(OG) RP/Thoma Bravo Merger Agreement Quick Summary



From: research@oscargruss.com At: 12/21/20 16:15:50
To: Laurent Chekroun (MAKOR SECURITIES LO )
Subject: RP/Thoma Bravo Merger Agreement Quick Summary

RP/Thoma Bravo Merger Agreement

https://www.sec.gov/Archives/edgar/data/1286225/000119312520322436/0001193125-20-322436-index.htm

 

Merger Agreement Announced:  12/21/20

Merger Agreement Dated: 12/20/21

Merger Agreement Filed:  12/21/20

 

Merger Consideration: $88.75 cash

 

Go-Shop:  45 days (ends 11:59 pm NYC time 2/3/21)

No-Shop:  2/4/21

 

Termination Date:  9/20/21 or if marketing period not commenced; 3 business days after final date of marketing period

Termination Fee:

Company: $288M ($91M if superior proposal during go-shop)

Parent:  $528M

 

Closing:  2 business days subject to satisfaction or waiver (2 business days after marketing period ended)

 

Confidentiality Agreement: 11/27/20

 

Regulatory:

HSR  10 business days (1/5/21)
Other Antitrust/Foreign Investment (Disclosure Letter) (1/18/21)

Specified Consents

7.1 (c) Money Transmitter Licenses. The Specified Consents shall have been received; provided, however, that (x) unless Parent and the Company mutually agree in writing, the reference to “80%” in the definition of Material Jurisdictions shall be deemed to be a reference to “100%” until the Licensee Consent Deadline, (y) upon the earlier of the Licensee Consent Deadline or such date that Parent and Company mutually agree in writing, this condition shall be deemed satisfied by the receipt of the Specified Consents or any combination of Licensee Consents and Alternative Arrangements in the Material Jurisdictions, and (z) with respect to each jurisdiction for which a Licensee Consent is required prior to the Closing but that does not constitute a jurisdiction used to satisfy the 80% test within the definition of Material Jurisdiction for purposes of this condition, the Company shall, and shall cause Licensee to, in consultation with Parent, use their respective reasonable best efforts to implement an Alternative Arrangement to continue the lawful conduct of services in such non-Material Jurisdiction, and where such Alternative Arrangements cannot be implemented despite such reasonable best efforts, cease the conduct of services regulated by Licensee in such jurisdiction in accordance with the Law of such non-Material Jurisdiction (including surrendering the Money Transmitter License in accordance with such Law). Notwithstanding the foregoing, this condition shall not be deemed satisfied if the Alternative Arrangements and any other steps necessary to ensure compliance with applicable Law (including surrender of Money Transmitter Licenses) in such Material Jurisdictions and non-Material Jurisdictions, would, individually or in the aggregate, constitute a Company Material Adverse Effect, taking into account such Alternative Arrangements and steps and the effect thereof notwithstanding Section 1.1(ee)(vii) and Section 1.1(ee)(viii).

“Licensee Consent Deadline” means the date that is one hundred and fifty (150) days following the date hereof. (5/20/21)

 

Material Jurisdictions” means those jurisdictions in which Licensee provides regulated services pursuant to a Money Transmitter License issued by state banking departments, or other Governmental Authorities of states, that represent, in the aggregate (together with the state represented by “ZZ” in cell A43 of Section 1.1(xxx) of the Company Disclosure Letter, with states that do not require a Money Transmitter License to provide such services, and jurisdictions that do not require approval, consent, exemption, or waiver to consummate the Transactions), at least 80% of the “Fee Revenue” received by Licensee in the United States during the period of January 1, 2020 to November 30, 2020, as set forth on Section 1.1(xxx) of the Company Disclosure Letter.

 

(o) “Business Day” means each day that is not a Saturday, Sunday or other day on which the Company is closed for business or the Federal Reserve Bank of San Francisco is closed.

 

Best Efforts:

(II) In connection with obtaining any approvals or consents in connection with a change of control to the extent required by a Money Transmitter License of any Company Group Member, the Parties will use their respective reasonable best efforts following the Licensee Consent Deadline to implement, to the extent permissible by Law, Alternative Arrangements with respect to the operations of the Company Group governed by the Company Group’s Money Transmitter Licenses, such as payee agent arrangements or other uses of third parties, to permit the Closing to occur as promptly as practicable. Notwithstanding the foregoing, no Alternative Arrangement shall be implemented prior to the Licensee Consent Deadline without the prior written approval of Parent. Notwithstanding anything in this Agreement to the contrary (including Section 7.1(c)), the Parties agree to consider in good faith all available Alternative Arrangements in a particular jurisdiction before surrendering the Money Transmitter License in such jurisdiction. None of the Company Group Members shall publicly announce, or make any disclosures to any Governmental Authorities or customers with respect to, an intention to implement Alternative Arrangements prior to the Licensee Consent Deadline without the prior written approval of Parent (it being understood that in no event shall (x) the public disclosure of this Agreement or (y) the disclosure of this Agreement or any of the related transaction documents as requested or required by Law or any Governmental Authority, including by any state banking department or similar agency, be deemed a breach of this sentence). Without limitation of the preceding sentence (including the proviso therein), the Company shall provide any public announcement of, or any disclosure to Governmental Authorities or customers with respect to, any Alternative Arrangement to Parent a reasonable time prior to making such announcement or disclosure and consider in good faith any comments proposed by Parent or its Representatives. Any Alternative Arrangements in compliance with this Section 6.2(b)(II) shall be considered an approval for purposes of Section 7.1(c) and the 80% test within the definition of Material Jurisdiction. The Company shall use its commercially reasonable efforts to identify and disclose to Parent as promptly as practicable following the date of this Agreement any Payments Contract which would have been required to be disclosed in Section 3.5 of the Company Disclosure Letter had Payments Contracts been included within the definition of Material Contracts. For the avoidance of doubt, actions taken by the Company pursuant to this Section 6.2(b)(II) shall be deemed to be permitted pursuant to Sections 5.1 and 5.2.

