already surpassed their $1 billion synergy target by $400 million as of 2022

AMAZON & WHOLE FOODS

By: Andrew Kuznetsov

In June 2017, Amazon, the world's largest online retailer, made a strategic move to acquire Whole Foods Market, an upscale grocery store chain, marking its entry into the brick-andmortar grocery market The share prices of both companies experienced significant changes following the announcement. On June 15, 2017, prior to the announcement, Amazon's share price was $964.17, and Whole Foods' share price was $33.06. The following day, Amazon's share price increased to $987.71, while Whole Foods' share price jumped to $41.99. The rationale behind the acquisition was multifaceted First and foremost, it aimed to expand Amazon's presence in the brick-andmortar grocery market and diversify its product portfolio Additionally, the deal sought to integrate Amazon's technological capabilities and delivery infrastructure with Whole Foods' premium grocery products to enhance the overall customer experience From a synergy standpoint, this acquisition led to major cost savings in distribution, logistics, and procurement, as well as increased purchasing power due to Amazon's scale Soft synergies involved enhancing customer experience, leveraging Amazon Prime membership, and implementing data-driven marketing efforts These synergies were expected to be realized within three to five years following the acquisition.

The deal was valued at $13.7 billion, with Amazon paying $42 per share in cash, a 27% premium, to purchase Whole Foods. This deal structure demonstrated Amazon's financial strength and allowed the company to avoid diluting its existing shareholders. The all-cash transaction also provided immediate liquidity to Whole Foods shareholders, making the acquisition more attractive Amazon's financial advisor for the deal was Goldman Sachs, while Whole Foods' financial advisor was Evercore. Amazon's share price currently stands at $10124, but adjusted for its 20-1 stock split on June 6th 2022, it has increased 205% since this transaction closed. The acquisition has been largely successful, as Amazon has integrated its Prime membership benefits into Whole Foods' operations, offering discounts and exclusive deals to Prime members.

Additionally, the company expanded its grocery delivery services and introduced Amazon Fresh, providing an integrated grocery shopping experience for customers.

To capitalize on the Whole Foods acquisition, Amazon should focus on four key areas: leveraging technology for operational efficiency and customer experience, optimizing data-driven decisions for pricing and product assortment, expanding privatelabel offerings, and strengthening grocery delivery services in urban areas. The acquisition has enabled the use of Amazon's advanced data tools for better product personalization and increased customer loyalty Additionally, the introduction of 3,000 local brands and expansion of Amazon's 365 private-label brand to over 2,200 products

demonstrate a commitment to supporting local suppliers, enhancing the unique identity of the high-end grocery chain, and improving competitiveness through lower prices and higher profit margins.

EXTENDED STAY

& BLACKSTONE AND STARWOOD

By: Nolan Labahn

In March of 2021, Blackstone Inc. and Starwood Capital announced the acquisition of Extended Stay America (ESA), a leading brand in the mid-priced extended-stay hotel segment in the United States Extended Stay America is a company that operates more than 600 hotels across the United States, with over 76,000 rooms. Before the announcement of the acquisition, Blackstone’s share price was around $66 and rose to about $75 by the end of the month. The total enterprise value of the deal was north of $6 billion.

The deal was structured as an all-cash transaction, with Blackstone and Starwood paying a premium of approximately 15% to Extended Stay America's shareholders. The deal was financed through a combination of equity and debt financing, with Goldman Sachs and J.P. Morgan serving as lead banks on the transaction. The transaction was approved by ESA's shareholders in June 2021 and was completed in August of that year. The rationale behind the deal was that Blackstone and Starwood believed in the longterm growth potential of the extended-stay segment, especially after the pandemic. They were confident that ESA's portfolio of hotels would be attractive to business and leisure travelers. The acquisition was also seen as a strategic move by Blackstone and Starwood to expand their already-big presence in the hospitality sector

The hard synergies are expected to come from cost savings and revenue enhancement opportunities. Blackstone planned to optimize ESA's operations, improve efficiencies, and reduce costs by consolidating back-office functions, centralizing procurement, and streamlining processes. Additionally, the new owners planned to implement revenueenhancement initiatives, such as improving sales and marketing strategies, increasing brand awareness, and improving pricing strategies. The soft synergies were expected to come from the combination of the new owners' expertise in the hospitality industry with ESA's existing operations Blackstone and Starwood Capital have significant experience in the hospitality industry, and they planned to leverage this expertise to enhance ESA's guest experience, improve customer satisfaction, and increase loyalty. These synergies will likely be realized over time.

Currently, Blackstone is trading at $87.84 and their P/E ratio is 37.22. Blackstone is up about 15% this year It is hard to completely tell if the deal has been successful, as it aims to capitalize on the long-term growth potential of the extended-stay hotel segment.

However, the deal has been successful in terms of achieving the expected synergies, especially in terms of cost-saving measures for ESA because of Blackstone’s expertise in the area. Blackstone has generally had a successful year, but being such a large company with so many diversified assets and a private equity wing that it is hard to tell how this deal specifically has affected it To best utilize the acquired/merged product and adapt to the sector, Blackstone and Starwood should continue to invest in Extended Stay America's properties and operations to maintain its market position andcapitalize on the long-term growth potential of the extended-stay hotel segment They should also focus on enhancing the brand's digital capabilities to drive further growth.

AMD & XILINX

By: Noah Kohn

On February 14, 2022, Advanced Micro Devices (NASDAQ: AMD) acquired Xilinx (NASDAQ: XLNX) for $35 billion, expanding its product portfolio and market share in high-performance computing, cloud computing, and data center markets The acquisition brought together AMD's CPUs and GPUs with Xilinx's FPGAs and adaptive SoC technology. FPGAs are programmable chips that can be reconfigured for different applications, making them crucial in the expanding field of Artificial Intelligence. The acquisition complements the two companies' product offerings, enabling AMD to add FPGAs to its product lineup and expand its market opportunity beyond its core areas of expertise With the creation of a comprehensive AI inference development solution called Vitis AI, which is adaptable thanks to Xilinx's FPGAs, AMD can offer a complete solution for AI workloads, giving it a competitive advantage in the market. The rapid expansion of Artificial Intelligence is drastically changing the world we live in, and companies like AMD and Xilinx are playing a crucial role in shaping its future. A few days prior to the announcement AMD was trading at $11318 A month later, it traded at $11537 - a 193% increase When looking at the soft synergies related to the acquisition, the total revenues in Q2 of 2022 were $655 billion, versus $589 billion in Q1 of 2022. With regards to hard synergies it was

reported that AMD expects the deal to generate $300 million in cost savings within 18 months of closing the transaction.

Currently AMD is trading at $96.56 with a street estimate of 11079 (147% upside) and a 116.68 P/E ratio as of the last 12 months. In my opinion, it seems that the acquisition of Xilinx has been successful for AMD. The company's expansion into data centers, embedded computing, and telecom with the support of its 5G network processor has been driving innovation and diversity. The acquisition of Xilinx has brought critical revenue streams and promising roadmaps for AI, which has helped AMD go big in AI. Despite the challenges of integrating such a large company, AMD has been able to bring on board 5,000 new employees and maintain a "simplified" and "crisp" focus on highperformance computing. According to Ruth Cotter, the senior VP overseeing marketing, human resources, and investor relations, the

company has been able to guide and usher its employees through market challenges and stay focused on what's important. Overall, it seems that AMD's acquisition of Xilinx has been successful in driving growth and innovation in key sectors, and the company has been able to manage the challenges of integrating a larger company into its operations.

