BP acquires TravelCenters of America in $1.3bn deal

BY Fraser Tennant

As part of its aim to significantly grow investment throughout this decade, petroleum company BP is to acquire the publicly traded full-service travel centre network TravelCenters of America Inc. in a transaction valued at $1.3bn.

Under the terms of the merger agreement, BP will acquire all of the outstanding shares of TravelCenters common stock for $86 per share in cash. The sale price represents an 84 percent premium to the average trading price of the 30 days ended 15 February 2023 of $46.68.

The acquisition of TravelCenters complements BP’s existing convenience and mobility business and will help expand its offers, including electric vehicle charging, biofuels, renewable natural gas (RNG) and hydrogen.

A condition of the sale is the approval by shareholders who own a majority of TravelCenters’ outstanding shares: Service Properties Trust, which owns 7.8 percent and The RMR Group, which owns 4.1 percent. Both have agreed to vote their shares in favour of the sale.

At the closing of the transaction, which has been unanimously approved its board of directors, TravelCenters will terminate its management agreement with RMR pursuant to the terms of the agreement and pay a termination fee to RMR that is currently estimated to be approximately $44m.

“The announcement that BP is acquiring TA is a result of the successful implementation of our turnaround and strategic plans,” said Jonathan M. Pertchik, chief executive of TA. “We have improved our core travel centre business, expanded our network, launched our specialised business unit eTA to prepare for the future of alternative fuels and improved our operating and financial results, none of which we could have accomplished without the hard work and dedication of our employees at every level.”

Founded in 1972 and headquartered in Westlake, Ohio, TravelCenters’ over 18,000 team members serve guests in 281 locations in 44 states, principally under the TA, Petro Stopping Centers and TA Express brands. TravelCenters’ offerings include diesel and gasoline fuel, truck maintenance and repair, full-service and quick-service restaurants, travel stores, car and truck parking and other services.

Subject to shareholder and regulatory approval, the transacting parties are targeting closing the acquisition by mid-2023.

News: BP to buy TravelCenters for $1.3 bln in U.S. fuel retail drive

CVS strikes $9.5bn Oak Street Health deal

BY Richard Summerfield

CVS Health Corp has agreed to acquire Oak Street Health Inc in an all-cash transaction valued at $9.5bn. The deal will allow CVS to offer routine health screenings and diagnosis to older adults.

The deal will see CVS acquire all the outstanding shares of Oak Street at $39 per share, representing an enterprise value of approximately $10.6bn. The agreed price represents a nearly 16 percent premium to Oak Street Health’s closing price last Tuesday. The parties anticipate that the deal will close in 2023.

CVS Health expects to fund the transaction through available resources and existing financing capacity. The transaction has been approved by the board of directors at each of the respective companies and is subject to approval by a majority of Oak Street Health’s stockholders, regulatory approval and satisfaction of other customary closing conditions. Private equity funds affiliated with Newlight Partners LP and General Atlantic LLC and certain members of the Oak Street Health board of directors, which collectively own approximately 45 percent of the common stock of Oak Street Health, have agreed to vote the shares they own in favour of the transaction, subject to customary exceptions.

“Combining Oak Street Health’s platform with CVS Health’s unmatched reach will create the premier value-based primary care solution,” said Karen S. Lynch, health president and chief executive of CVS. “Enhancing our value-based offerings is core to our strategy as we continue to redefine how people access and experience care that is more affordable, convenient and connected.”

“This agreement with CVS Health will accelerate our ability to deliver on our mission and continue improving health outcomes, lowering medical costs, and providing a better patient experience while offering significant value to our shareholders,” said Mike Pykosz, chief executive of Oak Street Health. “Together with CVS Health, we will have access to greater resources and capabilities to expand the reach of our platform, provide more opportunities for our teammates and, most importantly, make a meaningful difference in the lives of the patients we serve.”

“Oak Street Health is a premier value-based primary care platform,” said Shawn M. Guertin, chief financial officer of CVS Health. “We believe that in partnership with CVS Health, Oak Street Health can accelerate its growth and provide an attractive return to our shareholders over time. The pending acquisitions of Oak Street Health and Signify Health will also meaningfully advance our goal of adding 200 basis points of long-term adjusted operating income growth, a key commitment we made to shareholders at our December 2021 Investor Day.”

The deal, CVS’ third largest in the last decade, echoes moves by rivals Walgreens Boots Alliance, Cigna and tech giant Amazon, all of which expanded their healthcare offerings, especially primary and urgent care delivery, during the coronavirus (COVID-19) pandemic. Oak Street Health has approximately 600 primary care providers and 169 medical centres across 21 states in the US.

News: CVS digs into primary care with $9.5 bln Oak Street Health deal

Holcim agrees $1.2bn Duro-Last deal

BY Richard Summerfield

Holcim AG has agreed to acquire US roofing systems manufacturer Duro-Last in a $1.29bn deal. The deal is expected to close by the second quarter of 2023, subject to customary conditions and regulatory clearance in the US.

Duro-Last currently employs around 840 workers and has annual sales of roughly $540m. The deal is expected to complement Holcim’s integrated roofing offerings, with expected synergies of $60m per year.

The transaction is valued at $1.293bn, representing a 2023 earnings before interest, taxes, depreciation and amortisation (EBITDA) multiple of 11.9x, or 7.4x after synergies. It is earnings per share accretive from the first year. With this acquisition, Holcim’s roofing systems will exceed $4bn in net sales ahead of schedule.