(c) Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall require, or be construed to require, Parent, Merger Sub and/or any of their respective partners, equity holders, investment professionals, executives or Affiliates to (1) (A) make any payment to any third party (other than filing and application fees to Governmental Authorities (and related expenses incurred in connection therewith), payments to its third party Representatives working on its behalf to obtain approvals and consents or reasonable confirmations of compliance with obligations and reporting requirements) in order to obtain any consent or approval; or (B) (1) agree to invest any additional capital in Parent or any of its Subsidiaries or Affiliates or (2) take any action, or commit to take any action, or agree to any condition or restriction that would reasonably be expected to have a material adverse effect on the business, properties, assets, liabilities, results of operations or condition (financial or otherwise) of Parent or any material Affiliate of Parent, tak  en as a whole.

 

 

Proxy: 20 business days (1/20/21)

Company S/H Vote:  majority of outstanding

Voting Agreement:  10%

 

Dividends:  N/A

 

Superior Proposal Notice:  4 business days; two business days extension to time remaining for material change

Governing Law:  DE (NY for financing)

Dissenters Rights:  Available

 

Marketing Period:means the first period of fifteen (15) consecutive Business Days commencing on the date that Parent has been provided the Required Financial Information; provided that (i) the Marketing Period shall end on any earlier date on which the Debt Financing is consummated and Parent shall have obtained all of the proceeds contemplated thereby; and (ii) the Marketing Period shall be deemed not to have commenced if, prior to the completion of such fifteen (15) consecutive Business Day period, the Company has announced any intention to restate, or the Company or its independent auditors have determined that the Company must restate, any financial statements included in the Required Financial Information, in which case the Marketing Period shall be deemed not to commence unless and until such restatement has been completed and the applicable Required Financial Information has been amended to reflect such restatement or the Company has or its independent auditors have, as applicable, announced or informed Parent that it has concluded that no restatement will be required. If at any time the Company shall reasonably believe that it has provided the Required Financial Information, the Company may deliver to Parent and Merger Sub a written notice to that effect (stating when it believes it completed such delivery), in which case the requirement to deliver the Required Financial Information will be deemed to have been satisfied on the date such notice is received, unless Parent in good faith reasonably believes the Company has not completed the delivery of the Required Financial Information and, within three (3) Business Days after the receipt of such notice from the Company, delivers a written notice to the Company to that effect (stating with specificity which portion(s) of the Required Financial Information the Company has not delivered or are otherwise unsuitable).

“Company Material Adverse Effect” means any change, event, effect or circumstance (each, an “Effect”) that is or would reasonably be expected to be materially adverse to the business, financial condition or results of operations of the Company Group, taken as a whole; provided, however, that, none of the following Effects with respect to the following matters (by itself or when aggregated) will be deemed to be or constitute a Company Material Adverse Effect or will be taken into account when determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur (subject to the limitations set forth below):

(i) general economic conditions in the United States or any other country or region in the world, or changes in conditions in the global economy generally;

(ii) conditions in the financial markets, credit markets or capital markets in the United States or any other country or region in the world, including (1) changes in interest rates or credit ratings in the United States or any other country; (2) changes in exchange rates for the currencies of any country; or (3) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market operating in the United States or any other country or region in the world;

(iii) conditions in the industries in which the Company Group or its customers generally conduct business;

(iv) regulatory, legislative or political conditions in the United States or any other country or region in the world;

(v) geopolitical conditions, outbreak of hostilities, acts of war, sabotage, terrorism or military actions (including any escalation or general worsening of any such hostilities, acts of war, sabotage, terrorism or military actions) in the United States or any other country or region in the world;

 

(vi) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wildfires or other natural disasters, pandemics (including SARS-CoV-2 or COVID-19, any evolutions or mutations thereof or related or associated epidemics, pandemics or disease outbreaks (“COVID-19”)), epidemics or other outbreaks of diseases, quarantine restrictions, weather conditions and other force majeure events in the United States or any other country or region in the world (or escalation or worsening of any such events or occurrences, including, as applicable, second or subsequent wave(s));

(vii) resulting from the announcement or the existence of, compliance with, pendency of or performance under, this Agreement or the Transactions, including the impact thereof on the relationships, contractual or otherwise, of the Company Group with employees, suppliers, customers, partners, vendors or any other third Person; provided, however, that this clause (vii) shall not apply to any representation or warranty contained in this Agreement to the extent that such representation or warranty expressly addresses consequences resulting from the execution of this Agreement or the consummation or pendency of the Transactions;

(viii) the compliance by any Party with the terms of this Agreement, including any action expressly required to be taken or refrained from being taken pursuant to or in accordance with this Agreement, including the failure of the Company to take any action that the Company is specifically prohibited by the terms of this Agreement from taking to the extent Parent fails to give its consent thereto after a written request therefor pursuant to Section 5.2;

(ix) arising from any action taken or refrained from being taken, in each case to which Parent has expressly approved, consented to or requested in writing following the date hereof;

(x) changes or proposed changes in GAAP or other accounting standards or in any applicable laws or regulations (or the enforcement or interpretation of any of the foregoing);

(xi) (A) changes or proposed changes in Laws (or the enforcement or interpretation thereof) or (B) any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or similar Law, directive, guidelines or recommendations promulgated by any Governmental Authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19 (“COVID-19 Measures”);