The key recommendation I would bring up is investing in software. AMD can benefit from investing in software development for AI applications, as it can help the company offer customers a complete solution, including hardware and software While Xilinx is known for its hardware expertise, it is crucial to have software that is optimized for AI applications to improve the overall performance and efficiency of the system. By developing its software, AMD can differentiate itself from

competitors and capture a larger share of the AI market

In addition to the benefits of software development, investing in chatbot software can also be a profitable move for AMD. Chatbots are currently the fastest-growing subcategory within AI, with a 261% increase in chatbot software traffic from February 2022 to February 2023, indicating a growing demand for chatbots. Companies are using chatbots to automate customer service and support functions, offering 24/7 assistance to customers while also saving on labor costs By investing in chatbot software, AMD can tap into this growing market and offer solutions to companies looking to automate their customer service processes.

REGAL REXNORD & ALTRA INDUSTRIAL MOTION

By: Bennett Stalls

Altra Industrial

Motion

(NYSE:AIMC)

is a manufacturer of motion control, automation, and power transmission products based in Braintree, MA On October 27, 2022, Regal Rexnord Corporation (NYSE:RRX) reached an agreement to acquire 100% of AIMC’s shares at $6200 per share in cash. This constituted a significant 62.30% premium above the company’s market price of $38.20 as of October 26, 2022. The transaction was completed on March 27, 2023. The $4.95 billion transaction represents a 13.6x LTM EBITDA multiple, or 95x projected EBITDA multiple including run rate synergies RRX has retained J.P. Morgan and Incentrum Group as financial advisors and is receiving $5.5 billion in bridge financing from JP Morgan AIMC retained The Goldman Sachs Group as its financial advisor.

This transaction will provide anticipated annualized cost synergies of $160 million by year four. This will be driven by procurement and distribution efficiencies, footprint rationalization, and SG&A savings RRX projects that EBITDA margins will reach 40% by 2025 up from its previous 2025 estimate of 37% before the transaction. This transaction will enable RRX to engage in significant de-levering bringing RRX’s debt/adjusted EBITDA ratio down to 2.5x-3.0x by 2024 and target 2.0x 2.5x as the company progresses in years to come. The acquisition of AIMC will allow RRX to transition into a global automotive solutions

provider by building on their current holdings, Modsmart and Automation Solutions. It will allow the company to expand its reach into industries with significant secular economic tailwinds including factory automation, medical, aerospace, and warehouse & logistics services. Additionally, AIMC will complement the RRX’s current offerings in the industrial powertrain industry by adding brake, gear, and clutch products and expanding the number of end markets the company participates in. The transaction is projected to accelerate R&D investment across business units and enhance RRX’s digital and IIOT strategies. It will rebalance RRX’s business divisions (by % of pro forma revenue) to Motion Control (48%), Climate Solutions (15%), Automation & Specialty (15%) and Industrial Systems (9%).

Directly after the acquisition was announced, RRX’s share price decreased significantly. RRX bottomed out on November 3, 2022 at $11230 per share, down 263% from its peak of $15235 on October 26,2022. RRX has experienced

significant volatility since completing the transaction, with its share price ranging between $11230 and $16250 On April 3, 2023, RRX closed at $13200 and the company’s PE ratio stands at 18.12. It appears that RRX shareholders are apprehensive about this transaction and RRX’s ability to deliver on stated synergies.

I believe the success of this transaction will be dependent on the ability of the RRX management team to retain the talent of the AIMC team and successfully incorporate it into the company's current business units. Pro forma financial statements are based on the potential of gaining R&D staff on AIMC’s team as well as other skilled employees throughout the organization Additionally, the transaction is also dependent on developing soft synergies between the companies’ business units If the market is unresponsive to the potential for cross-selling in a diverse range of end markets, the company could fall short of pro-forma revenue projections. RRX and AIMC news reports do

not list the deal structure. According to the 10-K, $1.3 billion in bridge financing has been used by the RRX RRX and AIMC press releases do not list the deal structure According to the company's 10-K, $13 billion in bridge financing has been used by RRX

MICROSOFT & NUANCE COMMUNICATIONS

By: Maanya Kumar

The software company Nuance (NASDAQ: NUAN) was officially acquired by Microsoft (NASDAQ: MSFT) as of March 4, 2022 Nuance is a revolutionary AI software company that provides conversational recognition systems to provide solutions for any type of business but specifically those in the healthcare industry. The transaction had an enterprise value of $19.7 billion and was the second largest acquisition that Microsoft has made, after its 2016 purchase of LinkedIn. The share price of Nuance after the acquisition increased to $56 per share, which is the price that Microsoft paid, demonstrating the 23% control premium that was paid The deal was an all-cash deal, and cost Microsoft $16 billion without Nuance's net debt included The reason why Microsoft decided to acquire one of the largest and most successful speech technology companies is because with the technology that Nuance has, Microsoft can greatly upgrade their own and provide even more services to their users. One of the main benefits that come out of this acquisition is the fact that Microsoft will be able to employ more of itself into healthcare industries because of Nuance’s strong standing in the field. Microsoft wants to use Nuance’s technology to create new solutions for patients and doctors in order to solidify Microsoft’s efforts to enter and thrive in the healthcare field This acquisition caused the company’s total addressable market value in the healthcare space to increase to $500 billion. Along with this, Microsoft for years has been developing its AI to increase customer engagement and using Nuance’s

advanced technology, they can update their cloud computing and efficiency incredibly. Because Nuance had a history of also acquiring smaller technology companies on the West coast, Microsoft has gained a plethora of technology that they can now implement into their own products and services The overall synergies will be fully realized and sustained when the technology is implemented in business and especially hospitals and starts reducing the stress or complications that come along with those professions.

Microsoft’s current share price is $284.34, its P/E ratio is $31.63, and its EPS is $8.99.

Although this price is higher than the price of the company after the 28% crash in 2020, it is still lower than the peak price of $336.32 in December of 2021. Since it acquired Nuance in March of this year, Microsoft was able to

announce an application called Dragon Ambient eXperience (DAX) which uses voice control to automatically document conversations between doctors and their patients, and can fill out electronic health records using the information gathered. By further integrating Microsoft Cloud for Healthcare with Nuance’s new machine learning models, Microsoft will be able to better support healthcare professionals and provide a seamless and efficient program that many hospitals will then want to implement.

Compared to their competition, such as Apple, Google, and other technology companies that are all trying to get into the healthcare space, Microsoft has an edge because of the already established connections that Nuance has with all of its clients, especially those that are system providers. By leveraging this to their advantage and using products that Nuance already has in place such as Dragon Medical One and PowerScribe One, Microsoft can

make the technology even faster and easy to use, attracting more clients to the product Combining the industry knowledge of Nuance’s databases and the market reach that Microsoft already has, I think that this acquisition will demonstrate what it looks like when a technology company can successfully move into the healthcare space and reimagine their own products to make them more efficient In my opinion, I believe that apart from focusing solely on the industry of healthcare, Microsoft can find great success if they move into something like supply chain operations or corporate expense management The latter is a field that could be deemed financial technology and the company has already provided security for banking, however, if they are able to monitor large amounts of data for companies and provide them with more efficient solutions, especially with Nuance’s voice powered AI, there could be a lot of growth for the company there Overall, I believe this acquisition was strategically done by Microsoft to gain more supply for research and aid their entrance into new business areas It will be interesting to see how advanced their technology could get in the future as the company continues to grow its relationships and conduct new research.

