Global insurance M&A hits four-year high

BY Richard Summerfield

The level of global insurance industry M&A has increased considerably in recent years, according to Clyde & Co’s ‘Insurance Growth Report 2019’.

There were 222 completed insurance M&A deals worldwide in the first half of 2019, up from 196 in the second half of 2018, a 13.2 percent increase – the highest increase in the volume of transactions since the first half of 2015. The figure also represents the fourth consecutive six-month period of M&A growth. Mega-deals have continued to be a factor in dealmaking in the insurance space, with 11 deals in H1 2019 valued at over $1bn. There were 18 in the whole of 2018.

“Despite recent signs of market hardening, delivering a positive result for shareholders remains challenging and M&A is an attractive strategy to deliver growth for re/insurance businesses around the world,” said Ivor Edwards, a partner and European head of the corporate insurance group at Clyde & Co.

Europe has seen a rush of completed deals that had been put on hold due to Brexit preparations, the report notes. Europe saw the biggest increase in M&A activity – up 39.7 percent – with 88 completed deals in H1 2019 compared to 64 in H2 2018. France led Europe in terms of insurance M&A activity and was the second most active country worldwide, just behind the US. The UK and Spain were next in the list.

Away from Europe, dealmakers have been buoyed by a combination of strong economic growth, notably in the US, and positive growth prospects for the insurance sector. In the Asia-Pacific region, 38 insurance M&A deals were recorded during H1 2019, marking the fourth straight period of rising deal volume to the highest level since 2015. Japan led the region in terms of deals made, followed by Australia and India.

Though the US remains the world’s most active nation in terms of M&A volume, it saw its third consecutive drop in H1 2019, with 66 deals completed. Geopolitical and financial uncertainty relating to potential trade wars involving the US may have rattled investors and could make dealmakers more cautious in the second half of 2019.

Report: Insurance Growth Report 2019

Bayer and Lankess sell Currenta stakes to MIRA in €3.5bn deal

BY Fraser Tennant

In a deal valued at €3.5bn, German chemical groups Bayer AG and Lanxess AG are to sell their stakes in chemical park operator Currenta to infrastructure investor Macquarie Infrastructure and Real Assets (MIRA).

Managing and operating infrastructure, energy supply and other essential services across chemical parks in Leverkusen, Dormagen and Krefeld-Uerdingen, Currenta is a joint venture of Bayer, with a 60 percent stake, and Lanxess, with 40 percent.

“We are delighted to announce that in MIRA, the world’s leading infrastructure asset manager, we have found the right partner to drive the successful development of Currenta while leveraging its international expertise,” said Dr Hartmut Klusik, a member of the board of management and labor director at Bayer. “In addition, MIRA has a long term focus and will also be a reliable employer for Currenta’s employees.”

Active in Germany for 30 years, MIRA has extensive experience in Currenta’s core business areas including utilities, transport, logistics, storage, waste management and treatment services. Through these investments MIRA has demonstrated its commitment to sustainability and helping to create stronger businesses.

“MIRA is delighted to partner with Bayer and Lanxess to acquire Currenta,” said Hilko Schomerus, head of Germany at MIRA. “As a long-term owner of essential infrastructure, MIRA is committed to working with the Currenta management team to ensure the longevity and ongoing success of the business for both customers and employees.”

As one of Currenta's main customers, Lanxess will provide MIRA with operational support during the transition phase and will continue to hold its stake in Currenta for several months longer than Bayer, which expects its part of the transaction to close in the fourth quarter of 2019.

“With MIRA as an experienced and strong partner and with the long-term contract package, we have achieved this and secured a reliable infrastructure at competitive conditions for the future,” said Matthias Zachert, chairman of the board of management at Lanxess. “At the same time, the sale of our stake will give us additional financial leeway to drive forward our growth course in specialty chemicals.”

The transaction is expected to be fully completed by the end of April 2020.

News: Lanxess, Bayer sell chemical park operator to Macquarie for $3.9 billion

EssilorLuxottica’s GrandVision

BY Richard Summerfield

Franco-Italian eyewear manufacturer and retailer EssilorLuxottica is to acquire Dutch rival GrandVision in a deal worth $8bn.

EssilorLuxottica will pay at least €28 a share for investment firm HAL Optical Investments’ roughly 77 percent stake in Grandvision. Following completion of the deal, EssilorLuxottica will be obliged to make an offer for the rest of GrandVision’s shares.

However, the transaction is expected to attract considerable regulatory scrutiny, particularly in light of the lengthy review that European antitrust authorities undertook when approving the $53bn merger between Essilor and Luxottica in 2017. Furthermore, EssilorLuxottica has already been criticised for its alleged prohibitive prices and bullying tactics. The addition of GrandVision to the company’s portfolio of brands may be unacceptable to regulators.

If approved, the deal will see EssilorLuxottica acquire 7200 new stores globally, over 37,000 employees and €3.7bn in annual revenue.

“This acquisition is another step towards our ambition to eradicate poor vision in the world before 2050,” said Hubert Sagnières, executive vice chairman of EssilorLuxottica. “Following the combination with Luxottica, it‘s a milestone in our vision of reshaping the optical industry with the aim to provide all consumers of the world a better optical experience with higher quality eyewear. We look forward to welcoming the 37,000 employees of GrandVision to the growing EssilorLuxottica family. Together, we will have an even stronger voice to champion better vision everywhere in the world.”