(xii) price or trading volume of the Company Common Stock, in and of itself (it being understood that any cause of such change may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred) or any change in the credit ratings or ratings outlook of any Company Group Member (provided that the underlying cause of such change in credit rating or rating outlook may be considered in determining if there has been a Company Material Adverse Effect);

 

(xiii) any failure, in and of itself, by the Company Group to meet (A) any public estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period; or (B) any internal budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (it being understood that any cause of any such failure may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred if not otherwise excluded hereunder);

(xiv) the availability or cost of equity, debt or other financing to Parent or Merger Sub;

(xv) any matter set forth in the Company Disclosure Letter; and

(xvi) any Transaction Litigation or other Legal Proceeding threatened, made or brought by any of the current or former Company Stockholders (on their own behalf or on behalf of the Company) against the Company, any of its executive officers or other employees or any member of the Company Board arising out of the Transactions;

except, with respect to clauses (i), (ii), (iii), (iv), (v), (vi), (x) and (xi) (other than, in the case of clauses (vi) or (xi), any Effect with respect to COVID-19 or the COVID-19 Measures or any escalation or worsening thereof (including any second or subsequent wave(s))) to the extent that such Effect has had a materially disproportionate adverse effect on the Company Group relative to other companies operating in the industry or industries in which the Company Group conducts business, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has occurred a Company Material Adverse Effect.

 

 

DISCLAIMER This information represents neither an offer to buy or sell any security nor, because it does not take into account the differing needs of individual clients, investment advice. Those seeking investment advice specific to their financial profiles and goals should contact their Oscar Gruss & Son Incorporated sales representative. Oscar Gruss & Son Incorporated believes this information to be reliable, but no representation is made as to accuracy or completeness. This information does not analyze every material fact concerning a company, industry, or security. Oscar Gruss & Son Incorporated assumes that this information will be read in conjunction with other publicly available data. Matters discussed here are subject to change without notice. There can be no assurance that reliance on the information contained here will produce profitable results. A security denominated in a foreign currency is subject to fluctuations in currency exchange rates, which may have an adverse effect on the value of the security upon the conversion into local currency of dividends, interest, or sales proceeds. The value of securities and depositary receipts of foreign issuers that are denominated in United States dollars are also influenced by fluctuations in currency exchange rates. © 2020 Oscar Gruss & Son Incorporated. All rights reserved.

Bus Of Fashion : What’s Next for Streetwear’s Biggest Brands

What’s Next for Streetwear’s Biggest Brands
The new owners of Stone Island and Supreme have lofty expectations for their billion-dollar brands. Is it possible to scale these labels without sacrificing cool?

Supreme and Stone Island are going to have to sell a lot of logo T-shirts to justify their new billion-dollar valuations.

In November, Vans and North Face-owner VF Corp. acquired Supreme in a deal valuing the brand at $2.1 billion. Moncler bought Stone Island at a €1.15 billion ($1.4 billion) valuation earlier this month.

The pair of deals reaffirmed streetwear’s status as one of fashion’s most lucrative categories, leading to speculation about the potential for future sales of other independent streetwear brands. In a year defined by casual clothing and e-commerce sales, hoodies, sweatpants and logo-adorned T-shirts are particularly valuable assets.

“We see no upside limitation on the brand,” VF Corp. chief financial officer Scott Roe told investors in November, adding that the conglomerate wants to roughly double Supreme sales to $1 billion.

But scaling these brands won’t be easy. Supreme and Stone Island, with their private equity backers and global distribution networks, were hardly underground labels. And the fashion industry has a long history of struggling to strike a balance between being big and being cool. Creating a “union between two families,” as Moncler chief executive Remo Ruffini described the Stone Island acquisition to BoF earlier this month, isn’t easy.

“Every brand needs to assess the balance between exclusivity and distribution … once a brand is diluted it’s very difficult to recoup equity,” said Simeon Siegel, managing director of equity research at BMO Capital Markets. “The acquisition of Supreme will be a success if consumers never know it happened.”

A Balancing Act

Both Stone Island and Supreme trade on a large supply of cultural references within devoted youth subcultures, from Milan’s “paninari” youth movement in the early 1980s to New York’s downtown skateboarding scene.

Supreme started in 1994 from a lone store on Manhattan’s Lafayette Street, ballooning into a multi-million dollar business by 2017 through a tight distribution model and hyped collaborations under founder James Jebbia.

Stone Island, which was founded by designer Massimo Osti in 1982, quickly became associated with UK football’s hooligan culture. It’s a crowd that has helped the brand reach revenue of €240 million from November 2019 to October of this year with profitability roughly as high as 28 percent, despite heavy wholesale distribution.

Maintaining a cult appeal while undergoing rapid expansion through growing sales and distribution is a seemingly paradoxical task for many streetwear brands, and a risk for both brands as they scale. Gen-Z and Millennial consumers are a critical asset for both Moncler and VF Corp. in these acquisitions, and keeping their trust will be important.

Streetwear brands of the 1990s and early 2000s, from Zoo York and Rocawear to Ecko Unlimited, all faced challenges in maintaining cultural credibility with younger consumers after their respective sales.

VF Corp was emphatic about a hands-off approach to the company.

“We are not coming in to make changes,” said VF Corp. chief executive Steve Rendle in a call with investors announcing the move, adding that the mission would be to support and enable Supreme’s growth. How Rendle aims to double the brand’s sales without large changes remains to be seen.

Supreme has managed to maintain a cool, anti-establishment vibe even with the Carlyle Group, a private equity firm, as a major investor. Unlikely collaborations have fuelled the brand’s growth for years, but timing and limited inventory have been key.

