Deal Dispatch: PharmChem Forgoes Banker To Run Sale, TGI Fridays Sells 19 Restaurants For $3.1 Million

New On The Block

PharmChem, Inc. PCHM, the go-to name for drug-detecting sweat patches, is officially exploring strategic alternatives (i.e., mergers, acquisitions, or an outright sale). So far, the board of directors expressed confidence that it can handle things solo as opposed to hiring a banker. For interested suitors, a data room officially opened.

Other auction block items this week:

• Ontario Teachers’ Pension Plan tapped Lazard to run a sale process for compliance software firm Mitratech. Reuters estimates that the transaction could hover around $4 billion.
• Recall how Paysafe PSFE went public via a SPAC in 2020. Today, it’s for sale, according to Bloomberg. The firm, backed by billionaire Bill Foley, is receiving takeover interest.
• Switzerland-based Bank J. Safra Sarasin is weighing a takeover offer for Denmark’s Saxo Bank, per Bloomberg.

Updates From The Block

• Veritas Capital is circling Wall Street data provider Dun & Bradstreet DNB, per Bloomberg. Dun & Bradstreet boasts a $4.9 billion market cap.
• Bausch + Lomb BLCO considered “a full separation” from Bausch Health Companies Inc. After engaging with potential buyers, that process did not result in a deal. Full separation remains the goal, the company confirmed. Full-year 2024 earnings will be posted on Feb. 19.
• KKR & Co Inc KKR is adamant about buying Japanese tech group Fuji Soft. The private equity firm upped its offer to around $4.3 billion to outbid a rival firm, Bain Capital.
• Bain has another deal in the works, should the Fuji Soft one not work out. The firm is close to buying the pharma unit of Mitsubishi Chemical Group 4188. The price tag is expected to be north of $3.3 billion, according to Bloomberg.

Off The Block

• Meanwhile, Bain Capital agreed to buy a 51% stake in Milacron, a provider of plastic processing equipment and services. Hillenbrand HI sold the stake for $287 million.
• Riverwood Capital agreed to buy Munich-based Quicklizard QLRD, a pricing platform for retailers and brands, for roughly $52 million.
• TPG agreed to buy Altus Power AMPS, an owner of commercial-scale solar in the U.S., for around $2.2 billion.
• Another solar-related deal: Turn/River Capital agreed to buy Austin, Texas-based SolarWinds SWI for $4.4 billion — a 35% premium to the stock’s closing price on Thursday, Feb. 6.
• Montreal-basedValsoft, a software firm backed by Coatue Management and Viking Global Investors, acquired VHL Sistemas, a Brazilian provider of cloud-based notary management software.
• BCI, a Canadian asset management, agreed to buy Luxembourg-based investment BBGI Global Infrastructure BBGIB. Reuters reported that the deal cost around 1 billion pounds ($1.24 billion).
• EP Global Commerce, backed by billionaire Daniel Kretinsky, purchased Düsseldorf, Germany-based Metro at a 2 billion euro ($2.76 billion) valuation.
• Databricks, valued at $62 billion, acquired BladeBridge and its talent to bolster enterprise data warehouse migrations.
• JD.com, Inc. JD reportedly revived its interest in buying Düsseldorf, Germany-based Ceconomy AG. The Chinese e-commerce giant last showed interest in the German retailer in 2023.
• Nissan Motor Co. NSANY CEO Makoto Uchida informed Honda Motor Co. HMC CEO Toshihiro Mibe of his intention to terminate discussions on a potential merger.
• Brookfield completed its $1.7 billion acquisition of Houston-based Chemelex, a provider of electric thermal and sensing solutions. Goldman Sachs advised nVent Electric NVT on the sell side.
• Court Square Capital Partners and WindRose Health Investors completed a $1.1 billion buyout of Frisco, Texas-based infusion company Soleo Health. H.I.G. Capital.

Bankruptcy Block

Judge Christopher Lopez has rejected a deal that would have facilitated a second auction attempt for Alex Jones‘ media company, Infowars. This ruling, as reported by NPR, provides another temporary reprieve for Jones, but delays the Sandy Hook families' efforts to collect the $1.3 billion in defamation damages awarded nearly seven years ago.

Lopez explained he couldn’t approve the deal because Infowars’ parent company, Free Speech Systems (FSS), is no longer in bankruptcy. That means, he rules, its assets cannot be sold—only Jones’ ownership stake in the company can be auctioned. And yet, the judge also blocked a previous offer from satirical website The Onion, which had partnered with the Connecticut families to bid on Infowars.

Moving forward, Lopez emphasized that any asset sale must be a straightforward cash deal. With this latest decision, the path to recovering damages—and potentially dismantling Jones' platform—remains uncertain.

TGI Fridays has sold 19 more restaurants as part of its ongoing Chapter 11 bankruptcy proceedings. Fremont, California-based Yadav Enterprises, an operator of 340 restaurants across six brands, is buying 16 stores for $3 million in debt. Sugarloaf Hospitality, a firm owned by former TGI Fridays CEO Ray Blanchette, is acquiring three locations for $100,000.

Notes From The Block

Scale Vs. Scope: This week, Bain Capital pointed out a trend in the media sector.

Media deals are becoming “predominantly cross-industry.” According to Bain’s analysis, using data from Dealogic, more than half of all media industry M&A for the first three quarters of 2024 involved either a target or acquirer outside of their industry.

Here are a few callouts, cited by Bain partners Nicole Magoon, Matt Keith and Alex Egan:

• The majority of Walt Disney Co DIS transactions used to be “scale” (i.e., Pixar in 2006 and 21st Century Fox in 2019); today, there’s an “increasing emphasis on scope deals.” For example, last year, Disney invested in Epic Games, the maker of Fortnite.
• Sony Group Corp SONY purchased the theater-dinner chain Alamo Drafthouse.
• Companies are also doing deals for evergreen IP: Sony Music bought half of Michael Jackson's publishing and recorded music catalog.
• Pophouse Entertainment acquired Kiss's catalog as well as the band members' likenesses.
• Private equity funds have invested in smaller production studios with a track record of quality IP. For example, Redbird bought All3Media, seeking an enduring advantage in the video space.

Is there risk? “Acquirers in cross-sector media M&A quickly learn that such deals require a different type of diligence,” the Bain partners say. “For one thing, an acquirer is likely to be less familiar with the target's industry. Also, the revenue synergies inherent in scope deals are harder to realize and underwrite than cost synergies.”

For last week’s Deal Dispatch, click here.

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