General Dynamics to acquire CSRA for $9.6bn

BY Richard Summerfield

US defence contractor General Dynamics Corp is to acquire CSRA Inc. for about $9.6bn – including the assumption of $2.8bn in CSRA debt. The deal will see General Dynamics pay $40.75 per CSRA share – a 32 percent premium to its Friday closing price of $30.82. The transaction is expected to close in the first half of 2018.

The acquisition of CSRA is General Dynamics' largest ever deal, easily eclipsing the $5.3bn the company paid for Gulfstream Aerospace Corporation in 1999.

“The acquisition of CSRA represents a significant strategic step in expanding the capabilities and customer base of GDIT,” said Phebe Novakovic, chairman and chief executive of General Dynamics. “CSRA’s management team has created an outstanding provider of innovative, next-generation IT solutions with industry-leading margins. We see substantial opportunities to provide cost-effective IT solutions and services to the Department of Defence, the intelligence community and federal civilian agencies. The combination enables GDIT to grow revenue and profits at an accelerated rate. It will allow us to deliver even more innovative, leading-edge solutions to our customers.”

Larry Prior, chief executive and president of CSRA, said, “Our combination with General Dynamics represents an excellent outcome for CSRA’s stockholders, employees and customers. It builds on strong shared values, culture and a passion for serving our customers’ missions. We believe that this combination creates a clear, differentiated leader in the Federal IT sector, with a full spectrum of enterprise IT capabilities, including unique depth in Next-Gen offerings in conjunction with our commercial IT alliance partners.”

The deal for CSRA comes at a delicate time for General Dynamics. The company’s revenue over the last two quarters has disappointed investors. General Dynamics reported sales of $31.35bn in the year ended 31 December. CSRA generated revenue of $4.99bn in the fiscal year ended 31 March. Ninety-four percent of CSRA’ revenue last year was derived from US government contracts.

CSRA provides IT, mission and operations-related services to the Department of Defence, the intelligence community and homeland security. With defence spending expected to rise in the coming years, the timing of the deal for CSRA will likely be advantageous for General Dynamics.

News: General Dynamics to buy federal services provider for $6.8 billion

Sanofi to acquire Ablynx for $4.8bn

BY Richard Summerfield

French pharmaceutical multinational Sanofi is to acquire Belgian rival Ablynx for $4.8bn, its second multi-billion dollar deal this month.

Sanofi will pay €45 per share in cash for Ablynx, a premium of 21 percent over its closing price on Friday 26 January, and more than double the price before Novo Nordisk – a rival Danish firm which made an unsolicited takeover offer for Ablynx – went public with its initial bid for the company earlier this month. The Sanofi deal, which has been approved by the boards of both companies, is expected to close by the end of the second quarter 2018. Sanofi’s bid is 48 percent above Novo’s unsuccessful offer.

Novo made a €2.6bn unsolicited offer for Ablynx in January, however that offer was rebuffed and the company reconsidered its options due to “unrealistic premiums”. The pharma space has become an increasingly competitive market of late. With companies looking to bolster their product pipelines and generate growth, acquisitions of smaller competitors has become common practice. Last week Sanofi announced it had agreed to acquire Bioverativ for $11.6bn, its biggest deal for seven years.

In a statement announcing the deal, Sanofi’s chief executive Olivier Brandicourt said: “With Ablynx, we continue to advance the strategic transformation of our Research and Development, expanding our late-stage pipeline and strengthening our platform for growth in rare blood disorders. This acquisition builds on a successful existing partnership. We are also pleased to reaffirm our commitment to Belgium, where we have invested significantly over the years in our state-of-the-art biologics manufacturing facility in Geel. We intend to maintain and support the Ablynx science center in Ghent.”

Ablynx’s chief executive Edwin Moses said: “Since our founding in 2001, our team has been focused on unlocking the power of our Nanobody technology for patients. The results of our work are validated by clinical data. As we look ahead, we believe Sanofi’s global infrastructure, commitment to innovation and commercial capabilities will accelerate our ability to deliver our pipeline. Our board of directors feels strongly that this transaction represents compelling value for shareholders and maximises the potential of our pipeline to the benefit of all stakeholders.”

One of the key drivers of the Sanofi/Ablynx deal was the Belgian company’s experimental drug caplacizumab, which is used to treat the rare bleeding disorder acquired thrombotic thrombocytopenic purpura.

News: Sanofi beats Novo to buy Ablynx for $4.8 billion in biotech M&A boom

UnitedHealth to acquire Banmédica

BY Richard Summerfield

After signing a non-binding agreement in September, US healthcare company UnitedHealth Group has agreed to acquire Chilean private health insurance company Empresas Banmédica for $2.8bn.

According to an SEC regulatory filing, UnitedHealth will pay 2150 Chilean pesos per share to acquire the company. Banmédica’s two controlling shareholders have confirmed that they will tender their combined 57 percent ownership. The transaction is expected to close in the first quarter of 2018, pending the usual closing terms and conditions.

The acquisition will greatly increase UnitedHealth’s presence in the Latin American market going forward. UnitedHealth already owns Brazil’s largest healthcare company, Amil, which serves more than 4 million people. Through Amil, the company offers both health insurance and medical care services to Brazilian customers and UnitedHealth is expected to offer similar services through Banmédica in a number of Latin American countries, including Chile, Colombia and Peru.

UnitedHealth has identified opportunities to grow in emerging and established global healthcare markets by utilising its expertise as both an insurer and a provider of medical care. It has been steadily growing its insurance and data services businesses, and in 2013 acquired Amil Participações, a large provider and health insurer in Brazil. While UnitedHealth has enjoyed $200bn in annual revenue, largely from the US, it is looking to developing markets for additional growth. Banmédica generated around $2.1bn in revenues in 2016.