For Stone Island, there may be less of a risk of losing cultural credibility. Moncler has grown into a hyped collaborator through the brand’s “Genius” programme. Ruffini said he’s looking to Stone Island as a “Moncler of 2010,” which he purchased in 2003 and transformed from a sleepy Alpine outerwear label to one of fashion’s biggest status symbols.

Both VF Corp and Moncler are “paying a hefty price for ‘cool,’” said William Susman, managing director of Threadstone Advisors. The question, he added, is “how much can cool bend versus break?”

Direct-to-Consumer Channels

VF Corp and Moncler know how to market and distribute global brands. They’ll be looking to open Supreme and Stone Island to new audiences.

For Moncler, that means taking tighter control of Stone Island’s distribution channels. The brand relies heavily on multi-brand retail, something Ruffini hopes to change in order to “capture the important growth potential” of the brand’s direct-to-consumer channel, according to a press release announcing the acquisition.

Many brands struggle to make the transition from department stores to direct sales. As a streetwear brand, Stone Island may have an easier time of it; its target customers are used to waiting for drops on brands’ sites.

Supreme’s robust direct-to-consumer business and digital model — which accounts for 60 percent of its revenue — is one of its biggest assets to VF Corp., and something it seems unlikely to tinker with.

The brand also complements VF Corp.’s portfolio, with some of its most popular collaborations emerging from the corporation’s current roster of brands, including Timberland, North Face and Vans. The acquisition could create a halo effect for its entire portfolio, and inspire future collaborations.

“[VF Corp.] is increasingly looking to mix their business to more digital, younger, direct to consumer customers,” said Susman. “To be able to do that in a high-growth, high-margin opportunity ... it’s the right time.”

Eyes on China

Both brands also have opportunities to increase exposure in China, an increasingly important market given that Europe and the US have been slower to recover from the pandemic.

Supreme currently has 12 stores worldwide, with no locations in China.

“The Asian market in general still has plenty of room for growth, and I think VF can really help them take advantage of that,” said Josh Peskowitz, former VP of fashion direction and menswear at Moda Operandi.

Similarly, Moncler cited growth potential for Stone Island in both the US and Asian markets in its press release. Asia is Moncler’s top-performing market, accounting for 40 percent of the brand’s total revenues, signalling a plan for Stone Island’s future growth in the region.

“[Stone Island is] really still under-penetrated in the market too,” said Peskowitz. “They’ve still got room to grow.”

NY Post : Mysterious Qatari sheikh snaps up Flatiron property for $40M

Alo Yoga, say “alo” to your new landlord — a mysterious Qatari sheikh whose charitable foundation has allegedly been flagged by his country’s Mideast rivals for suspected ties to terrorism.

Qatari Sheikh Thani bin Abdullah bin Thani al-Thani closed on the $40 million purchase last week of 164 Fifth Ave., a handsome, 1918 vintage, six-story Flatiron building between West 21st and 22nd streets.

Its 17,600 square feet are home to LA-based Alo Yoga’s New York flagship, which houses a yoga studio and a women’s athletic-wear shop filled with sexy photos of lithe young men and women in what the brand calls “mindful moments.” Famed chef Matthew Kenney’s new restaurant, Sutra, is coming soon to the top floor.

The sale was a modest shot in the arm for the snoozing investment-sale market — Sitt bought 164 Fifth in 2014 for just $23 million. Sources said the sheikh’s purchase was likely for investment purposes as Alo Yoga has 13 years left on its lease.

But the sheikh himself might be the story’s most interesting part. He signed the purchase papers in his own name — a rarity when most foreign buyers hide their identities behind limited-liability corporations.

The personal signature suggests a man with nothing to hide. And while little known outside the Middle East, the ultra-rich royal — a member of Qatar’s ruling al-Thani family — is caught up in a swirl of intrigue involving Qatar and four neighboring Persian Gulf states resentful of Qatar’s increasing wealth and influence.

Sheikh al-Thani is the founder and a director of Doha, Qatar-based real estate giant Ezdan Holding — technically a publicly traded operation but whose shares are 94 percent controlled by members of the al-Thani family. The octopus-like property empire reported third-quarter net profit of $57 million, down from $140 million in the same period in 2019.

It isn’t clear from public records whether the sheikh bought the building personally or through Ezdan; the title’s in the name of 164 Fifth Ave., Inc. at 599 Lexington Ave.

But while Ezdan’s Web site cites the sheikh’s roles in several medical, educational and humanitarian charities, it curiously omits the one for which he’s controversial. He’s also a founder of the Thani Bin Abdullah Bin Thani Al-Thani Humanitarian Fund, according to his profile on UNHCR, the UN’s refugee agency to which he has lavishly donated.

The foundation, also known as RAF from its Arabic initials, appeared on a 2017 list compiled by the United Arab Emirates, Saudi Arabia, Bahrain and Egypt of 59 Qatari individuals and organizations suspected of aiding terrorist groups in Turkey, Syria, Gaza, Iraq and inside their own borders, according to Arab News, an English-language newspaper published in Saudi Arabia.

The four countries ended diplomatic relations with Qatar in 2017 and have conducted a punishing trade boycott against it since then. The Saudis once even booted 12,000 Qatari camels that strayed onto their territory.

President Trump has suggested that Qatar has terrorist ties, but the claims have not been verified. The United States has a large air base in Qatar.

Trump said last year, “They are investing very heavily in our country. They’re creating lots of jobs. They’re buying tremendous amounts of military equipment, including planes.”

E-mails seeking comment sent to the sheikh through Ezdan’s Web site, and to the al-Thani humanitarian fund, were not returned.

