HNA Acquires Pactera (NASDAQ: PACT) from Blackstone
Transaction Size – Estimated $800mm – $1bn
- Blackstone hired Morgan Stanley to run a sale process for Pactera in February 2016
- Pactera announced on Aug. 22, 2016, that Blackstone Group L.P. and other shareholders of Pactera have entered into a share purchase agreement with HNA EcoTech Group Co. Ltd., an affiliate of HNA Group, for the sale of almost all the issued and outstanding shares
- HNA Group – Highly Active in International Investments and M&A Activity
- HNA Group is a China-based conglomerate focused on the aviation, property dev, logistics, tourism, and IT industries
- Earlier in the year, China planned a pilot program to allow for select commercial banks to invest directly in technology firms (previously forbidden by China banking laws) If current trends continue, we are likely to see tremendous growth in the Chinese technology sector
- HNA Group secured at least $17B worth in global acquisitions in 2015 alone (Bloomberg)
- A $6B purchase of Ingram Micro in February represents the largest Chinese acquisition of a US technology target
- HNA Acquired a 27% stake in Azul Airlines in August, one of the largest equity investments in Brazil in 2016
- The recent surge in China-backed investments into the US and other foreign markets, primarily driven by decelerating growth in China and government support for foreign strategic acquisitions, has created a pathway for corporations to enter the traditionally secluded Chinese market
- Blackstone Capitalizes on a Low Price
- VanceInfo Technologies and smaller rival HiSoft Technology merged in 2012 to create Pactera, the world’s largest China-based offshore IT services provider with over 23,000 employees at the time
- The merger was advised by Citigroup Global Markets (VanceInfo) and Lazard (HiSoft)
- HiSoft CEO Tiak Koon Loh became, and currently remains, the Pactera CEO
- Pactera was acquired by a consortium led by Blackstone Group and delisted from NASDAQ in March 2014 for $7.30/share, GGV Capital was also a beneficial owner in the deal
- At the time, Pactera shares were trading at 3.3x LTMEBITDA/share vs a peer average of 9.1x
- The deal followed a line of similar private takeovers of Chinese companies that lost confidence with US investors due to suspicions of accounting scandals; the biggest takeover involved Carlyle Group’s privatization of Focus Media for $3.7B
- Debt financing for the deal was provided by BoA Merill Lynch, Citigroup Global Markets Asia, HSBC Bank USA
History of Pactera Transactions
| Date | Buyer | Target | EV ($M) | EV/REV | EV/REV | Notes |
|---|---|---|---|---|---|---|
| 08/22/16 | HNA | Pactera | $1,000 | – | – | Sale process headed by Morgan Stanley |
| 01/13/16 | Pactera | Blue Fountain Media | – | – | – | Blue Fountain Media is a digital marketing agency in NYC (2013 Rev: $16.2B, 181 employees) |
| 01/24/14 | Pactera | Innoveo Solutions | – | – | – | Innoveo is a Swiss based IT firm (under 200 employees) focused on the insurance industry, rebranded as Pactera Switzerland AG |
| 10/17/13 | Blackstone | Pactera | $625 | 0.7x | 11.0x | Privatization of Pactera |
| 11/03/12 | VanceInfo | HiSoft | $875 | – | – | All-stock merger of equals to create Pactera |