PEPSICO & SODASTREAM

By: Ela Taneja

In 2018, PepsiCo (NYSE: PEP) acquired the Israel-based beverage company, SodaStream (NASDAQ: SODA) for $32 billion SodaStream’s share price in the 30 days prior to the August 2018 announcement averaged $142 PepsiCo purchased SodaStream for $144 per share in cash, which represented an 11% premium at the time of the announcement and a 32% premium to the 30-day average share price. Goldman Sachs and Centerview Partners advised the acquirer, PepsiCo, while Perella Weinberg Partners advised the target, SodaStream. The rationale behind PepsiCo’s acquisition of SodaStream was that Pepsi needed to keep up with consumer preference trends, which at the time– and has since grown in popularity–included adopting healthier lifestyle choices. Pepsi and its competitors such as Coca-Cola are infamous for their sugary and unhealthy sodas that have become an American staple. But, with consumer preferences shifting away from artificial sweeteners and towards healthier alternatives, brands such as Pepsi feel pressure to adapt. SodaStream, however, was not Pepsi’s first “healthy” acquisition. In 2001, Pepsi acquired Quaker Oats and its subsidiaries, including Gatorade. This allowed the organization to begin expanding into health-focused products and beverages

Pepsi’s acquisition of SodaStream strengthens

its health-focused segment of products as well as its ability to keep up with consumer preferences.

SodaStream is an incredibly innovative and popular, healthier alternative to classic carbonated soft drinks. Through “do-ityourself” carbonation with mix-and-match syrups, the consumer has an optimal choice The synergies of this acquisition are an overall revenue increase, product diversification, and positive rebranding. SodaStream’s last 12 months of revenue prior to the announcement was $61257 million and Pepsi’s was $64.42 billion. Currently, Pepsi’s revenue has increased to $86.392 billion. Seeing as SodaStream is mostly based in Israel, its overall outreach is still more European and Middle East-focused With this acquisition, SodaStream has been able to successfully enter and excel in North American markets. It

has also amassed a presence in Asia and other developing markets. Furthermore, it has helped Pepsi develop a more sustainable and healthier brand with more health-conscious alternatives through SodaStream This acquisition also opens the door for product development and diversification. Although Pepsi has stated that it wants to keep SodaStream as a standalone unit, SodaStream now has access to more flavors which gives Pepsi the opportunity to produce and launch new syrups. Today, PepsiCo’s price per share is $183.64 with a price-to-earnings ratio of 26.60.

SodaStream, now a subsidiary of PepsiCo, has contributed to that growth Prior to the acquisition, Pepsi’s share price was $100.23, and its price-to-earnings at the time of 3103 The price-to-earnings ratio is a bit above average for consumer and retail, but consumer spending has also increased by

02% in the last month In 2022 SodaStream amassed $436 million in online sales and its products are also available in Walmart, Target, and other major retailers Consumers across all generations are more conscious about their purchases and are now more willing to spend more money on sustainable brands. Gen Z, being the trailblazer of sustainable consumption, has spread its influence on older generations. 90% of Gen X consumers are willing to spend at least 10% extra on sustainable products. Gen Z will represent 27% of the world’s income, and their influence on markets will continue to grow A potential recommendation with this move towards a more sustainable and healthier image is turning to more sustainable packaging in the form of pods or tablets instead of plastic syrup bottles.

With environmental concerns and a new generation of consumers that stress sustainability and preach healthier standards of living, a food and beverage giant like PepsiCo made a great decision in acquiring SodaStream Pepsi moved in the right direction with consumer and market trends, and has continued to diversify its portfolio and improve its overall brand image.

AMD & PENSANDO NETWORKS

By: Rohan Bajpai

Advanced Micro Devices (NASDAQ: AMD) is a global semiconductor designing company specialized in creating microprocessors (CPUs), graphics processing units (GPUs), Field Programmable Arrays (FPGAs), and System-on-Chip (SoCs) for the personal and enterprise segments. In the past year, AMD has purchased Pensando Networks, a startup focused on developing programmable processors and hardware aimed to execute cloud-related processes. AMD bought Pensando Networks to bolster its data center revenue segment. The rationale behind the deal was for AMD to acquire Pensando’s portfolio of networking technologies that would complement and strengthen AMD’s existing data center solution The deal was structured as a private transaction to Pensando’s shareholders, and AMD paid $1.9 billion for the acquisition, with $15 billion used in cash and the remaining $400 million financed through debt. AMD paid a premium of $200 million for Pensando (~1176% premium), as $17 billion was assigned to Pensando’s shareholders. DBO Partners acted as financial advisor to AMD, while DBO partners acted as financial advisor to Pensando Investors believed the acquisition would be accretive for the company, as AMD’s share price rose 2.5% the day following its April 4th, 2022, announcement (from $9266 to $9467) The deal was finalized on May 26th, 2022.

Synergies from the acquisition have benefited AMD with its business operations AMD was able to acquire hard synergies from its acquisition of Pensando by utilizing Pensando’s existing advancements in its data center processing segment which reduced the need for AMD to make additional investments in R&D in the segment. Additionally, AMD was able to gain operational synergies from Pensando’s operations by merging it with its previous acquisition of Xilinx, which specialized in the production and design of FPGAs.

Since the acquisition AMD’s share price has increased, reaching $9801 per share as of March 31st, 2023, despite huge macroeconomic uncertainty stemming from the banking sector. AMD’s trailing twelve months price-to-earnings ratio is at 116.68.

AMD’s performance on the stock market has been further proof of how beneficial its

I believe that overall, AMD’s acquisition of Pensando has been beneficial to the company. The time of purchase and the valuation of Pensando was very reasonable for AMD, especially given that the deal had more long-term benefits for AMD Additionally, the acquisition has helped AMD diversify its revenue streams as it begins to gain more market share in the data center segment, an area extremely valuable for the company as its main competitor, Nvidia, is beating them out in the personal electronics segment

acquisition of Pensando has been to the company.

MICROSOFT & LINKEDIN

By: Tanish Gandhi

Microsoft's (NASDAQ: MSFT) acquisition of LinkedIn (NYSE: LNKD) in 2016 was one of the biggest tech transactions in recent memory Microsoft acquired the social networking service for $262 billion in cash at a value of $196 per LinkedIn share The share price of LinkedIn was around $131 before the news, and it increased to $196 following the announcement. The purpose of the transaction was to increase Microsoft's presence in the professional and social networking communities LinkedIn had a sizable professional user base and provided Microsoft with the chance to integrate its products into LinkedIn's platform, creating a one-stop shop for business requirements The share price of Microsoft before the announcement of the acquisition was $50.19 and it rose to $5805 approximately 2 months after the acquisition

Cross-selling prospects between LinkedIn and Microsoft's other products, such as Office 365 and Dynamics CRM, were among the hard synergies. For instance, Microsoft Dynamics 365 and LinkedIn's Sales Navigator were combined, enabling salespeople to find new leads and learn more about the preferences and wants of clients by using LinkedIn insights. Business sales procedures become more productive and efficient because of this connectivity The inte ess into her

difficult synergy that enabled Microsoft to provide marketers with a more complete range of options for connecting with professional audiences. The combination of LinkedIn's data and Microsoft's AI capabilities has also enabled more targeted and personalized advertising experiences for users Soft synergies included merging the data and analytics expertise of both businesses to give people more individualized and smarter experiences. More individualized and efficient job matching and career development are now possible because of the combination of data from LinkedIn on job skills, titles, and career advancement with data from Microsoft on skills training, certification, and search Moreover, Microsoft has been able to leverage LinkedIn's Economic Graph, a digital depiction of the world's workforce, to guide its workforce development programs. This graph offers helpful insights into labor market trends and skills shortages.

Although Microsoft paid a premium of around 50% above LinkedIn's pre-announcement share price, it was deemed appropriate considering the strategic importance of the purchase Microsoft was advised by institutions including JP Morgan, Goldman Sachs, and Bank of America Merrill Lynch, and the sale was set up as an all-cash transaction. Microsoft will issue fresh debt to pay for this transaction. Given that it now has less than $50 billion in total debt compared to a market value of equity of about $400 billion, this could assist the business cut its weighted average cost of capital. The company's average cost of debt is less than 2.5%, whereas the cost of equity is estimated to be roughly 75% While the cost of debt is likely to increase following the deal, due to the higher debt load and subsequent risk of a credit rating downgrade as well as rising interest rates, it will still remain substantially lower than the cost of equity

Accordingly, Microsoft’s cost

of capital should decline fairly significantly

A recommendation for Microsoft is to create new goods and services based on data from LinkedIn. LinkedIn data may be utilized to create new products and services that cater to the needs of companies and professionals. For instance, Microsoft may utilize the information from LinkedIn to develop a platform for matching jobs that would assist job searchers in locating the greatest possibilities

based

on their qualifications and expertise

Five years after the acquisition, Microsoft had effectively incorporated LinkedIn into its ecosystem; in the last quarter of 2022, LinkedIn's revenue increased by 25% year over year. Due to the platform's contribution to the growth of both LinkedIn's income and Microsoft's cloud business, LinkedIn has been a valuable asset for Microsoft. Microsoft's current share price as of April 2023 was about $383, with a P/E ratio of about 36.

QUIDEL & ORTHO CLINICAL DIAGNOSTICS

By: Shaun Gupta

Quidel Corporation’s (NASDAQ: QDEL) acquisition of Ortho Clinical Diagnostics (NASDAQ: OCDX) is an exciting move that cements Quidel’s position as a leader in the diagnostics industry The deal, announced in December 2021, closed during the first half of the fiscal year 2022. The acquisition price of $24.68 per share represents a 25% premium over Ortho’s closing price on December 22, 2021, and an equity value of approximately $6.0 billion. The rationale behind the acquisition is clear By bringing together Quidel’s point-of-care diagnostics with Ortho’s global reach, there is a substantial opportunity to capitalize on crossselling opportunities, move into attractive adjacent markets, and accelerate innovative product expansion and the development of molecular technologies In addition, the combined company will have a more diverse product pipeline, enhanced R&D capabilities, and a broader geographic footprint Notably, the two companies are committed to their customers, patients, and the communities they serve, reinforcing their confidence in the longterm value creation of the transaction. The synergies expected from the acquisition are both hard and soft. The complex synergies are anticipated from operational efficiencies, supply chain optimization, and shared

administrative functions, including public company costs. Quidel expects the combined company to realize approximately $90 million of run-rate cost-related synergies, excluding one-time costs, by the end of year three. The soft synergies, conversely, are expected to come from the combination of the companies’ highly complementary product and service offerings. The transaction provides Quidel ample opportunity to capture demand in emerging markets through telehealth technology and digital health capabilities, utilizing Ortho’s strong customer relationships and providing greater patient access to pointof-care diagnostic products. Quidel expects to drive cross-selling solid revenue synergies of over $100 million by 2025, as well as meaningful adjusted EBITDA benefits. The deal structure combines cash and newly issued shares in the combined company. Quidel expects to finance the cash portion of

the consideration with a combination of cash on hand and debt financing. Perella Weinberg Partners and Citi were the lead financial advisors to Quidel, while J.P. Morgan Securities LLC acted as Ortho Clinical Diagnostics’ financial advisor

As of April 5, 2023, QuidelOrtho Corporation’s stock price is $8947 per share, and its PE ratio is 9.36. The playout of the deal appears to be successful, as Quidel has emerged as a leader in Transfusion medicine with a market share of 29% and strengthened its position in Immunohematology and Donor Screening to 39% and 15%, respectively. The company reported revenue of $3.3 billion in 2022, a 65% increase over the previous year, and expects revenue growth to continue QuidelOrtho’s

Adjusted EBITDA margin is expected to improve from 16% in 2022 to 26% in 2025. In addition, the acquisition has solidified Quidel’s position as a leader in the diagnostics industry, providing the company with a more diverse product pipeline, enhanced R&D capabilities, and a broader geographic footprint

To capitalize on the expected synergies, Quidel should integrate Ortho’s products, solutions, and services into its existing offerings. The company should also leverage Ortho’s global commercial reach to expand its customer base and drive revenue growth. In addition, Quidel should continue to invest in R&D to develop innovative products that meet the evolving needs of its customers and the healthcare industry as a whole. Overall, the transaction is expected to generate substantial synergies and create significant shareholder value Also, by leveraging Ortho’s global reach and product offerings, Quidel can capture growth opportunities in emerging markets and expand its customer base. Moving forward, the company should focus on integrating Ortho’s products and solutions, investing in R&D, and driving revenue growth to capitalize on the expected synergies and solidify its position as a leader in the industry.

PIONEER & PARSLEY ENERGY

By: Rohin Dutt

In October 2020, Pioneer Natural Resources (NYSE: PXD) announced the acquisition of Parsley Energy (NYSE: PE) This all-stock transaction constituted a 79% premium to Parsley shareholders based on unaffected closing share prices as of October 19, 2020 Pioneer will issue approximately 52 million shares of common stock in the transaction. After closing, existing Pioneer shareholders will own approximately 76% of the combined company and existing Parsley shareholders will own approximately 24% of the combined company. The total equity value of the transaction is approximately $45 billion The total estimated value of the transaction, inclusive of Parsley’s debt assumed by Pioneer, was $76 billion

The transaction was advised by several entities. For Pioneer, Goldman Sachs and Morgan Stanley served as the lead financial advisors with Gibson, Dunn & Crutcher LLP as the legal advisor. For Parsley, Wells Fargo and Credit Suisse served as financial advisors with Vinson & Elkins LLP as the legal advisor

There were numerous synergies behind the deal including operational efficiencies, expanded footprint, and future development. The deal significantly expanded Pioneer's footprint in the Permian Basin, one of the most prolific oil-producing regions in the United States Parsley Energy had a strong presence in that region, with an additional 267,000 net acres in the Midland Basin and 215,000 net acres in the Delaware Basin. This acquisition expanded Pioneer’s acreage rapidly, bringing their net acreage in the Permian basin to approximately 930,000 acres. In total, Pioneer

estimated that this deal expanded their reserves by about 65%. In terms of operational efficiencies, the acquisition yielded approximately $325 million in annual cost savings, due to improved operational efficiencies and consolidation of overhead expenses such as reduced drilling cost, reduced administrative expenses, enhanced supply chain management, and better productivity. Additionally, the combined company has made it a priority to focus on sustainable operations heading into the future

Since the deal was announced, Pioneer’s stock price has risen from $85.54 to $209.97, a 145% increase. Overall, the deal didn’t change the operational goals of the company but rather increased its efficiency and market presence, which has been the main driver in the increased stock price. Additionally, the deal

was completed during a time when oil and gas stocks were plummeting due to the onset of the COVID-19 pandemic Before the pandemic, Pioneer’s share price was just over $100, less than half of its current value, indicating that the deal proved to be massively successful Furthermore, Pioneer’s price-to-earnings ratio has decreased massively since the completion of the deal. At the end of 2021, the Pioneer reported a P/E of 21.0 and now in April 2023 that ratio has decreased to 6.56. This is slightly slower than the current industry P/E of 7.9. However, the long-term outlook for the oil and gas industry is uncertain at this time, as there is increasing pressure to transition to renewable energy sources and reduce

greenhouse gas emissions So far, the deal has proven to be massively successful, but in the long term it's uncertain if that will hold true.