 “The future integration of GrandVision with EssilorLuxottica brings new opportunities to GrandVision’s business, its well-established retail banners, stores, employees and all our stakeholders,” said Stephan Borchert, chief executive of GrandVision. “Furthermore, it will create a truly global eyecare and eyewear company that is ideally positioned to capture changing consumer needs and behaviors, and provide its customers with a high quality optical omni-channel customer experience. This transaction is expected to provide value to GrandVision’s shareholders, while allowing for the acceleration of GrandVision’s growth strategy through the expansion of our store network and online platforms. EssilorLuxottica’s interest in joining forces with GrandVision is a clear recognition of GrandVision’s successful strategy, our state-of-the-art retail platform and our people. We look forward to joining forces with EssilorLuxottica in what will be an exciting new chapter ahead.”

At the time of announcing the deal for GrandVisison, EssilorLuxottica also reported revenues of €8.78bn during the first half of the year, up 7.3 percent.

News: EssilorLuxottica sets sights on retail dominance with $8 billion GrandVision deal

M&A deal value in MENA spikes in H1 2019, says new report

BY Fraser Tennant

Deal value in the Middle East and North Africa (MENA) region increased by 220.8 percent to $115.5bn in H1 2019 – up from $36bn in H1 2018 – according to a new EY report.

In its ‘H1 MENA M&A’ report, EY reveals that, while deal value increased significantly. deal volume witnessed a decrease of 10.7 percent, with 216 announced deals in H1 2019, down from 242 deals recorded in H1 2018.

Among the key deals in H1 2019 was Uber’s acquisition of Careem Networks for $3.1bn, the largest technology sector transaction to date in the Middle East, as home-grown technology start-ups find themselves being pursued by global players. The largest deal during H1 2019 was Saudi Aramco’s acquisition of a 70 percent stake in SABIC worth $69.1bn from PIF.

“MENA corporates are finding innovative ways to raise capital and have stepped up the frequency of their portfolio reviews,” said Matthew Benson, MENA transaction advisory services leader at EY. “Companies are reviewing their portfolios every quarter or more frequently – more often than global executives. With more frequent portfolio reviews, several non-core businesses are set aside for divestment thereby fuelling deal activity.”

In terms of domestic M&A activity, deal value in H1 2019 was driven by mega deals, with 111 deals amounting to $79.3bn, compared with 96 deals amounting to $5.5bn in H1 2018. In comparison, MENA witnessed 65 outbound M&A deals worth $21bn, compared with 77 deals worth $18.2bn in H1 2018.

As far as inbound investment is concerned, H1 2019 witnessed a fall in M&A deal volume in the MENA region, with 40 deals amounting to $15.1bn, compared with 69 deals valued at $12.3bn in H1 2018. The United Arab Emirates (UAE) was ranked the highest in terms of inbound M&A investment in the region, with 20 deals amounting to $14.4bn.

The EY report also reveals that the oil & gas sector was the top target sector for inbound activity, accounting for $10.8bn. Furthermore, four out of the six inbound deals in the sector were in the UAE, including three mega deals.

“Large sums of inbound M&A reinforce the MENA investment thesis,” said Anil Menon, MENA M&A and equity capital markets leader at EY. “We continue to believe that these are good times for strategic acquisitions in MENA.”

Report: EY H1 MENA M&A

AbbVie acquires Allergan

BY Richard Summerfield

In a deal that is likely to be one of the largest healthcare mergers of the year, US drug manufacturer AbbVie has agreed to buy Irish Botox producer Allergan in a deal worth $63bn. The company will pay $120.30 in cash and a portion of AbbVie stock for each Allergan share held. This amounts to $188.24 per share, around a 45 percent premium on Allergan’s closing stock price on Monday.

AbbVie shareholders will own 83 percent of the merged company, while Allergan shareholders will own the remaining 17 percent. The company will be headquartered in Chicago and will be led by Richard Gonzalez, chairman and chief executive of AbbVie.

The deal, which is expected to close in early 2020, is forecast to add 10 percent to AbbVie’s adjusted earnings per share over the first full year following the close, the companies said in a statement. Furthermore, AbbVie expects annual pre-tax savings and other cost reductions of at least $2bn in the third year after the deal closes. Abbvie remains committed to paying down its debts by $15bn to $18bn by the end of 2021.

“This is a transformational transaction for both companies and achieves unique and complementary strategic objectives,” said Mr Gonzalez. “The combination of AbbVie and Allergan increases our ability to continue to deliver on our mission to patients and shareholders. With our enhanced growth platform to fuel industry-leading growth, this strategy allows us to diversify AbbVie’s business while sustaining our focus on innovative science and the advancement of our industry-leading pipeline well into the future.”

“This acquisition creates compelling value for Allergan’s stakeholders, including our customers, patients and shareholders,” said Brent Saunders, chairman and chief executive of Allergan. “With 2019 annual combined revenue of approximately $48bn, scale in more than 175 countries, an industry-leading R&D pipeline and robust cash flows, our combined company will have the opportunity to make even bigger contributions to global health than either can alone. Our fast-growing therapeutic areas, including our world class medical aesthetics, eye care, CNS and gastrointestinal businesses, will enhance AbbVie’s strong growth platform and create substantial value for shareholders of both companies.”

News: AbbVie looks beyond Humira with $63 billion deal for Botox-maker Allergan