Wednesday, November 24, 2010

Nuance Communications rumoured to be buyout target for Apple

Nuance Communications is rumoured to be a buyout target for California-based Apple. Apple co-founder Steve Wozniak on a video interview with TvDeck, he appeared to be referring to a potential deal related to voice recognition search technology, which Nuance said Tuesday that it is powering for’s I-Phone application.

Knowing all the top executives at Nuance and their robust track record and well-respected reputation in the market, the rumors are likely not true but a combination of Apple hardware with Nuance software assets would make a highly competitive next-generation I-Phone/I-Pad platform

Nuance reported its fiscal 2010 results on Monday without a hint to stockholders of any impending deal to sell itself to Apple. 

“In the fourth quarter, Nuance delivered 18% revenue growth and record operating cash flow, driven by strong performance in our healthcare and mobile and consumer business lines,” said Paul Ricci, chairman and CEO of Nuance. “Strong fourth quarter bookings for our healthcare and mobile solutions position Nuance for sustained growth in fiscal 2011.”  

Nuance has a market cap of $ 5.29B. Apple has ample cash to buy Nuance but in my opinion the company has the potential for a higher multiple deal in few more years.

J Crew Agrees to $3 Billion Takeover

According to FT, JCrew the US retailer with a preppy style, has agreed to be acquired by TPG Capital and Leonard Green & Partners in a $3 B deal.
PE firms are rushing in to cherry pick strong brand retailers with good prospects for overseas growth outside North America. TPG for example, has respected retail assets in Europe and Middle East which brings more confidence into their ability to grow internationally.
Thanks to cheap and abundant debt, PEs typically load a retailer with significant debt to pay for first dividends. They also sell off any real estate as part of the initial restructuring, which gives them strong return on invested capital as well as return on equity.
The deal for a brand favored by Michelle Obama, the first lady, is the second private equity transaction in the US retail sector in as many months.
It follows Bain Capital’s $1.8 B acquisition of Gymboree, the children’s retailer, which was finalized on Tuesday.
The two funds have agreed to pay $43.50 per share in cash for J Crew, representing a premium of 29% to its average closing share price during the past month.
The shares jumped 16.1 per cent to $43.72 shortly before the deal was announced.
The deal would return J Crew to the control of TPG, which ran the retailer as a private company between 1997 and its initial public offering in 2006. The deal would give TPG 75% of the company, with Leonard Green holding the remainder.
J Crew is led by Mickey Drexler, one of the most highly regarded figures in US fashion retailing, who led Gap’s rise to dominate the retail landscape in the 1990s.
After leaving Gap suddenly in 2002, he was recruited to lead a restructuring at J Crew, which began as a catalogue business in the 1970s. Mr Drexler is a colorful figure at the retailer, who regularly links his mobile phone into the loudspeaker system at the group’s New York headquarters to keep staff abreast of his design ideas and thinking.
He successfully repositioned the retailer as an upmarket brand and expanded it to include a children’s store and Madewell, a separate youth denim brand.
The chain operates more than 320 stores and had sales last year of $1.7B. It recently launched its first men-only and bridal stores, as well as an e-commerce site for its Madewell brand.
Paul Lejuez, retail analyst at Nomura Securities, said that both the J Crew and Gymboree deals involved retailers that were performing well but had potential for growth, rather than underperforming stores in need of a turnaround.
“The pattern, if we can call two announced deals a pattern, has been to acquire good businesses,” Mr Lejuez said. Gilbert Harrison, chief executive of Financo, a retail focused investment bank, said that TPG would take J Crew “to a next stage that I have to assume would involve the roll out of the platform to the rest of the world”.
J Crew has no stores outside the US but is set to open its first store in Canada next year and plans to expand its e-commerce operation internationally. Gymboree recently opened its first stores in Australia.
The deals are seen as a further sign that private equity firms increasingly regard the stock market as good value and are attempting to take advantage of cheap debt.
Mr Harrison said he expected to see further private equity interest in retail buy-outs.
The two private equity groups have financing from Bank of America Merrill Lynch and Goldman Sachs, who also advised them on the bid.
J Crew was advised by Perella Weinberg.
It is not the first time TPG and Leonard Green, a smaller Los Angeles buy-out firm, have teamed up to buy a company they had owned in the past. They previously jointly invested in Petco, the pet supplies chain, which they exited and then jointly invested in a second time during the credit boom that ended three years ago.
The repeat deals are seen as a further sign that private equity firms increasingly regard the stock market as good value and are attempting to take advantage of cheap debt.
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Tuesday, November 23, 2010