WSJ : Pfizer-BioNTech Covid-19 Vaccine Is Cleared for Use by EU Drug Agency

Pfizer-BioNTech Covid-19 Vaccine Is Cleared for Use by EU Drug Agency
European Medicines Agency recommends authorization for the shot, clearing way for formal approval this week

BRUSSELS—The Covid-19 vaccine from Pfizer Inc. and its German partner BioNTech SE was cleared for use by the European Union’s drug agency, a major step in efforts to tame the disease in a region that is fighting a deadly winter surge, as the bloc also tries to keep out a new mutation in the coronavirus found in Britain.

The European Medicines Agency said that the Pfizer-BioNTech vaccine—which was developed in Germany—is safe and effective against Covid-19, clearing the way for EU authorities to formally authorize the use of the shot this week. Distribution could begin next week, following administrative procedures needed to coordinate a rollout across 27 member states.

The EU is also grappling with concerns over the spread of a new variant of the coronavirus in the U.K. that has prompted many countries to ban passenger flights from that country in an effort to prevent entry of the mutation, which the British government says is more infectious.

The decision to recommend authorization of the Pfizer-BioNTech vaccine comes after the U.K. and the U.S. approved it in early December. Some EU leaders expressed anger at the bloc’s slower pace, in light of the thousands of Europeans dying of the disease each day. The agency moved up the timing of its decision by a week.

U.S. regulators on Friday also permitted use of Moderna, Inc.’s Covid-19 vaccine, with the first immunizations expected Monday.

Even with the approval, a rollout to the EU’s 450-million strong population will take months, if not longer, with supplies of the virus constrained, say health officials.

Europe was hit early on in the pandemic, with 300,000 people dying of the disease so far and 15 million sickened. After suppressing the coronavirus to very low levels in the summer, the pathogen has surged sharply this fall. Authorities across Europe have expressed alarm at stubbornly high levels of infection, hospitalizations and deaths, numbers that bode ill for the winter.

Before the rollout can commence, EMA’s decision must now be approved by the European Commission, which must first survey all 27 EU members. Authorities expect procedural and logistical issues mean some countries won’t start vaccinating until Dec. 29.

The EU has ordered 300 million doses of the Pfizer-BioNTech vaccine over the next year, enough to inoculate up to 150 million people with the two-shot inoculation. It lined up another 160 million doses of Moderna’s double-dose vaccine. On Jan. 6, the EMA is expected to decide whether to approve that vaccine.

If they do, European states only expect enough doses over the next several months to cover most—but not all—health-care workers and the very elderly.

Germany, assuming both the Pfizer-BioNTech and Moderna shots are authorized and delivered on schedule, plans to vaccinate about 6.5 million people before April 1. The government’s priority list—those over aged 80, patients with serious health conditions and medical staff—totals eight million people. Some 18 million Germans are aged over 65.

Beyond those two vaccines, it might be months before the EU authorizes a third. AstraZeneca PLC and Oxford University developed a vaccine that is on average effective in 70% of people—but which suffered an error in clinical trials, when test subjects were given inconsistent doses.

This month, the EMA began a rolling review of a vaccine by Johnson & Johnson, which is still in large-scale clinical trials and won’t be authorized until February at the earliest. If that vaccine doesn’t win EMA approval, no other obvious contender is likely to arrive in Europe soon.

Meanwhile, the authorization of the Pfizer vaccine comes amid growing concerns over the risks of allowing the virus to spread, and mutate. A new variant in the U.K., which the government says is more infectious, has prompted a number of EU states to cut off travel to Britain.

The European Center for Disease Prevention and Control said Sunday that a few cases of the new strain had also been reported in Denmark, the Netherlands and possibly in Belgium. The mutated virus appears to cause it to spread more quickly, but doesn’t seem to make it more resistant to a vaccine, according to U.K. officials.

Monday’s recommendation by the EMA meanwhile sets off regulatory and logistical steps that would swiftly send the first doses across all of the EU’s 27 nations.

The European Commission, the EU’s executive arm, is coordinating the acquisition and distribution of vaccine doses to ensure a fair and rapid rollout across the bloc.

After Monday’s announcement, a new vaccine body is expected to issue its own guidance and then the Commission plans to authorize the vaccine for commercial use within 24 hours.

The Paul Ehrlich Institute, the federal institute for vaccines and biomedicines in Germany, must then issue certification papers for the vaccine. The EMA, which has limited technical staff, relies on national institutes for lab work, and it delegated the review of the Pfizer-BioNTech vaccine to the German institute, which has long worked with BioNTech.

Approval paperwork must be translated into the EU’s 24 official languages. Each batch of vaccine must be validated before it can be shipped. Every member state in turn has its own procedures for domestic distribution and administration. That means rollout would likely begin on Dec. 26, with the first shots coming Dec. 27.

Europe’s population skews older, so it has more high-risk people to vaccinate compared with the U.S. Other countries, notably Canada, the U.S. and the U.K. pre-purchased more doses of forthcoming vaccines than the EU did. As a result, the bloc might not have enough to cover its entire population next year.

“Logistically this is going to be really challenging,” said Herman Goossens, a microbiologist at the University of Antwerp and a health adviser to the Belgian government. “I see politicians saying, ‘I hope the festivals will take place this summer, young people will be able to come to the festivals.’ No, I think that’s too optimistic. It will take the whole year 2021.”

FT : Hauliers count losses as lorry queues grow in Kent after French port closur

Hauliers count losses as lorry queues grow in Kent after French port closure
Government triggers Operation Stack to hold trucks on motorway while exporters try to find routes to Europe

British hauliers and exporters were counting their losses on Monday after France closed its borders to freight traffic from the UK without notice on Sunday night as a precautionary measure against the spread of a new strain of the Covid-19 virus.