“Combining with UnitedHealth Group will enable Empresas Banmédica to leverage UnitedHealth Group’s clinical expertise, advanced technology, and data and health information capabilities to better meet the health needs of people in Chile, Colombia and Peru,” the companies said in a statement. “UnitedHealth Group will benefit from Empresas Banmédica’s substantial expertise in care delivery and health benefits across its three markets.”

UnitedHealth’s acquisition of Banmédica was the company’s second deal in a number of weeks, following the announcement of UnitedHealth’s $4.9bn acquisition of the DaVita Medical Group for $4.9bn in early December.

News: UnitedHealth to buy Chile's Banmedica for $2.8 billion

New era for retail as $25bn deal sees Unibail-Rodamco acquire Westfield

BY Fraser Tennant

In a deal that kicks off a new era for retail, French property group Unibail-Rodamco SE is to acquire Australia’s Westfield Corporation, owner of Westfield Shopping Centres, in a deal valued at $24.7bn.

Under the terms of the agreement, Westfield securityholders will receive a combination of cash and shares in Unibail-Rodamco, valuing each Westfield security at $7.55. The proposed transaction has been unanimously recommended by Westfield’s board of directors and Unibail-Rodamco’s supervisory board.

Westfield group owns and operates 35 shopping centres in the US and UK, encompassing approximately 6400 retail outlets and total assets under management of $32bn.

“The acquisition of Westfield is a natural extension of Unibail-Rodamco’s strategy of concentration, differentiation and innovation,” said Christophe Cuvillier, chairman of the management board and chief executive of Unibail-Rodamco. “It adds a number of new attractive retail markets in London and the wealthiest catchment areas in the US. It provides a unique platform of superior quality shopping destinations supported by experienced professionals of both Unibail-Rodamco and Westfield. We look forward to welcoming Westfield’s securityholders as shareholders in the new Group and continuing to create significant value for our existing and new shareholders.”

Following the completion of the transaction, Christophe Cuvillier will be the group chief executive and Colin Dyer will be group chairman of the supervisory board. Furthermore, a newly created advisory board, to be chaired by Sir Frank Lowy, will provide independent advice from outside experts on strategy.

“This transaction is the culmination of the strategic journey Westfield has been on since its 2014 restructure,” said Sir Frank Lowy, chairman of the Westfield board of directors. “We see this transaction as highly compelling for Westfield’s securityholders and Unibail-Rodamco’s shareholders alike. Unibail-Rodamco’s track record makes it the natural home for the legacy of Westfield’s brand and business. We look forward to seeing Westfield continue to grow as part of the world’s premier owner of flagship shopping destinations.”

The transaction is conditional upon the satisfaction of customary conditions, including Australian court approval and the approval of Unibail-Rodamco shareholders and Westfield securityholders, and is expected to close in the first half of 2018.

Mr Cuvillier concluded: “We believe that this transaction represents a compelling opportunity for both companies to realise benefits not available to each company on a standalone basis, and creates a strong and attractive platform for future growth.”

News: Westfield shopping centres bought in $25bn deal

LKQ seals Stahlgruber deal

BY Richard Summerfield

American auto parts company LKQ Corporation is to acquire Stahlgruber GmbH from Stahlgruber Otto Gruber AG in a $1.77bn deal, the companies have announced in a statement.

Chicago-based LKQ will fund the deal from planned debt offerings, borrowings under its current credit facility and direct issuance of 8.06 million newly issued LKQ shares to Stahlgruber's owner. The deal is expected to close in the second quarter of 2018.

The acquisition will greatly improve LKQ’s standing in Europe where Stahlgruber is a leading wholesale distributor of aftermarket spare parts for passenger cars, tools, capital equipment and accessories. LKQ will also gain access to Stahlgruber’s extensive sales and manufacturing infrastructure within Europe. Stahlgruber’s facilities include 228 sales centres, six warehouses and an approximately 128,000 square metre advanced logistics centre. The deal is the latest in a string of acquisitions made by LKQ; in 2015, it completed a $1.14bn deal for Rhiag-Inter Auto Parts Italia S.p.A.

“This transformative acquisition solidifies LKQ as a leading Pan-European aftermarket mechanical parts distributor, and further enhances our global diversification strategy,” said Dominick Zarcone, president and chief executive of LKQ. “Stahlgruber has a history of delivering above-market growth and its stellar industry reputation is an ideal fit with our culture; we are extremely proud to welcome the approximately 6600 Stahlgruber employees to the LKQ family. Importantly, we believe that our combined efforts will create tremendous long-term value for our customers and stockholders and growth opportunities for our collective team members.”

John S. Quinn, chief executive and managing director of LKQ Europe, said: “Stahlgruber will create a contiguous footprint and serve as an additional strategic hub for our European operations, allowing for continued improvement in procurement, logistics and infrastructure optimisation. The LKQ Europe management team and I look forward to working with Stahlgruber’s management team and leveraging our combined best practices to maximise the benefits of scale across the continent.”

Heinz Reiner Reiff, chief executive of Stahlgruber, said: “This combination is a natural fit for both LKQ and Stahlgruber. I am very excited about the meaningful benefits that will occur by combining our complementary cultures and industry leading management, which together position Stahlgruber to achieve the continued growth of its European businesses. Our acceptance of LKQ shares as part of the consideration emphasises our belief in the value of this combination.”

The automotive parts sector has seen considerable activity recently, which may have spurred LKQ into action. In September, the firm’s largest rival, Genuine Parts, entered a definitive agreement to acquire the Alliance Automotive Group for $2bn.

News: LKQ to buy German car parts retailer Stahlgruber in $1.8 billion deal