BROOKFIELD & AUSNET

By: Kartik Maheshwari

On February 18th, 2022, a consortium led by Brookfield Asset Management (NYSE: BN) acquired Australian energy distributor and service provider AusNet Services (ASX: AST) in a deal that marked the full privatization of Australia’s electricity infrastructure sector As a part of the transaction, Brookfield offered $1.78 per share in cash, representing a premium of 34% in comparison to the $1.33 price AusNet was trading at prior to the deal's announcement. Brookfield funded $6.44 billion in equity and $1.34 billion in debt in order to acquire AusNet, resulting in a total transaction value of $778 billion

Bank of America served as Brookfield's financial advisor, with White & Case serving as primary legal advisors. For AusNet, Citigroup, Adara Partners, and Barrenjoey Capital Partners served as financial advisors, with Dentons and Allens serving as legal advisors. The deal consisted of multiple short and longterm synergies, including Brookfield's mission to build infrastructure toward achieving net zero emissions, increased flexibility in their capital structure, and a lower regulatory burden for AusNet Brookfield's Asia-Pacific head Stewart Upson termed AusNet as a "forever asset", as much of their plans for AusNet are to be realized in the long-term future Victoria, where AusNet currently serves upwards of 1.5 million customers, has a high usage of gas, making for a high need for investment in electricity transmission extensions Brookfield stated that they plan to

invest as much if not more than their acquisition price into electrifying the grid across the near future in order to meet their 2050 net-zero goal They are currently in possession of $60 billion in renewable assets under management, placing them as one of the global leaders of decarbonization. Acquiring AusNet's $6.45 billion regulated and contracted electricity transmission and distribution asset base makes for further diversification of their assets, as well as more predictable earnings and cash flows for shareholders With AusNet becoming private since the transaction, the Australian energy provider was able to redirect a greater proportion of its investment expenditure toward their 2050 net-zero goal, rather than being required to pay steady dividends to its shareholders

Brookfield's share price prior to the announcement was $43.01 and currently

stands at $3154, though this figure is altered largely by the ongoing energy crisis Brookfield's price-to-earnings ratio currently sits at 26.52-up from 17.41 at the time of the deal being closed-though this figure is also dependent on the highly volatile energy sector currently in the midst of an ongoing crisis. The crisis, coupled with their initial goal of the acquisition being to achieve net-zero emissions by 2050, makes it too early to judge whether the deal has been successful thus far

Depending on how long and costly the energy crisis ends up, its impacts on the economy in the foreseeable future may force Brookfield to postpone its desired target year past 2050. Also, stronger prospective climate change policies may play a significant role in the electrification development of Brookfield's assets. In the near and long-term futures respectively, Brookfield should continue to utilize their acquisition of AusNet Services as a method of achieving decarbonization by 2050 Alongside their rich, diverse portfolio of renewable assets, the acquisition of AusNet will aid Brookfield's efforts of electrification.

REGAL REXNORD & ALTRA INDUSTRIAL MOTION

By: Dhroov Kshatriya

On October 27th, 2022 Regal Rexnord (NYSE: RRX) a leading manufacturer of automation solutions and industrial powertrain solutions announced a press release about their agreement to acquire Altra Industrial Motion (NASDAQ: AIMC), a leader in power transmission products Regal Rexnord acquired 100% of Altra’s shares (79,838,709) as a part of their “all-cash” deal at $62.00 per share, which was about $2.28 higher (per share) than Altra’s share price ($59.72) on the day of the announcement, which implied a 3.8% control premium. AIMC’s share price 1 day before the announcement was $4025, and it jumped to $60.10 one day after the agreement, a solid 49% jump. The total value of the acquisition was $495 billion The deal was closed on March 27th, 2023

The advising side of the deal included Goldman Sachs as financial advisors to Altra Industrial with Cravath, Swaine & Moore and Sullivan and Cromwell as legal advisors. Regal Rexnord had a combination of J.P. Morgan and Incentrum as financial advisors and Simpson Thacher & Bartlett and Sidley Austin as legal advisors. The deal brings the brands Kollmorgen, Portescap, Twiflex, Thomson, Bauer Gear Motor, Stieber, Stromag, Jaure, Kop-Flex, Centa, Falk, and Rexnord together The primary goal of this deal is to transform Rexnord’s existing automation portfolio namely ModSort and Automation Solutions (formerly Arrowhead) into “a meaningful, global automation solutions provider.”

Regal Rexnord expects this merger to improve free cash flow through a higher percentage of market share. Through synergies, based on growth and margin outlook, there is an expectation of $160 million in annualized run rate cost synergies with expectations of $83 billion in revenue by 2025 These synergies are expected to be driven by procurement, distribution efficiencies, footprint rationalization, and SG&A savings. This also puts the gross margin expectation at 40% by 2025 These projections are based on the high growth prospects in the automation industry as this acquisition will enable Rexnord’s ModSort and Automation Solutions and Altra's Automation & Specialty platform to transform their entire automation portfolio. These expectations are also driven by the unique position that Rexnord gained through this deal: it significantly increases its industrial powertrain portfolio as complimentary

products like brakes, gears, and clutches will be added in while also increasing its participation in the number of end markets, which has the potential to reach 70% of the sales in the automation business

Altra Industrial Motion was valued at $4.74 billion but acquired at $4.95 billion. However, I don’t believe that Rexnord overpaid for it. Beyond the astronomical returns expected from the synergies, AIMC is in a strong position as a company Their diluted EPS rose from 0.42 in 2021 to 1.94 in 2021. Further, the financial health of the company can be verified with its strong current (222) and quick ratios (1.23), and lower debt to equity ratio (0.53). Beyond that, AIMC also noticed a 358% net income growth in 2022. This is possibly due to the supply chain changes recently and amplified by the growth potential in this industry. Thus, this acquisition has the ability to prove highly profitable for RRX. Regal Rexnord has seen consistent growth in its EPS, reaching an all-time high in 2022 at 7.33. Post this deal, EPS is set to grow but only slightly keeping in mind the changes in the supply chain. Thus, moving forward, if Regal Rexnord is able to efficiently utilize the synergies, they will be in a strong position to meet the $8 billion revenue goal and position themselves as a leader in the industry

MICROSOFT & GITHUB

By: Rohan Kottamasu

In the technology sector, mergers and acquisitions are frequently used by businesses to grow and obtain a competitive advantage The purchase of GitHub by Microsoft (NASDAQ: MSFT), which was announced on June 4, 2018, and was eventually finalized on October 25, 2018, was one notable deal that attracted the attention of many in the tech community. GitHub is a web-based hosting service for software development projects that use the Git version control system On the other hand, Microsoft is a global technology business that focuses on creating hardware, software, and cloud services. The purchase ranked as Microsoft's seventh-largest acquisition to date with a $7.5 billion equity value.