Trucks that failed to meet the 11pm deadline on Sunday began to back up outside the Channel port of Dover on Monday morning as the government triggered Operation Stack to hold lorries on the M20 motorway that serves the UK’s arterial freight route to Europe.

The Road Haulage Association said the queue was 17 miles long by 1pm and predicted it would probably get longer as drivers in northern Britain tried to return to the continent.

Manston Airport, near Ramsgate, would also be available as an emergency truck park capable of storing up to 4,000 vehicles, the Department for Transport said.

With Christmas approaching, the Food and Drink Federation said it did not anticipate that the border closure would cause immediate shortages in the shops if the restrictions were limited to 48 hours, as the French government indicated, but for individual operators the delays still caused painful losses.


Paul Jackson, the managing director of Chiltern Distribution, in Peterborough, who relies on import-export trade with the EU for about a third of his annual revenue, estimated the delay was costing his company more than £5,000 a day.

“The French decision just came completely out the blue,” he said. “We’d committed to six loads that have been cancelled; four of them had already been loaded. It’s all fresh produce — bakery products, vegetables — and pharmaceuticals.”

With cancellations already coming in for Tuesday, losses would mount, Mr Jackson added.

The company had explored alternative short crossings to Belgium and the Netherlands to bypass French controls, but discovered these were booked out to January 4.

Ian Baxter, who owns Nottingham-based Baxter Freight, said the delays were costing the industry “many millions of pounds every hour”, with his own trucks ensnared in the border chaos carrying clothes destined for shops in Europe.

Other operators found their vehicles were stranded in Europe. John Vincent, who owns fishing and haulage group Peche, which services fishing ports in Scotland and Wales, said he had wine loaded at Bordeaux and “no way of getting that lorry back”, while a consignment of UK-bound lettuce would be sacrificed in order to deliver shellfish through France to Barcelona. 

The Scottish Seafood Association said it would be seeking compensation from the government for lost profits if goods failed to reach target markets in Europe in time for Christmas.

“People's livelihoods and jobs are at stake here,” said Jimmy Buchan, the group’s chief executive.

Ferry operator P&O said it stood ready to resume a full service between Dover and Calais “as soon as we are permitted to do so” but haulage groups warned it would take many days to clear inevitable delays, as EU drivers baulked at travelling to the UK to avoid getting stuck in queues over Christmas.

Philip Edge, chief executive of UK freight forwarder Edge Worldwide, questioned whether European truckers would risk entering the UK, deepening existing haulage capacity shortfalls. “Do we have the capacity over here, in terms of drivers, to pick stuff up? That’s not the case a lot of the time.”

Supermarkets already under pressure from sporadic panic-buying caused by new Covid-19 restrictions called on the government to introduce fast track “green lanes” for all fresh produce, but said they had sufficient stocks for Christmas. 

However, Andrew Opie, director of food and sustainability at the British Retail Consortium trade body, said any prolonged closure of the French border would be a problem as the UK enters the final 10 days before the post-Brexit transition ends on December 31.

Non-perishable goods industries were also affected. Peter Shaw, who owns medical equipment supplier CP Medical, said he had been relying on a shipment of safety needles now caught in Calais to build up essential stockpiles ahead of next year. 

“Our products are critical. We have gone from one crisis to another. The truck left Poland a week ago but we heard this morning it was stuck in Calais. No one is sending trucks to the UK, not knowing whether they are coming back,” he said.

He added that there was a wider problem with supply chains of similar essential equipment, with areas such as surgical gowns and gloves running short already. “We are going back to where we were in March and April.”

More immediately, pharmaceutical company Pfizer said it was working with the government to ensure that the delays did not affect the delivery of its Covid-19 vaccine, by ship or, if necessary, by air.

“As with all our supply chain operations, we keep these routes under close observation to mitigate against delays,” the company said.

FT : Shell to take further $4.5bn writedown after bruising year

Shell to take further $4.5bn writedown after bruising year
Shares in Anglo-Dutch group slide after fourth-quarter update

Royal Dutch Shell will slash billions of dollars from the value of its assets, underlining how the blow to oil demand from the pandemic and the shift to renewable energy is forcing producers to rapidly adjust.

The Anglo-Dutch company said on Monday that the $4.5bn in charges relate to an oilfield in the Gulf of Mexico, the closure of a refinery and unprofitable liquefied natural gas contracts.

Shell has already disclosed about $18bn in writedowns so far this year, with the tally for 2020 potentially rising above the $22bn in impairments it flagged in June.

Already under pressure before the pandemic struck, Shell has since suspended share buybacks, lowered capital spending, slashed costs, issued bonds and secured new credit lines. It added to that wave of measures on Monday by separately announcing a deal to sell a minority stake in an Australian liquefied natural gas project for $2.5bn.

An April announcement that it would cut its dividend — the first since the second world war — helped send its stock price to a 25-year low. In an effort to woo back shareholders, Shell in October raised the payout and declared a new era of “dividend growth.”

Shell’s shares, which had already fallen more than 40 per cent this year, dropped 4 per cent in early afternoon trading in London.

The company is due to announce its fourth-quarter results in early February, just days before chief executive Ben van Beurden is due to update shareholders on its strategy for navigating the energy transition.

Shell has adopted a net-zero emissions goal as the pressure from both environmentalists as well as investors to tackle climate change grows, but it has been scrambling to come up with a corporate strategy that satisfies shareholders and staff.

The pandemic has complicated the picture by battering the finances of the energy sector. The company has already warned of a quarterly loss in its exploration and production division, as well as “significantly” weaker results from its oil trading business — a previous buffer for the group.

