Liberty Global secures Sunrise deal

BY Richard Summerfield

Liberty Global has agreed to acquire Sunrise Communications in an all-cash, $7.4bn deal.

Under the terms of the deal, Liberty Global will pay 110 francs per share for Sunrise, a 32 percent premium to the company’s average share price over the past 60 days. The transaction is expected to close around year end, subject to regulatory approval.

Last year, a $6.3bn deal which would have seen Liberty sell its Swiss cable unit UPC to Sunrise collapsed following opposition from shareholders including Freenet, a German company that owns 24 percent of Sunrise. On Wednesday, Freenet pledged its support to the new bid, which “appreciates the value that Sunrise has created over the past five years”.

“The industrial logic of this merger is undeniable, but the real winners are Swiss consumers and businesses,” said Mike Fries, chief executive of Liberty Global. “This powerful combination of 5G wireless and gigabit broadband will accelerate digital investment at a time when connectivity has never been more essential. Fixed-mobile convergence is the future of the telecom sector in Europe, and now Switzerland will have a true national challenger to drive competition and innovation for years to come. We look forward to welcoming Sunrise employees to the Liberty and UPC family and congratulate them and the board on their success.

“This transaction is another significant step on our path to create fixed-mobile champions in all of our core markets, crystallising the value of our superior broadband networks and driving long-term, sustainable free cash flow growth. Even after this deal, and assuming completion of our recently announced UK transaction, we will continue to have approximately $7 billion of liquidity to drive value-creation for shareholders,” he added.

“Sunrise has delivered on its quality-focussed strategy and built one of the best mobile networks worldwide,” said Andre Krause, chief executive of Sunrise. “We have successfully gained market share in all our businesses, underpinned by our strong focus on customer centricity, service excellence, innovation and quality offering. We are very proud of what our employees have achieved and believe that the combination with UPC Switzerland will enable the combined company to become the leading fully converged challenger in the market.”

The combined business will have 3.17bn Swiss francs in revenue, with a customer base comprising 2.1 million mobile subscribers, 1.2 million broadband subscribers and 1.3 million TV subscribers — around a 30 percent market share in each segment, according to Liberty Global.

News: Liberty Global surprises with $7.4 billion deal to buy Sunrise in latest telecoms consolidation

Varian and Siemens Healthineers combine in $16.4bn deal

BY Fraser Tennant

In a deal which creates a global healthcare leader with a comprehensive cancer care portfolio, medical device and software manufacturer Varian Medical Systems is to combine with healthcare technology supplier Siemens Healthineers AG in an all-cash transaction valued at $16.4bn.

Under the terms of the agreement, German health group Siemens Healthineers will acquire all outstanding shares of US firm Varian for $177.50 per share in cash.

The combined company will offer an integrated platform of end-to-end oncology solutions to address the entire continuum of cancer care, from screening and diagnosis to care delivery and post-treatment survivorship.

Through the transaction, Siemens intends to address a long-term rise in the incidence of cancer – from 14 million cases in 2010 to a forecast of 25 million in 2030.

"This transaction represents an important milestone in our company's history, and our board is confident that this is the right path forward for Varian," said Dow Wilson, president and chief executive of Varian. "In addition to delivering immediate and compelling value to our shareholders, the combination with Siemens Healthineers brings us even closer to realising our transformative vision of a world without fear of cancer.

The transaction has been unanimously approved by Varian's board of directors.

“With this combination of two leading companies we make two leaps in one step: a leap in the fight against cancer and a leap in our overall impact on healthcare,” said Dr Bernd Montag, chief executive of Siemens Healthineers. “This decisive moment in the history of our companies means more hope and less uncertainty for patients, an even stronger partner for our customers, and for society more effective and efficient medical care.”

The transaction is expected to close in the first half of 2021, subject to approval by Varian shareholders, receipt of regulatory approvals and other customary closing conditions. It is expected that Varian will continue to operate under the Varian name as an independent company within Siemens Healthineers.

Dr Montag concluded: “Together with Varian's outstanding and passionate employees, we will shape the future of healthcare more than ever before."

News: Siemens Healthineers to acquire Varian for $16.4 billion

Maxim and Analog Devices agree $21bn deal

BY Richard Summerfield

Analog Devices Inc. (ADI) has agreed to acquire rival Maxim Integrated Products Inc. for $20.9bn in an all stock deal.

The deal values Maxim at $78.43 per share, a premium of about 22 percent to its closing price last Friday.

The transaction is expected to close in the summer of 2021, subject to the satisfaction of customary closing conditions, including receipt of US and certain non-US regulatory approvals, and approval by stockholders of both companies.

The newly combined company will have a market value of $68bn and form a larger rival to industry leader Texas Instruments. Maxim shareholders will own approximately 31 percent of the combined entity.

“Today’s exciting announcement with Maxim is the next step in ADI’s vision to bridge the physical and digital worlds,” said Vincent Roche, president and chief executive of ADI. “ADI and Maxim share a passion for solving our customers’ most complex problems, and with the increased breadth and depth of our combined technology and talent, we will be able to develop more complete, cutting-edge solutions.

