This year’s Corporate Finance award was highly competitive, with the judges noting that the shortlisted deals were the best they had seen in this category to date.
The award was ultimately taken by Phoenix Group, the specialist consolidator of heritage life assurance funds, which was also named Overall Winner for its £2.9bn acquisition of Standard Life Assurance Limited (SLAL).
Phoenix’s reverse takeover of SLAL enabled the group to become Europe’s largest closed life consolidator.
As a result of the deal, the company now has more than £240bn of assets and 10.4 million policyholders.
Financing the takeover was a major undertaking which was achieved through a combination of £1bn of debt, £1bn rights issue and £1bn equity placing with the vendor.
The debt-financing component included £1.5bn of underwritten debt facilities, which were refinanced through an inaugural £500m restricted Tier 1 (Solvency II compliant) bond issue, followed by a €500m Tier 2 issuance – swapped to £445m – following completion.
The equity component, meanwhile, included a £950m underwritten rights issue in May 2018.
The transactions have strengthened the company’s capacity to generate shareholder value through the delivery of management actions and future accretive acquisitions
The deal included the following tranches:
Despite the complexity of the many moving parts, this ambitious deal was completed in a short time frame.
Also advantageous were the deal's timings: the €500m Tier 2 capital debt issue issued in September was Phoenix’s debut issue in the EUR market and was hedged into GBP via a cross-currency swap, at a lower cost than that implied by the trading level of Phoenix’s GBP Tier 2 debt trading level.
In terms of its pricing, that transaction was just ahead of substantial volatility in the debt markets, which subsequently hindered a number of issuers.
The transactions have strengthened the company’s capacity to generate shareholder value through the delivery of management actions and future accretive acquisitions.
The takeover is also expected to enhance cash flow and deliver expected synergies of over £700m.
“This was a transformational deal which covered a lot of ground, and a big step up from anything Phoenix had done before.”
Provider ABN Amro, HSBC and NatWest
Structure £1bn debt, £1bn rights issue, £1bn equity placing
The judges highly commended E.ON for the company’s considerable achievements in maintaining its existing BBB/Baa2 ratings with stable outlooks during the takeover of innogy – a company with the same market capitalisation as E.ON.
Notable features of the deal included an innovative asset swap with RWE, which saw RWE gain a 16.67% stake in the future of E.ON, while E.ON received a 76.8% stake in innogy as well as a €1.5bn cash payment.
E.ON also secured a fully underwritten €5bn acquisition facility to support a voluntary public takeover offer to innogy’s minority shareholders, which enabled the company to increase its position in innogy to 86.2%.
The judges were impressed by E.ON’s rigorous approach to the deal, while also highlighting the wider significance of the transaction in reshaping Germany’s energy sector.
The Treasurer’s Deals of the Year Awards recognise the outstanding work of treasurers, both within the treasury community and the wider business world. Through them we champion the success and achievements of treasury teams that have stood out in the market over the prior 12 months. Winning an award is a great way to strengthen your organisation's and your treasury's profile, bringing peer and industry acknowledgement.
This article was taken from the Deals Edition 2019 issue of The Treasurer magazine. For more great insights, log in to view the full issue or sign up for eAffiliate membership