Novell agrees to be acquired by Attachmate for $2.2 billion

Novell, Inc. (Nasdaq: NOVL), the leader in intelligent workload management, today announced that it has entered into a definitive merger agreement under which Attachmate Corporation would acquire Novell for $6.10 per share in cash in a transaction valued at approximately $2.2 billion. Attachmate Corporation is owned by an investment group led by Francisco Partners, Golden Gate Capital and Thoma Bravo. Novell also announced it has entered into a definitive agreement for the concurrent sale of certain intellectual property assets to CPTN Holdings LLC, a consortium of technology companies organized by Microsoft Corporation, for $450 million in cash, which cash payment is reflected in the merger consideration to be paid by Attachmate Corporation.

The $6.10 per share consideration represents a premium of 28% to Novell's closing share price on March 2, 2010, the last trading day prior to the public disclosure of Elliott Associates, L.P.'s proposal to acquire all of the outstanding shares of Novell for $5.75 per share and a 9% premium to Novell's closing stock price on November 19, 2010.

 "After a thorough review of a broad range of alternatives to enhance stockholder value, our Board of Directors concluded that the best available alternative was the combination of a merger with Attachmate Corporation and a sale of certain intellectual property assets to the consortium," said Ron Hovsepian, president and CEO of Novell. "We are pleased that these transactions appropriately recognize the value of Novell's relationships, technology and solutions, while providing our stockholders with an attractive cash premium for their investment."

 Mr. Hovsepian continued, "We also believe the transaction with Attachmate Corporation will deliver important benefits to Novell's customers, partners and employees by providing opportunities for building on Novell's brands, innovation and market leadership."

 "We are very excited about this transaction as it greatly complements our existing portfolio," said Jeff Hawn, chairman and CEO of Attachmate Corporation. "Novell has an established record of innovation, impressive technology and brand assets, and a leading ecosystem of partnerships and talented employees. The addition of Novell to our Attachmate and NetIQ businesses will enhance the spectrum of solutions we can offer to customers. We fully support Novell's commitment to its customers and we look forward to continuing to invest for the benefit of Novell's customers and partners."

 Attachmate Corporation plans to operate Novell as two business units: Novell and SUSE; and will join them with its other holdings, Attachmate and NetIQ.

 Attachmate Corporation's acquisition of Novell is subject to customary closing conditions, including regulatory approvals and clearance under the Hart-Scott-Rodino Act, and is also conditioned upon the closing of the proposed sale of certain intellectual property assets to CPTN Holdings LLC. In addition, the transaction is subject to approval by Novell's stockholders. The sale of the intellectual property assets to the consortium is subject to customary closing conditions, including regulatory approvals and clearance under the Hart-Scott-Rodino Act, and is also conditioned upon the closing of the merger with Attachmate Corporation. Novell currently expects these transactions to close in the first quarter of 2011.

J.P. Morgan is serving as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Novell. Credit Suisse and RBC Capital Markets are serving as financial advisors and Jones Day is acting as legal advisor to Attachmate Corporation.

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Monday, November 15, 2010

EMC to Buy Isilon Systems for $2.25 Billion

My old employer EMC that had also bought my company Document Sciences, is paying $2.25 billion for Isilon Systems, a Seattle company that provides network storage.
Isilon makes so-called scale-out network attached storage, a type of storage that can start small and grow fast — reaching up to 10 petabytes — without disrupting a network.
IDC estimates the market for Isilon’s type of storage will be worth $6 billion in 2014.
EMC said that with its acquisition of Isilon, it would be better able to provide storage infrastructure for private and public cloud environments, with a focus on so-called big data, like gene sequencing, online streaming and oil and natural gas seismic studies.
“The unmistakable waves of cloud computing and ‘Big Data’ are upon us,” said Joe Tucci, head of EMC. “Customers are looking for new ways to store, protect, secure and add intelligence to the vast amounts of information they will accumulate over the next decade.”
The company stuck to its outlook for the year, anticipating $16.9 billion in consolidated revenue for the period.
One of EMC’s partners, Dell, recently made an unsuccessful bid for 3Par, only to lose to Hewlett-Packard. EMC has seen its revenue from Dell decline in recent years, and the announcement on Monday looks like a strategic move toward income it can count on. There is many more deals to come in the storage market. I would anticipate more deals from Dell and IBM.
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