Due to the fact that GitHub was a privately owned business prior to the announcement, there was no share price to monitor But 20 days after the announcement, the price of Microsoft's stock dropped 4.05%, suggesting skepticism among investors However, after the purchase was finalized, Microsoft's share price grew by 6.5% overall and kept rising steadily. The goal of the acquisition was crystal clear: Microsoft wanted to increase its developer community footprint and enhance its developer-focused offerings. With over 28 million developers using the platform to collaborate and share code, GitHub was the biggest code host in the world. Microsoft got

access to a sizable developer community and their valuable code contributions by purchasing GitHub

Microsoft demonstrated their keen interest in acquiring the business by paying a premium of 275% over GitHub's most recent private valuation at the time of the transaction For context, in its most recent fundraising round in 2015, GitHub raised $350 million, which valued the business at $2 billion. Microsoft’s acquisition of GitHub was set up as an allstock exchange, with no cash or debt exchanged. Additionally, a number of banks were involved in the transaction, including Qatalyst Partners, who advised GitHub, and Morgan Stanley and JPMorgan Chase, who served as financial advisers to Microsoft. In the current technology market, Microsoft is doing well. Microsoft's stock price is $287.23 and its EPS (P/E) ratio is 3283 as of April 3, 2023 Microsoft's acquisition of GitHub has been effective, as the company has integrated GitHub's services into its Azure cloud platform

and provided new developer features. Github was integrated into Microsoft’s intelligent cloud segment, which has been steadily increasing by 20% in revenue per year on average.

Compared to their competition, such as Apple, Google, and other technology companies that are all trying to get into the healthcare space, Microsoft has an edge because of the already established connections that Nuance has with As for suggestions, Microsoft should keep funding GitHub and the developer group Microsoft's recent success has been largely attributed to its emphasis on open-source software and collaboration, and the purchase of GitHub has only consolidated its place in

these markets Microsoft should also keep developing and enhancing its developer-focused services to remain ahead of rivals like Amazon Web Services and Google Cloud Platform In conclusion, Microsoft's acquisition of GitHub was a significant and effective business transaction in the technology sector that enabled Microsoft to strengthen its developerfocused offerings and increase its presence in this area.

MONDELEZ & CLIF BAR

By: Brooke Vandermyde

Mondelez International, Inc. (NASDAQ: MDLZ) is a confectionery, food, beverage, and snack company that operates in 150+ countries With a 137% market share in the global snacking industry, Mondelez prides itself on empowering consumers to snack right with their flagship products such as Wheat Thins, Oreos, and Ritz. After Dirk Van de Put stated that he wanted to prioritize more snacking segments within the industry, Mondelez announced on June 20, 2022 that they planned on acquiring Clif Bar & Company for $2.9 billion. The deal includes additional cash considerations if Clif surpasses certain undisclosed revenue targets in 2025 and 2026 for a potential payout of $24 billion Clif is currently #1 in the US protein bar market and is looking to expand to global markets with Mondelez’s help and expertise. For Mondelez, this acquisition furthers their efforts of prioritizing their snacking segments in key geographies like Latin America, as well as achieve long-term growth. These synergies are expected to be realized in year 2 through expanded global sales growth after allowing time to strategize marketing plans. Mondelez was advised by Morgan Stanley, and financed this deal through cash on hand and debt.

On August 1, 2022, the deal was finalized and MDLZ finished the trading day at $64.89 a share The stock currently sits at $7024, an 8% increase that is attributed to Mondelez’s aggressive horizontal acquisition strategy and is accompanied by an EPS of 1.96 in their most recent earnings report In the last 3 months of

2022, in part due to its acquisition of Clif, Mondelez’s net revenue increased by $361 million, and is projected to grow its top line by an additional 5% in 2023. On March 7, 2023, Mondelez began its restructuring efforts within Clif by replacing its CEO and 34 other executives that helped bring the deal to paper.

In my opinion, this deal was great for Mondelez and provides proof of its efforts to expand into new snacking segments to achieve long-term growth, which was a promise to shareholders in 2022. However, due to Mondelez’s size and standing in the industry, I do not see this deal single handedly impacting Mondelez a substantial amount. The protein bar market has seen a sharp comeback since the pandemic, increasing to an $8 billion market size. This acquisition puts Mondelez in a position to be

a market leader in another snacking category, keeping them competitive against their biggest competitors such as Nestle, General Mills, and PepsiCo.

For Clif, this deal was also extremely beneficial as it was a privately owned company before, so its employees reaped a generous payout through this acquisition. This deal gives Clif Bar much-needed exposure to emerging markets and allows them to continue scaling in a more efficient manner. Overall, this deal will reap benefits for Mondelez and has already proven to do so through the increase

in net revenues and share price. However, it will not present as much of an impact as anticipated to increase Mondelez’s revenue and earnings by a substantial amount.

ABBVIE & PHARMACYCLICS

By: Jay Kadire

AbbVie Inc. (NYSE:ABBV) is a biopharmaceutical company that discovers, develops, manufactures and sells pharmaceuticals worldwide and has a market cap of $284B On March 4, 2015 AbbVie officially announced its plans to acquire a smaller biotechnology company, Pharmacyclics (NASDAQ:PCYC). At the time, Pharmacyclics focused on small-molecule drugs for treating cancer and other immune mediated diseases.

Pharmacyclics’ main drug, Imbruvica, passed all three stages of FDA approval and was selling in global markets. Imbruvica is a Bruton's tyrosine kinase (BTK) inhibitor approved for use in four indications to treat three different types of blood cancers. This drug perfectly complemented AbbVie’s oncology segment and was set to bolster AbbVie’s revenues from that area of their pipeline.

On May 26, 2015 the acquisition of PCYC was officially completed at a price of $208B The deal was done with 58% cash and 42% stock, with PCYC stockholders receiving either $261.25 per share in cash or 3.99 shares of ABBV per share of PCYC This entailed a premium paid of 20.6% as PCYC was trading at $217.60 at the time of the announced acquisition. AbbVie’s financial advisor was Morgan Stanley & Co. and PCYC’s financial advisors were Centerview

Partners LLC and J.P. Morgan Securities LLC. AbbVie’s share price was $58.24 when the deal was announced and $6659 when the deal was completed; today, ABBV trades at near $160. At the time AbbVie expected the acquisition to “immediately strengthen [their] clinical and commercial presence in oncology” while also broadening their product portfolio They noted the growing nature of combination therapies as being a lead reason to their purchase, and made a statement to how Imbruvica would diversify and grow their revenue over time AbbVie expected the acquisition to be accretive beginning in 2017. AbbVie at the time was facing imminent patent expiration of their key drug Humira and were fighting to receive a new patent in order to fight off biosimilars. Still, the addition of Imbruvica –which was expected to bring in $14B in revenue, of which they would receive half and Johnson & Johnson the other half– would have

amounted to being a significant addition to Abbvie’s drug portfolio. The space for smallmolecule drugs was increasing and so were the number of companies looking to get into the oncology space Albeit, Imbruvica proved to not yet be nearly successful as AbbVie predicted While its revenue has increased a substantial amount each year, the drug only produced $4.5B for AbbVie in FY22.