In the third quarter, the energy company’s net income adjusted for cost of supply — Shell’s preferred profit measure — dropped to $955m, down from $4.8bn in the same period a year ago. Shell is also expected to cut up to 9,000 job as part of an organisational restructuring to streamline the company.

WWD : LVMH vs. Tiffany — Off Again, On Again Dealmaking

LVMH vs. Tiffany — Off Again, On Again Dealmaking
It was a bruising battle, but the two luxury names got back in sync this year.

Even in the midst of a global pandemic, love can prevail — especially with a little nudge from the Delaware Chancery Court and a 2.6 percent price cut.

So it was with Tiffany & Co. and LVMH Moët Hennessy Louis Vuitton, a pair that came into the year happily engaged after a whirlwind romance. The French giant pursued and ultimately persuaded the jeweler to accept a buyout at $135 a share, or $16.2 billion, when the deal was signed in November 2019.

Tiffany marks the largest luxury deal in Arnault’s long and storied career of high-end consolidation.

When Tiffany shareholders signed off on the transaction in February, LVMH chief executive officer Bernard Arnault trumpeted the milestone even as the coronavirus pandemic had already chilled business in China.

“A globally recognized symbol of love, Tiffany will be an outstanding addition to our unique portfolio of luxury brands,” Arnault said. “We look forward to welcoming Tiffany into the LVMH family.”

That warm embrace cooled considerably as the pandemic spread from China to Europe to the U.S. — shutting stores, cutting off travel and forcing an emphasis on essential retailers and necessities.

While neither side outwardly portrayed doubts about the deal as both Tiffany and LVMH scrambled to adjust to the new world, concerns were growing on both sides.

Tiffany worried over LVMH’s efforts to get regulators around the world to sign off on the deal and LVMH looked aghast at the jeweler, which continued its long practice of paying dividends despite the suddenly horrid economy.

In June, WWD broke the news that LVMH was getting cold feet. The firm’s board met in Paris to discuss the deal, voicing concerns about both the pandemic and growing social unrest following the killing of George Floyd at the hands of Minneapolis police.

By September, LVMH was walking away.

In a twist, the luxury giant said it couldn’t go ahead with the deal because of a letter from French Foreign Minister Jean-Yves Le Drian, which it described as an order to hold off on the deal given a separate trade spat between Paris and Washington, D.C.

But that order started seeming less certain, and Le Drian later told the French parliament that: “My role is to apply, whenever appropriate, the government’s opinion on an assessment of a political nature regarding the management of major international events to come. That is the reason why I replied to a question from the LVMH group, totally in my role.”

That injected a bit of unexpected political intrigue, with the suggestion that LVMH, and Arnault, used its political clout to enlist the French government’s help to get out of the deal lingering. But it was the nuances of the contract that became the primary focus of a bruising court battle.

And as court battles go, it didn’t disappoint, with Tiffany chairman Roger Farah pushing hard to keep the deal he negotiated and LVMH pushing back just as hard.

The rhetoric ranged well beyond the legalese of the contract dispute with many zingers, including:

• Farah: “As we are not aware of any other French company receiving such a [governmental] request, it is all the more clear that LVMH has unclean hands.”

• Jean-Jacques Guiony, LVMH chief financial officer, to a reporter: “You must be joking. Are you seriously suggesting that we procured the letter? I don’t even want to answer that question. [The letter from the French government] was fully unsolicited.”

• Farah: “LVMH’s shifting explanations indicate bad faith in its dealings with Tiffany and are nothing more than distractions meant to hide its efforts to run out the clock and avoid fulfilling its obligations.”

• LVMH: “The business LVMH proposed to acquire in November 2019 — Tiffany & Co., a consistently highly profitable luxury retail brand — no longer exists. What remains is a mismanaged business that over the first half of 2020 hemorrhaged cash for the first time in a quarter century, with no end to its problems in sight.”

But once the regulatory approvals finally rolled in, the trial was set for early January and the potentially messy depositions were just about to start, tensions eased and the two sides started talking again.

The result after nearly two months of open warfare was a new deal at $131.50 a share, or $16 billion, with the understanding that Tiffany would continue to pay dividends until the transaction closes.

Ultimately, the coming to terms had a little bit for everyone, LVMH got a bit of a price cut, Tiffany can move on and neither side had to risk a Delaware judge compelling them to do anything.

“This balanced agreement with Tiffany’s board allows LVMH to work on the Tiffany acquisition with confidence and resume discussions with Tiffany’s management on the integration details,” Arnault said. “We are as convinced as ever of the formidable potential of the Tiffany brand and believe that LVMH is the right home for Tiffany and its employees during this exciting next chapter.”

The focus is now on what that next chapter looks like and many expect any bad blood from the dispute to dissipate as LVMH starts to put its imprint on the business with its decidedly long-term approach.

Sources expect Tiffany ceo Alessandro Bogliolo to exit the business while LVMH sticks to its practice of promoting from within its vast empire of high-end brands for a new leader of the American jeweler.

Bogliolo came into Tiffany in 2017 with a plan to drive growth in China and through omnichannel initiatives while also raising average unit retail prices and accelerating product innovation.

“These four engines of growth, it took really three years to put together,” Bogliolo said. “I think they have been really stress tested in [the third] quarter. Three years down the road here, we are in a difficult quarter and the four engines all worked very well.”

Net earnings for the three months ended Oct. 31 jumped 52 percent over a year earlier to $119 million and were far better than analysts projected. Excluding $16.5 million in costs related to the merger with LVMH, Tiffany’s earnings advanced 73 percent to $136 million.