“Maxim is a respected signal processing and power management franchise with a proven technology portfolio and impressive history of empowering design innovation,” he continued. “Together, we are well-positioned to deliver the next wave of semiconductor growth, while engineering a healthier, safer and more sustainable future for all.”

“For over three decades, we have based Maxim on one simple premise – to continually innovate and develop high-performance semiconductor products that empower our customers to invent,” said Tunç Doluca, president and chief executive of Maxim. “I am excited for this next chapter as we continue to push the boundaries of what’s possible, together with ADI.”

He added: “Both companies have strong engineering and technology know-how and innovative cultures. Working together, we will create a stronger leader, delivering outstanding benefits to our customers, employees and shareholders.”

The deal is the largest technology merger announced in 2020 to date and follows a broader trend of consolidation in the semiconductor market. Previous deals in the space include Infineon Technology AG’s $9.4bn acquisition of Cypress Semiconductor Corp. in June 2019 and NXP Semiconductors NV’s $1.76bn acquisition of Marvell Technology Group Ltd.’s wireless connectivity business unit in May 2019.

News: Chipmaker Analog Devices to buy rival Maxim for about $21 billion

M&A predicted to rise after post-COVID-19 crash, reveals new report

BY Fraser Tennant

Mergers and acquisitions (M&A) are predicted to rise over the next few years, as banks seek to reduce costs in the short term, refocus core business for the long term and transform operating models, according to new analysis by Kearney.

In ‘Life after COVID-19: building a new banking landscape through M&A’, Kearney predicts that, post-crisis,  banks will likely find M&A as the most efficient means to radically reshape their business portfolio – for both buyers and sellers – to achieve the required amount of cost reduction and transformation to stay afloat.

The analysis also reveals that the market is likely to see changes to operating models, with banks refocusing their core business offering. Some may seek to divest non-essential assets where they are not able to maintain competitive edge in the mid-term, while others might opt to source new capabilities, such as analytics and artificial intelligence  – further bolstering and scaling up their core business.

“Retail banks will be feeling the effects of this current crisis for the next two to three years, so never has there been a better opportunity for banks to reshape their cost base and revise their long-term outlook,” said Simon Kent, partner and global head of financial services at Kearney. “Analysis of previous market crashes indicate that change will be needed for most European retail banks, requiring bold decisions and quick action. After the 2008 crash, domestic M&A was a route to success, with 80 percent of banks outperforming their peers after such a transaction.”

In addition to a rise in M&A, Kearney also predict a rise in strategic partnerships, particularly across smaller banks and FinTechs, as they look to gain reach quickly and efficiently. Positive collaborations with these smaller enterprises, notes Kearney, will also allow larger legacy banks to leverage capabilities off others, either through back-end operations, technology platforms, or shared supplier networks.

“For a successful merger, banks will need to ensure strong due diligence and realistic expectations – setting out a good plan for integrating both entities,” said Mr Kent. “They will need to take extra care in communication to all stakeholders, such as clients, employees and investors ensuring cultures are aligned and employee motivation and retention remains strong.”

Mr Kent concluded: “While the COVID crisis in Europe has subsided, it is far from over, but the resulting surge in M&A activity will present a multitude of opportunities for the years ahead creating a better and strong market in the long run.”

Report: Life after COVID-19: building a new banking landscape through M&A

Dominion Energy to sell gas assets for $4bn

BY Richard Summerfield

Berkshire Hathaway’s energy unit has agreed to acquire Dominion Energy Inc’s natural gas transmission and storage network for $4bn.

The deal gives Berkshire Hathaway Energy, a unit of the parent company Berkshire Hathaway, that already runs a $100bn energy portfolio, ownership of almost 8000 miles of natural gas transmission lines, and transport capacity of almost 21 billion cubic feet a day.

The deal, which is subject to regulatory approvals, is expected to close in the fourth quarter of 2020. The Berkshire unit will also assume $5.7bn of debt, giving the transaction a $9.7bn enterprise value.

“Today’s announcement further reflects Dominion Energy’s focus on its premier state-regulated, sustainability-focused utilities that operate in some of the most attractive regions in the country,” said Thomas F. Farrell, II, chairman, president and chief executive of Dominion Energy.

“Over the past several years the company has taken a series of steps – including mergers with Questar Corporation and SCANA Corporation, and the divestiture of Blue Racer Midstream and merchant generation assets – to increase materially the state-regulated nature of our profile, enhance the customer experience, strengthen our balance sheet, and improve transparency and predictability,” he added. “Our mission over that period has remained the same: providing round-the-clock affordable and sustainable energy, world-class customer service, and meaningful community engagement.”

“I admire Tom Farrell for his exceptional leadership across the energy industry as well as within Dominion Energy,” said Warren Buffett, chairman of Berkshire Hathaway. “We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business.”

The acquisition is Berkshire’s biggest since 2015, yet it is small by the company’s usual standards. Berkshire Hathaway had $137bn in cash at the end of the first quarter 2020. Mr Buffett has been criticised by some for missing the stock market rally from the March lows.

Dominion and Duke Energy Inc separately announced on Sunday they would be abandoning their $8bn Atlantic Coast Pipeline, running under the Appalachian Trail and through West Virginia, Virginia and North Carolina.

News: Buffett's Berkshire to buy Dominion Energy gas assets for $4 billion