This acquisition has strengthened AbbVie’s pipeline, and while it hasn’t yet reached its potential, I predict the drug will eventually reach there Firstly, the patent for Imbruvica doesn’t reach expiration until 2036, giving AbbVie plenty of time to continue developing it and pairing it with other drugs to become more effective. While there are other drugs in the market, Imbruvica’s 95% ORR (overall response rate) leads it to being far more

effective than other competing drugs in the market While the medication is pricey, its convenience and efficacy will drive more demand. Along with this, as more insurance policies begin to cover the payment for Imbruvica, more consumers will be driven to use it. As AbbVie invests more into oncology research, they will find other compounds that provide synergistic effects with Imbruvica. This will also drive more demand and higher revenues. Overall, while Abbvie’s acquisition of Pharmacyclics hasn’t yet reached its potential, I believe that it has so far been successful

AMD & XILINX

By: Bhavesh Boyapati

In late 2020, AMD (NASDAQ: AMD) announced that it agreed to buy Xilinx (NASDAQ: XLNX), a semiconductor technology company Valued at $35 billion, AMD closed the acquisition in February of 2022 – making it one of the largest semiconductor M&A deals ever The deal was done in all stock and shareholders of Xilinx received 1.7 AMD shares per Xilinx share. This deal caused Xilinx’s price to increase from $115 before the deal was announced to $194 at the announcement of the deal, and AMD’s stock rose from $75 to $114 between the deal’s announcement and its closing

The primary reasons for this acquisition land on synergies such as saving money from supply chain overlaps and other methods and improved infrastructure as well as increased sales potential. AMD’s President and CEO, Dr Lisa Su, stated, “Xilinx offers industry-leading FPGAs, adaptive SoCs, AI engines and software expertise that enable AMD to capture a larger share of the approximately $135 billion market” Part of acquiring Xilinx was for the technology advancements they had to improve and manufacture chips

Credit Suisse and DBO Partners advised AMD, and Morgan Stanley and Bank of America advised Xilinx. Since the acquisition, AMD’s stock has dropped to $9587 as of April 4 from $114 at the time of acquisition. The deal led to 400 million new shares created but was marketed as accretive from

acquisition due to Xilinx’s revenues growing at a 30%+ clip. According to the company’s quarterly earnings reports, AMD’s cash, margins, and EPS all dropped the following months from $0.59 to $0.01 and it is yet to be seen how the deal will play out in the future. The economy and the outlook for semiconductors has caused the industry to decline since 2022. The Federal Reserve, waning demand for semiconductors, and recessionary concerns have all taken a toll on the stock price of AMD As a result, it is too early to conclude whether the deal is successful or not. In fact, the deal is very likely to be successful as Xilinx is an industry leader in FPGAs or Field Programmable Gate Arrays which are programmable and thus, configurable for a number of industries such as aerospace and defense, communications, medicine, industrials, and more. The market for FPGAs is still new and is a multibillion

pp y y applications are expected to shift by 2027 doubling the current number in use. The compounded annual growth rate for this tech sits as 14% which is a good thing to hear for AMD as demand for other products is dwindling Considering that AMD is still above water in a market where semiconductors and chip manufacturers are struggling, they have a wild card in Xilinx that will be realized in the coming years. AMD acquiring Xilinx is still small in the scheme of things as AMD has acquired more firms such as Pensando Data on its path to gain an edge in the industry Xilinx has continued developing under AMD as it has the resources and backing and overall, this deal looks positioned to be successful for AMD on its current trajectory.

BOX & SIGN REQUEST

By: Brandon Stein

Box Inc. (NYSE: BOX) is a Cloud Content Management company that was founded in 2005. The current chief executive is Aaron Levie. Box powers over 97,000 businesses globally, with offices across the United States, Europe and Asia The company provides their services to health care, government, financial services, and legal services industries in the United States and internationally. Some of their notable customers include the Department of Defense, NASA, Morgan Stanley, Americans Homes 4 Rent. Box provides secure cloud storage for all of these companies and more while allowing for cloud-based content management, collaboration, and file sharing tools.

SignRequest was an e-signature software company that could provide users with tools to affix legally binding digital signatures on electronic documents. The notable features of this program include, custom name, logo, and color designs, smart document preparation, and most notably, a send and sign feature. This acquisition was completed on February 8th, 2021 This acquisition cost a total of $543 million and consisted of a combination of cash and shares of their Class A common stock. The exact amount of cash paid was $443 million of cash and 550,366 shares of their Class A common stock which was valued at $10.0 million.

$434 million was allocated to goodwill, $149 million to the acquired developed technology, $2.5 million to deferred tax liability and the remainder to net liabilities assumed which

were not material. The goodwill recognized was primarily to increase synergies that were expected to be achieved from the integration of the acquired developed technology into the Box service

BOX is currently priced at $2633 as of Tuesday, April 4th, 2023. The current market cap of BOX is $3.80 billion. The enterprise value is $390 billion BOX’s current PE ratio is 438.83, while their EPS is at $0.06 and is estimated to grow 112.76% within the next five years.

median of the EV/Sales multiple was used to find an enterprise value of $2146 billion, whereas the transaction implied a 29% premium. The acquisition by Salesforce was undoubtedly a strategic and clever one. Slack has now been integrated into Salesforce Customer 360 platform which helps business owners to perform analytics and gives companies a rounded base.

Prior to this acquisition, BOX’s stock price was around $17. Within just a few months of BOX acquiring SignRequest their stock price increased to around $23. SignRequest was a major missing link in BOX’s goal to build their content cloud Through this acquisition, Box was able to offer a platform where their customers could work entirely in BOX from their starting point, to their ending point of when they would sign their documents off.

To best utilize this acquisition, BOX immediately implemented SignRequest into

their platform. Their new BoxSign addition allowed their customers to create templates for common, repeatable processes, like NDAs, have security controls including signer authentication via email and a tamper seal indicator, allowing for unlimited documents to be sent for signature from within the Box web application, among other features.

PEPSICO & SODASTREAM

By: Aidan Sondell

PepsiCo is one of the world leaders when it comes to food and beverages. Their top products include, but are not limited to, Pepsi, Lay’s, and Quaker Oats In August of 2018, PepsiCo (NASDAQ: PEP) announced that they would be acquiring SodaStream International (NASDAQ: SODA) for $3.2 billion.

SodaStream makes a machine that allows their consumers to make their own carbonated beverages in the comfort of their own home According to Pew Research, compared to 20 years ago, 54% of Americans pay closer attention to eating healthier. With the market preferences changing to healthier food and beverage items, Pepsi products have not been as prominent in consumer homes. Wall Street Journal reported that their beverage revenue in North America has declined nearly 1% since the third quarter of 2017 contributing to the 14% decrease in profits over that span.