The ceo said Tiffany has been growing closer to many of its customers despite the pandemic.

“We equipped the sales professionals to connect with the customer even if the store was closed,” he said. “It was not selling, it was just to connect with regular, loyal customers in a difficult moment. That was enormously appreciated by the customer. And then it became a new habit, a new normal in which it has become OK for sales professionals to interact with customers, to reach out to them by text, by phone, by social media.”

Bogliolo’s partner in the company’s progress has been chief artistic director Reed Krakoff who has reimagined and expanded the jeweler’s signature “T” collection, introduced The Blue Box Café, added three distinct high-jewelry collections, and introduced Tiffany Paper Flowers, which runs from fine to high jewelry. It remains to be seen, though, if that is enough for LVMH and whether it will keep Krakoff onboard or taps another high-profile designer.

Overall, observers see Tiffany flourishing under LVMH.

“LVMH is a master at selling perceived exclusivity to the masses,” said Luca Solca, senior research analyst, global luxury goods at Bernstein, when the new deal was closed. “This, I expect, will be the most important contribution that LVMH can bring to Tiffany.”

FT : Thoma Bravo agrees to buy RealPage in $10bn deal

Thoma Bravo agrees to buy RealPage in $10bn deal
Acquisition of real estate software group is one of the year’s biggest leveraged buyouts

Private equity firm Thoma Bravo has agreed to buy the real estate software company RealPage in a deal that values it at $10.2bn, one of the biggest leveraged buyouts this year. 

The Chicago-based group will pay $88.75 a share for RealPage’s stock, a 30.8 per cent premium to its closing price of $67.83 on Friday, the software provider said in a statement on Monday.

The deal marks the second-largest leveraged buyout this year, behind the €17.2bn acquisition of Thyssenkrupp’s lifts business in February by Advent and Cinven, according to data from Refinitiv. 

Texas-based RealPage provides online services for property owners, including marketing apartments and operating online billing. It also uses an algorithm to screen potential tenants using data on rent-payment history, criminal records and credit scores.

The tool assesses “more than just a credit score and the ability to pay — it’s about the willingness to pay,” according to RealPage’s website.

The Nasdaq-listed company made revenues of $988m in the year to December 2019, according to its most recent annual report. Its shares tumbled at the beginning of the coronavirus pandemic in March, falling by a third to $42.69 in less than a fortnight, but they have since risen higher than their pre-crisis level. 

“We believe this transaction will provide immediate and substantial value to RealPage stockholders, reflecting the tremendous work that our employees have done to build this company,” RealPage’s chairman and chief executive Steve Winn said in a statement. 

RealPage expects Mr Winn and the existing leadership team to stay in place after the acquisition, it said. 

Thoma Bravo, which specialises in software deals, bought the Oxfordshire-based cyber security company Sophos in a $3.9bn deal announced last year. 

It owns a stake in SolarWinds, the Texas-based IT software group that was targeted this month in one of the biggest and most startling cyber hacks in recent history. It and rival Silver Lake sold some of their shares in the company to the Canada Pension Plan Investment Board just days before the hack became public, the Financial Times reported last week. 

The RealPage deal is subject to a 45-day “go-shop” process in which the software company can solicit higher bids and can terminate its agreement with Thoma Bravo to accept a better offer.

If the deal goes ahead, the parties expect it to close in the second quarter of 2021, the statement said. 

RealPage “has tremendous potential going forward,” said Orlando Bravo, a managing partner of Thoma Bravo. The group will seek to “grow the company’s market offerings and enhance its current capabilities to capitalise on the increasingly complex and expanding real estate market,” he said. 

>>> US Gapping Down

Gapping down
In reaction to earnings/guidance:

  • RDS.A -5.8% (provides update; adjusted Earnings are expected to show a loss in the current price environment )

M&A news:

  • QEP -7.4% (to be acquired by Diamondback Energy in all-stock transaction)
  • FANG -6.1% (entered into a definitive agreement under which Diamondback will acquire QEP (QEP) in an all-stock transaction valued at approximately $2.2 billion)
  • RNET -3.8% (agrees to be acquired by Viasat (VSAT))
  • THO -0.7% (announced the acquisition of Tiffin Motor Homes for $300 mln )
  • LMT -0.6% (to acquire Aerojet Rocketdyne (AJRD)

Other news:

  • QURE -18.4% (announced that its hemophilia B gene therapy program, including the pivotal, Phase III HOPE-B study, has been placed on clinical hold by FDA)
  • FGEN -11.3% (provides regulatory update on roxadustat; NDA review period to be extended by three months )
  • CPE -7.8% (files for 9,025,744 share common stock offering by selling shareholders)
  • VALE -5.2% (informs on a landslide at the Córrego do Feijão mine)
  • GSK -2.3% (announces the Marketing Authorisation of the first complete long-acting injectable HIV treatment in Europe)
  • IMGN -2.1% (files for mixed securities shelf offering)

Analyst comments:

  • TPR -6.1% (downgraded to Hold from Buy at HSBC Securities)
  • APPS -5.2% (downgraded to Hold from Buy at Canaccord Genuity)
  • MAC -4.9% (downgraded to Underweight from Neutral at JP Morgan)
  • ARWR -4.3% (downgraded to Neutral from Outperform at Robert W. Baird)
  • EPR -3.9% ( downgraded to Underweight from Neutral at JP Morgan)
  • EPZM -3.1% (downgraded to Hold from Buy at Jefferies)
  • VER -2.8% (downgraded to Neutral from Overweight at JP Morgan)
  • BXP -1.3% (downgraded to Underweight from Neutral at JP Morgan)
  • ICPT -1.2% (downgraded to Hold from Buy at Jefferies)