“I’m excited to welcome Duro-Last into Holcim’s broad range of innovative and sustainable building solutions,” said Jan Jenisch, chief executive of Holcim. “Duro-Last is a perfect strategic fit for our roofing business. Its proprietary technologies and leading brands complement our offering in the fast-growing North American market. Its energy-efficient systems and excellence in recycling will further advance our leadership in sustainability. I congratulate the Burt family and its leadership team for developing such a thriving business, based on its strong customer relationships and most of all its empowered and dedicated people. I am excited to further strengthen the Duro-Last brand and welcome all 840 employees to the Holcim family.”

“Over the past 45 years, our family business has continually reinvested in Duro-Last to create the solid, financially strong and well-recognized company we are today,” said Tom Saeli, chief executive of Duro-Last. “We are delighted to be joining the Holcim family, which shares our core values, and we look to the future to accelerate our success. Holcim recognizes the opportunities at Duro-Last and we are confident it will support us in our future growth plans.”

This acquisition of Duro-Last advances Holcim’s ‘Strategy 2025 – Accelerating Green Growth’ with the goal to expand its Solutions & Products business to 30 percent of group net sales by 2025. In the first nine months of 2022, Solutions & Products boasted a recurring operating profit margin of 20 percent, better than the 16 percent level for Holcim as a whole.

The deal is one of the largest acquisitions Holcim has made in North America. In early 2022, it acquired Malarkey Roofing Products for $1.35bn. Holcim also acquired Firestone Building Products in April 2021.

News: Holcim cements North America push with $1.29 bln acquisition of roofing company

Thoma Bravo-owned QAD acquires Redzone in $1bn deal

BY Fraser Tennant

In a deal designed to deal with the challenges of rising input costs and labour shortages, Thoma Bravo portfolio company QAD has acquired employee productivity platform Redzone for $1bn.

The acquisition of Redzone’s connected workforce product – which serves over 1000 plants and 300,000 frontline workers globally – will enable QAD customers to drive rapid, tangible increases in empowerment, retention and productivity on the frontline.

“We are delighted to bring Redzone into the QAD family,” said Anton Chilton, chief executive of QAD. “We believe the emerging connected workforce space is the most transformational area of technology for manufacturing companies. As we assessed the market for the category leader, it was evident that not only is Redzone the number one provider globally, but also the pioneer of the category and the one who continues to define it.”

The addition of Redzone's connected workforce product supercharges the QAD Adaptive Applications product suite by enabling QAD customers to drive rapid, tangible increases in empowerment, retention and productivity on the frontline.

QAD Adaptive Applications are designed to support the Adaptive Enterprise where in a turbulent world, facing disruptions in supply and fluctuations in demand, manufacturers and supply chains rapidly respond to change and seamlessly optimise agility, efficiency and resilience for effective customer service.

“Joining QAD will accelerate our mission of transforming manufacturing by empowering the frontline,” said Richard Tester, co-founder and chief executive of Redzone. “We have always put the frontline worker at the heart of our technology and know that arming these teams with the right digital workflows is the fastest way to unlock productivity on the plant floor.”

QAD’s acquisition of Redzone is its second such transaction completed in the last two months. In December, the company acquired Livejourney, a provider of a real-time process mining and predictive modelling solution designed to discover, monitor and improve business processes.

“Since acquiring QAD in 2021, we have remained committed to supporting the company in its mission to enable its customers to rapidly adapt to disruption and effectively innovate for competitive advantage,” concluded Peter Stefanski, a partner at Thoma Bravo. “The acquisition of Redzone demonstrates our commitment to advancing QAD's vision and to further building its leadership position in the broader industrial software universe.”

News: Thoma Bravo-owned QAD to acquire Redzone for about $1 bln

Xylem to acquire Evoqua in $7.5bn deal

In a deal designed to address the world’s most critical water challenges, global water technology company Xylem Inc. is to acquire clean technology firm Evoqua Water Technologies in an all-stock transaction valued at approximately $7.5bn.

Under the terms of the definitive agreement, Evoqua shareholders will receive 0.480 shares of Xylem for each Evoqua share, representing a value of $52.89 per share or a 29 percent premium based on Xylem and Evoqua closing prices as of 20 January 2023.

Building on Xylem’s global leadership in water solutions and Evoqua’s leadership in advanced treatment solutions and services, the combined company will be uniquely positioned to develop and deliver an even more comprehensive offering of innovative solutions.

Moreover, the combination unlocks compelling new growth opportunities and is expected to deliver run-rate cost synergies of $140m within three years, driven by scale efficiencies in procurement, network optimisation and corporate costs.

“Solving the world’s water challenges has never been more urgent,” said Patrick Decker, president and chief executive of Xylem. “Our acquisition of Evoqua creates a transformative global platform to address water scarcity, affordability and resilience at even greater scale. The combined company delivers an unparalleled portfolio of advanced technologies, integrated services and application expertise across the water cycle.”

Following closing, the combined company will continue to be led by Mr Decker, with two current members of the board of directors of Evoqua expected to join Xylem’s board of directors.

"I am incredibly proud of what our team at Evoqua has achieved to date, providing mission-critical water treatment solutions to the market and for our customers,” said Ron Keating, president and chief executive of Evoqua. “Along the way, we have earned a reputation for quality, safety and reliability around the world. Together with Xylem, we will drive innovation on a larger scale for our customers, positioning us to create even more value for our stakeholders.”

The transaction, which is anticipated to close in mid-2023, is subject to approval by shareholders of Xylem and Evoqua, the receipt of required regulatory approvals and other customary closing conditions.

Mr Decker concluded: “Together, our complementary businesses will be even more strongly positioned to help our customers and communities tackle their most challenging water needs.”

News: Xylem to buy Evoqua in $7.5 bln deal to tap water demand