SodaStream has focused on making sparkling water flavors with less sugar compared to their soda items. In order for Pepsi to remain a staple household name, they needed to remain aligned with consumer values It also helps PepsiCo reduce their carbon footprint as SodaStream utilizes reusable bottles. The CEO

of PepsiCo, Ramon Laguarta, stated that “SodaStream is highly complementary and incremental to our business, adding to our growing water portfolio,” (Bloomberg, 2018) There were hard and soft synergies that soon benefited both companies. Hard synergies focus on the measurable benefits such as increased efficiency and cost savings One hard synergies was increased manufacturing efficiency for SodaStream, as PepsiCo is known for their efficient manufacturing processes. This will allow SodaStream to cut some of their manufacturing costs with the help from Pepsi. Another hard synergy was the expanded distribution channels and target market for PepsiCo due to the diversification of their product portfolio By entering into a new market, they unlocked potential for rapid revenue growth. A couple soft synergies included increased brand recognition and marketing successes for SodaStream. Overall it is a win-win deal, and both companies will begin to see benefits within the next 2-3 years.

Goldman Sachs and Centerview were the primary banks that advised PepsiCo on the acquisition and provided insight regarding SodaStream’s valuation and the deal structure. SodaStream was advised by Perella Weinberg Partners Ultimately, PepsiCo paid all $32B in cash when the deal was officially completed near the end of 2018

Currently, PepsiCo is trading at $181.65 per share. Due to Pepsi’s growth over time, there has been about a 62% increase in their stock price since the acquisition of SodaStream was announced in August of 2018 In 2019 they also acquired Evolve, the company that makes Muscle Milk Over the past five years, Pepsi has been making strong moves in order to create a new brand image that focuses on making

healthy at-home food and beverages. The current P/E ratio is 28.14, and according to Investopedia the industry average range is 25-30 The P/E ratio is a quick way to analyze if a company has high potential for growth, and it seems Pepsi is going to grow at an average rate.

The deal has ended up successful for both sides, as SodaStream gained a lot of awareness while PepsiCo gained revenue from the sales. Furthermore, Pepsi was able to help create new models and product accessories that allowed SodaStream to expand. For example, they made a glass reusable bottle instead of plastic which washes easier They also created additional fizz settings for consumers to customize their beverages I recommend that PepsiCo continues to update the SodaStream line as consumer behavior changes in efforts to make SodaStream one of PepsiCo’s top products.

MICROSOFT & NUANCE COMMUNICATIONS

By: Bryce Burns

Microsoft Corporation (NASDAQ: MSFT) is an American multinational technology corporation that is involved in productivity and business processes, intelligent cloud, and personal computing Microsoft currently has a market cap of $214 Trillion On April 12th, 2019, Microsoft announced its acquisition of Nuance Communications (Formerly NASDAQ: NUAN). Nuance Communications specializes in conversational AI and speech recognition technologies These technologies are used in a variety of industries such as healthcare, automotive, financial services, and customer service. This deal officially closed on March 4, 2022, at a price of $197 Billion Microsoft acquired Nuance Communications in an allcash deal for around $16 billion, at an enterprise value of $19.7 billion including debt. Shareholders of Nuance Communications received $56 in cash for each individual share owned. Goldman Sachs & Co. acted as a financial advisor to Microsoft, while Evercore acted as a financial advisor to Nuance

MSFT had a share price of $119.89 when the deal was originally announced and a price of $2316 when the deal was closed NUAN had a price of $45.21 when the deal was originally announced and had a share price of $56 when the deal was completed. Microsoft bought Nuance at a premium of 23% Before the announcement MSFT had a price-to-earnings ratio of 25.0, they now have a price-to-earnings ratio of 31.9. Since the deal was announced MSFT has seen a share price increase of 13748%

Microsoft originally acquired Nuance with the goal of continuing to expand its presence in the healthcare industry. The plan was to continue improving Microsoft Cloud for Healthcare, which aims to address the comprehensive needs of the rapidly transforming and growing healthcare industry. Nuance solutions are currently used by more than 55% of physicians in the US and 75% of radiologists in the US, and 77% of all U.S. hospitals. This acquisition doubled Microsoft’s total addressable market in the

total healthcare provider space, bringing the company’s TAM in healthcare to nearly $500 billion. This deal has been considered successful because it has allowed Microsoft to assert itself as a dominant presence in the AI healthcare market. This deal helps expose Microsoft to a fast-growing industry. For instance, the healthcare cloud computing market is expected to reach $12704 billion by 2030 and grow at a

CAGR of 172% during this forecasted period

In order to best utilize this acquired company Microsoft needs to continue investing time and money in the healthcare market. By acquiring Nuance, Microsoft essentially bought a significant portion of the market share for AI and ambient intelligence used in hospitals In order to be successful Microsoft needs to maintain this dominance. They positioned themselves as a dominant player in an already fast-growing industry, so they just need to simply maintain the current path and ensure that the employees of Nuance are retained within the system

MARRIOTT & STARWOOD

By: Sirisha Bansal

In 2016, Marriott International (NASDAQ: MAR) acquired Starwood Hotels & Resorts Worldwide (NYSE: HOT) for approximately $13 billion, allowing Marriott to become the world's largest hotel company Starwood shareholders received $2100 in cash and 080 shares of Marriott International, Inc. Class A common stock for each share of Starwood Hotels & Resorts Worldwide, Inc. common stock they owned. Marriott is known internationally as a global hospitality company based in Bethesda, Maryland, which provides a brand of fullservice hotels and resorts Starwood Hotels & Resorts Worldwide is also a leading company handling everything from hotels, resorts, spas, residences, and vacation ownership properties

When the deal was made available to the public, Starwood’s shares fell by 3.6% whereas Marriott’s shares increased by 14% On April 8, 2016, the merger was announced and Marriott International's share price held at $66.57. The merger closed with the Federal Trade Commission before the market opening on September 23, 2016, and Marriott’s share price rose to $68.44. The purpose of this acquisition was for Marriott to expand its scale and become the largest hotel chain in the world by number of rooms. Marriott has now overtaken Hilton’s 773,000 rooms and the 766,000 that

are part of the Intercontinental Hotels Group (IHG) family. Marriottt also proposed a deal to combine its loyalty program with that of Starwood. Marriott allowed guests to switch between point currencies at an exchange rate of one SPG Starpoint for every three Marriott Rewards Points so the merger works for customers of both parties.

As an acquirer, Marriott estimated and discovered several revenue and cost synergies that made this deal a great success. Marriott planned to achieve $250 million in annual corporate cost synergies within two years after closing, thanks to massive new revenue opportunities The company unlocked additional hard synergies through laying off several employees, combining loyalty programs as discussed before, and merging both companies’ websites Marriott announced that it would acquire Starwood for $11.9 billion in stock and $340 million in cash. The agreement represented a premium of about 6% above the average of

Starwood’s stock that had been traded between Oct 17 to Nov 13 Due to the lower-thanexpected premium, Starwood shares dropped and Marriott shares rose The lead financial advisor for Marriott International was Deutsche Bank Securities, and the lead legal advisor was the law firm Latham & Watkins LLP. For Starwood Hotels & Resorts, the lead financial advisor was Morgan Stanley & Co. LLC, and the lead legal advisor was the law firm Cravath, Swaine & Moore LLP.

Looking into how the merger is doing currently, within Marriott’s most recent 10-Q, the company noted that the current economic state with global inflation, rising rates, and fluctuations in the foreign exchange market has taken a toll on the business but the current share price has risen over 50% and is now worth $16256 While Marriott’s share price has significantly increased since this transaction, it’s worth noting that the deal was almost derailed by everything from lawsuits, delays in approval, and counter offers.

However, in the long term, Marriott holds to be one of the greatest hotel chains nationwide The $13 billion deal for Starwood has left them with 30 new hotel brands and the potential for a great increase in revenue and earnings over the long term.