In the second part of the two part series of the CFO Competitive Intelligence Monitor, we explore different models of identifying and selecting the right CFOs during Mergers, Acquisitions and Divestitures. We also take a sneak peek at the executive compensation pay levels of a representative sample of CFOs.
Comcast - Charter Spinoff - CFO Hire
The Deal - $1.5 Billion in Operating Efficiencies
On April 28, 2014, Comcast and Charter announced that, assuming Comcast's merger with Time Warner Cable was successful, Charter would acquire 1.4 million Comcast/Time Warner Cable customers for cash, bringing Charter's subscriber total to 30 million and making Charter, by its own count, the second-largest cable operator in the country.
Comcast will form and spin off to its shareholders a new, independent, publicly-traded company that will operate systems serving approximately 2.5 million existing Comcast customers.
Comcast shareholders, including the former Time Warner Cable shareholders, are expected to own approximately 67 percent of SpinCo, while New Charter is expected to directly own approximately 33 percent of SpinCo.
SpinCo expects to incur leverage of approximately 5 times estimated pro-forma EBITDA, and New Charter will then acquire its interest in SpinCo by issuing New Charter stock to Comcast shareholders (including former Time Warner Cable shareholders).
SpinCo’s nine-member Board of Directors will include six independent directors and three directors designated by Charter. Comcast will hold no ownership interest in SpinCo (or Charter) and will have no role in managing SpinCo.
Hired then current Time Warner Cable SVP and Treasurer Matthew Siegel as Chief Financial Officer of “SpinCo,” the new cable company that will be spun off from Comcast upon completion of the Comcast – Time Warner Cable merger and the Comcast – Charter transactions.
He joined Time Warner Cable in 2008 from Time Warner Inc., where he was Vice President and Assistant Treasurer. Prior to joining Time Warner Inc. in 2001, he served as Senior Vice President of Finance and Treasurer of Insight Communications.
Siegel graduated from the Wharton School at the University of Pennsylvania with a B.S. in Economics and earned his MBA from the University of Chicago’s Graduate School of Business.
Key Considerations - Inside Approach
What made Matthew the right choice?
IBM Infra Spin Off - CFO to CEO Hire
The Deal - IBM will separate its Managed Infrastructure Services unit of its Global Technology Services division into a new public company ("NewCo").
IBM to focus on hybrid cloud growth, a $1 trillion market opportunity
New public company to launch as world's #1 Managed Infrastructure Services provider
The separation is expected to be achieved as a tax-free spin-off to IBM shareholders, and completed by the end of 2021.
NewCo will have greater agility to design, run and modernize the infrastructure of the world's most important organizations.
It has relationships with more than 4,600 technology-intensive, highly regulated clients in 115 countries, including more than 75% of the Fortune 100, a backlog of $60 billion, and more than twice the scale of its nearest competitor.
CFO Elevated to CEO Role
IBM recently appointed former CFO Martin Schroeter as Chief Executive Officer of NewCo.
Martin Schroeter served as IBM's Senior Vice President, Global Markets between December 2017 and April 2020. In that role, he had responsibility for IBM's global sales, client relationships and satisfaction and worldwide geographic operations. He also oversaw IBM's marketing and communications functions and was responsible for building the company's brand and reputation globally. Martin was IBM's CFO from 2014 to 2017, and prior to that, served as General Manager of IBM Global Financing, where he managed a total asset base in excess of $37 billion. Earlier in his IBM tenure, Martin served in numerous roles in Japan, the United States and Australia. He joined IBM in 1992 after earning his Master of Business Administration degree from Carnegie Mellon University, and received his undergrad degree in Economics and Finance from Temple University.
Key Considerations - Inside Approach
What made Martin the right choice?
XPO Spin Off - CFO Hire
The Deal - XPO Logistics, one of the world's biggest providers of logistics and transportation services will spin off its contract logistics segment.
The company will spin off its contract logistics segment, which includes 200 million square feet of warehouses in 27 countries around the world, from its transportation business.
The latter is made up of its freight brokerage, less-than-truckload (LTL) business, and last-mile e-commerce business, which specializes in delivery of heavy goods like appliances and furniture. Freight brokerage and LTL make up the bulk of the transportation segment, contributing 90% of EBITDA.
The transaction is currently expected to be completed in the second half of 2021
XPO recently appointed Baris Oran as Chief Financial Officer of NewCo, GXO Logistics. Baris joins from Sabanci Holding, an Istanbul-based investments manager.
He started his career as an auditor at Price Waterhouse Coopers and from 1998 to 2003, worked at Sara Lee Corp in Chicago IL, in audit, finance and treasury/capital markets. Between 2003 and 2006, he worked as Senior Manager at Ernst and Young initially at Minneapolis, MN and then in Europe, Middle East, Africa and India regions. He started working at Kordsa Global in 2006, and held positions of Internal Audit Director, Global Finance Director and CFO respectively. Oran has started at Sabancı Holding in 2011. He graduated from Boğaziçi University, Department of Business Administration, completed his MBA studies at the University of Georgia and Advanced Management Program at the Kellogg School of Management, Northwestern University. Mr. Oran served as the Chairman of the Board of Directors of Sabanci.
Key Considerations - Outside Approach
What made Baris the right choice?
Let's now examine a few representative samples of CFO Executive Compensation Data.
Refer to the CFO Competitive Intelligence Monitor Part 1 where theboardiQ explores the world of Mergers, Acquisitions and Divestitures in the Home, Networks and Communication segments and the top CFOs behind these deals.
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