Could it be magic
The business news that matters
Hello and welcome to the latest Off to Lunch…
An investment company founded by Simon Orange, the brother of former Take That singer Jason Orange, and based in Altrincham, Greater Manchester, is to go public on the New York Stock Exchange.
Orange (whose brother Jason is pictured with Take That above) established CorpAcq in 2006. The deal to go public values CorpAcq at $1.6 billion (£1.25 billion), delivering a significant windfall for Orange.
CorpAcq has bought a collection of 41 small and medium-sized businesses in the UK which employ more than 3,500 people. It claims to be “one of the fastest growing companies in the North West”.
CorpAcq will go public in the US through a deal with Churchill Capital Corporation VII, a special purpose acquisition vehicle, or Spac. Churchill is one of a collection of Spacs in the US. Spacs raise money from investors to list on the stock market with the intention of buying private businesses. Churchill was set-up by Michael Klein, the high-profile Wall Street banker, in 2021.
The surprise deal is an unexpected vote of confidence in CorpAcq - and its businesses across the UK - and will bring a new level of exposure to the company.
CorpAcq’s businesses include Cotton Traders, a fashion brand renowned for its rugby shirts, Aintree Plastics, which makes polythene film for industrial use, and Plant Hire UK, which rents out JCB machines. You can find the company’s portfolio of businesses here
The most recent accounts at Companies House for CorpAcq show that revenue rose 17 per cent to £561 million in 2021 and pre-tax profits rose from £4 million to £27.6 million. You find those accounts here.
Orange owns 68.7 per cent of CorpAcq through his company Orange UK Holdings, according to Companies House documents. That means the deal with Churchill values his stake at around £850 million. Goldman Sachs Asset Management and Nova Capital Management, a London-based firm, have also invested in CorpAcq.
Orange owns a majority stake in rugby club Sale, but that is not involved in the CorpAcq deal. You can find the accounts for Orange UK Holdings here
Under the terms of the deal with Churchill, CorpAcq will receive up to $592 million in cash. Shareholders including Orange will get $257 million and the business will be left with $199 million of cash on its balance sheet to do more deals.
Orange said of the deal:
“We are thrilled to partner with Churchill VII. With their team's deep M&A and capital markets expertise, track record of value-added investing in companies as well as an extensive relationship network, we are confident that Churchill VII is the right partner to propel CorpAcq's next phase of growth. As a public company, we believe CorpAcq will be better positioned to accelerate organic growth, expand our acquisition pipeline deeper in the UK and deliver compounding returns to shareholders, all while staying true to our ethos of fostering autonomy at our portfolio companies and investing over a long time horizon."
Klein said:
“We believe CorpAcq fits all our criteria and more with its proven acquisition and operating strategy, established positioning in the UK SME space, track record of topline growth and profitability and talented management team.”
You can find the announcement on the deal here and a presentation to investors about the deal here
Other stories that matter…
1. The FTSE 100 has fallen by nearly 2 per cent and other global markets are also down after credit rating agency Fitch removed the US’s triple A rating. Fitch announced overnight that it was downgrading the US from AAA to AA+. The rating agency blamed delays in the US agreeing to increase the level of debt the Treasury can carry, which left the country just days from defaulting on debt. It also warned of “fiscal deterioration over the next three years” and that the US is likely to enter a recession later this year as rising interest rates squeeze households and businesses. You can find Fitch’s statement here.
2. One company whose shares have risen today is BAE Systems. Shares in the defence company are up 5 per cent after BAE reported that revenues rose 13 per cent in the first half of 2023 to £11 billion while operating profits rose 20 per cent to £1.2 billion. BAE also said that it now expects sales and profits for 2023 as a whole to be higher than previously thought. The company has benefitted from a rise in government military spending after Russia’s invasion of Ukraine and an "accelerated spend profile” on the UK’s new Dreadnought nuclear submarines, which includes a new £2.4 billion 15-year contract with the Ministry of Defence. BAE is building the submarines in Barrow-in-Furness in Cumbria. You can find BAE’s statement here. This is the company’s share price over the last five years…
3. Box to Box Films, the UK production company behind Formula 1: Drive to Survive and other popular sporting documentaries, is raising $30 million to expand. Story by Axios here
4. Ryanair has become the first airline to fly more than 18 million passengers in a month in Europe. Story here
5. Stock exchange announcements from companies are way longer than they need to be, according to artificial intelligence technology like ChatGPT, which are being used to summarise the main points in financial results. Analysis here. Also on AI, a new survey by consultancy firm McKinsey has found that 79 per cent of people have already exposure to new AI technology at work or at home, and that 22 per cent are using it regularly at work. Research here
6. The UK needs to modernise old public sector buildings rather than focus on shiny new projects according to an analysis by The Economist. You can read that piece here
7. The Washington Post has done a big feature on Döstädning, a Swedish word for “death cleaning”, and why it is important for clearing your mind, reducing stress and improving happiness. Death cleaning involves clearing out your possessions so you can focus on those that actually matter to you. Piece here
Podcast…
A reminder that the latest episode of our Business Studies podcast features an interview with Richard Price, the managing director for clothing and home at Marks & Spencer. Price discusses his efforts to revitalise M&S fashion and attract a new generation of shoppers to the 139-year-old high street retailers. He also talks about an extraordinary career in retail that has spanned the early days of Next, Tesco and Sir Philip Green and BHS. You can listen to the episode on Substack here, Apple here and Spotify here
And finally…
A podcast recommendation from the US for you. Founders by David Senra spends each episode studying an entrepreneur or successful person by reviewing books that have been written about them. Recent episodes have looked at director Christopher Nolan, inventor James Dyson and basketball player Michael Jordan. You can find the podcast on Apple here and Spotify here
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Best
Graham