Square, Afterpay deal includes biggest ever $385m break fee
The $39bn takeover of Anthony Eisen and Nick Molnar’s Afterpay by American tech billionaire Jack Dorsey’s Square will be Australia’s biggest ever M&A deal.
And buried deep in the fine print of the transaction’s paperwork is corporate Australia’s biggest ever potential break free – an astonishing $385m that would cut either way if the mega deal is scrapped before it’s scheduled completion in the first quarter of next year.
Break fees are meant to reflect the actual costs of doing a deal, with the Takeover Panel offering a guideline of 1 per cent of a target’s equity value.
Afterpay is being advised by a team led by Michael Ginzberg from Goldman Sachs, while its board is being advised by Matt Roberts of boutique outfit Highbury Partners, plus lawyers from Gilbert + Tobin among others.
Are we really to believe they would bill to the tune of $385m?
Margin Call notes that the company’s lawyers have explicitly included the Covid-19 pandemic as a “material adverse event” that could scuttle the deal.
Still, let’s hope the 122-page scheme implementation deed leads to the deal getting done and one Afterpay director taking up a spot on the Dorsey-chaired Square board.
As Square execs slated to join the fold of the “Seller” and “Cash App” businesses, Eisen and Molnar won’t be offered seats on the board, leaving Afterpay chair Elana Rubin the candidate most likely.
Can’t you just see the straight-laced former ACTU official Rubin, who holds $8.2m worth of Afterpay stock at Square’s $126.21-a-share implied offer price, sitting alongside Square board members Larry Summers and Shawn ‘Jay-Z’ Carter, not to mention Dorsey himself?
The two companies are believed to have signed a confidentiality and nondisclosure agreement way back on May 22 towards getting talks underway, but it wasn’t until more than two months later that Square went about creating the local vehicle – Lanai (AU) 2 Pty Ltd – that would actually do the deal.
That company was created with the regulator only five days before the deal was announced, with directors comprising Square’s head of M&A out of San Francisco Vishal Dave, 40, its head of payment partnerships and industry relations at Square based in Melbourne Samina Hussain-Letch and the group’s head of tax in California Phil Seabrease.
Square, which as part of the deal is planning for a secondary listing on the ASX, is just going to print new shares to pay for its all stock deal, provided Square shareholders approve, that is.
But nowhere in the fine print is there any restriction on when Afterpay shareholders – including Eisen and Molnar – can sell their Square shares once the deal is done.
They wouldn’t consider cashing out – even in part – as soon as they are able?
Would they?
–
Costly affair for Post
Whatever way you look at it, the four Cartier watches handed out by former AusPost chief Christine Holgate have become quite the expensive affair for the government-owned enterprise.
Back in 2018 those four watches were bought for $19,950, though the true cost ballooned out to more than $1.1m on Wednesday thanks to the Peter Jacobson-mediated settlement between the postal service and its former top postie.
That’s not to mention its own legal costs for the matter.
AusPost and chair Lucio Di Bartolomeo stopped short of a formal apology, noting the payment was “without any admission of liability”, adding it regretted the circumstances surrounding her departure.
Seems actually saying “sorry” is so unfashionable these days.
Still, the organisation may have gotten off cheap, as termination payments under certain other circumstances could have blown out to at least a year’s base salary at $1.4m.
No doubt though all involved will be keen to draw a line under what has been a turbulent eight months for Post under the unassuming acting chief Rodney Boys.
He’ll revert back to his previous CFO role when new boss Peter Graham joins the fold next month.
Regardless, the whole incident has left a lasting legacy with Di Bartolomeo and his board colleagues the likes of Tony Nutt and Andrea Staines.
In the latest update to the board charter effective from June, a new clause was included, seemingly to avoid any repeat of the recent turmoil.
Clause 15 notes that “the board, and if required, each director individually, may seek any independent professional advice they consider necessary to fulfil their responsibilities and to exercise independent judgment when making decisions”.
“Such advice may be obtained at Australia Post’s expense and independent of Australia Post management, provided the consent of the chair or the deputy chair is first obtained in writing.
“For these purposes, ‘management’ may include the GCEO & MD.”
Only thing they missed there is any hyperlinks to reports of the scandal itself.
Holgate joins gabfest
As for Holgate, Margin Call has already told you of her early days at the helm of Global Express, but it seems with all the press of late the former CEO of the year is now taking to the speaking circuit too.
The Northern Beaches local leads the line-up of Sydney’s Women In Leadership Summit in October, along with surfer Layne Beachley and The Block’s Shaynna Blaze.
That’s followed by an appearance at the Courage Conference 2021 the following month at Brisbane’s Calile Hotel alongside former Virgin Australia boss Paul Scurrah.
He, for the record, still maintains his exit from the airline post its purchase by Bain Capital was mutual but after Holgate’s high profile settlement perhaps he too should have made more noise on the way out.
–
Spin doctor wanted
Now that matters are finalised with her former employer, Christine Holgate has a clear run at her new gig running Toll’s Global Express business for the private equiteers at Allegro.
Only problem is, the deal, which was struck with Toll owner Japan Post on April 21, is yet to settle.
Never mind that, with Toll management getting on with trying to find a new spin doctor to work at their almost divested Global Express transport and logistics business, for which Allegro has secured $500m in funding to complete the separation and transformation of the business.
If only Allegro’s founder Adrian Loader, who will also chair Global Express, could get his hands on the fund’s latest buy.
For sure spinning for Holgate would unlikely be dull if her time at AusPost is a reliable guide to the future, with spinners there forced to deal with persistent leaks from colleagues seeking to undermine the boss.
Along with Holgate’s high profile, Toll is also amid strained enterprise bargaining negotiations with the Transport Workers Union towards a deal that will also impact Global Express staff, with the union threatening strike action to get its way.
Toll described the Global Express senior communications manager’s role as “highly visible and critical”, with “responsibility for developing and implementing a strategic communications plan relating to the new ownership of Global Express and significant change agenda”.
In particular, the new exec would be key to supporting “the first 100 days of new ownership and new leadership”.
Plenty to get on with there.
Add your comment to this story
‘Shocked’ law firm was warned of anti-Semitism
BlackBay said it was ‘shocked’ by the ‘abhorrent views and comments’ that have emerged in a lawsuit filed against two former staff members, but the firm did have prior knowledge.
Fighter pilot accused of training Chinese air force has assets frozen
Should Aussies who train up Chinese fighter pilots for combat go to jail? The law isn’t clear. But, ducking tax on the millions you earn doing it will get you into real trouble.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout