Crescent Point acquires Spartan Delta assets in $1.7bn cash deal

BY Fraser Tennant

Despite current volatility in oil prices, oil and gas company Crescent Point Energy Corp. is to acquire the oil and liquids-rich Montney assets in Alberta of fellow energy company Spartan Delta Corp. in a deal valued at $1.7bn.

Under the terms of the definitive agreement, Spartan shareholders are expected to receive $9.50 per common share through the deal with Crescent Point, which is the second sizeable acquisition among Canadian explorers and producers this year after 2022 saw a drop in deals due to volatile oil prices.

The all-cash deal will see Calgary-based Crescent Point acquire 600 drilling locations in the Montney region, adding 38,000 barrels of oil equivalent per day to the company's production inventory.

The transaction also significantly grows Crescent Point’s presence in what is one of North America's largest unconventional petroleum resources, and immediately boosts excess cash flow per share by 20 percent.

“Over the past five years, we have fundamentally rebuilt and strengthened Crescent Point,” said Craig Bryksa, president and chief executive of Crescent Point. “As a result of our efforts, and after closing this transaction, our asset base will include significant inventory depth in both the Kaybob Duvernay and the Montney, while also maintaining significant low-decline assets in Saskatchewan that provide additional excess cash flow.”

Following the sale, Spartan intends to develop its remaining Alberta Deep Basin assets and spin off a portion of its remaining production to build a new growth-focused Montney junior company called Logan Energy Corp. with assets in Alberta and British Columbia.

“This transaction sees the successful conclusion of our strategic repositioning process with our core Montney development asset sale, the creation of a new growth-focused Montney junior company and the retention of our sustainable Free Funds Flow and dividend generating assets in the Deep Basin,” said Fotis Kalantzis, president and chief executive of Spartan. “I thank our shareholders, employees, board, stakeholders, and other supporters who helped cultivate this successful outcome.”

The transaction is anticipated to close during second quarter 2023, subject to regulatory approvals and customary closing conditions.

Mr Bryska concluded: “The Montney acquisition is immediately accretive to our per share metrics, enhances our return of capital to shareholders and is aligned with our long-term strategy to focus on high quality, scalable resource plays that meet our defined asset criteria.”

News: Crescent Point Energy to buy Spartan Delta's Montney assets for $1.2 bln

Origin Energy acquired for $10.21bn

BY Richard Summerfield

A consortium comprising Brookfield Renewable Partners, GIC, Temasek and MidOcean Energy, a liquefied natural gas (LNG) company formed and managed by EIG, has agreed to acquire Australian integrated electricity generator, and electricity and natural gas retailer Origin Energy in a deal worth $10.21bn.

The terms of the deal will value Origin at an enterprise value of $18.7bn. The purchase price of $8.91 per share represents a 53.4 percent premium to the company’s unaffected share price.

Upon closing of the transaction, Brookfield, its institutional partners and investors will own Origin’s energy markets business, Australia’s largest integrated power generator and energy retailer. MidOcean will separately own Origin’s integrated gas business including its upstream gas interests and a 27.5 percent stake in Australia Pacific LNG (APLNG). MidOcean has entered into an agreement to on-sell a 2.49 percent interest in APLNG to ConocoPhillips. ConocoPhillips, already a 47.5 percent owner in APLNG, is the current downstream operator and intends to take over upstream operatorship of APLNG.

The deal is subject to approval from Origin’s shareholders, regulatory approvals and an independent expert’s report into whether the offer is in best interest of the shareholders, among others.

“The Board is unanimous in its view that this transaction is in the best interests of shareholders,” said Scott Perkins, chairman of Origin. “The transaction represents a significant premium to the share price prior to the original indicative proposal, and reflects the strategic nature of Origin’s platform, its growth prospects and anticipated earnings recovery. We believe the Consortium will be responsible owners of Origin’s businesses. Our discussions with the Consortium confirm a high degree of alignment with Origin’s strategy and a desire to accelerate initiatives consistent with Origin’s critical role in Australia’s energy transition. This alignment validates the vision and hard work of Origin’s management team and employees.”

“The significant premium placed on Origin by the Consortium reflects the value of our strategy and our advantaged position to capture value from the energy transition,” said Frank Calabria, chief executive of Origin. “We believe this transaction is a great outcome not only for our shareholders, but for all stakeholders including our customers, employees and partners. We believe this transaction also stands to benefit the broader Australian community as it will unlock significant capital that can help accelerate the energy transition and deliver benefits in the form of cleaner, smarter and lower cost energy for our nation over time.”

“As the energy transition gathers pace, what’s needed is increasingly clear: faster deployment of large-scale renewables, the accelerated, responsible retirement of coal generation, and an interim, supportive role for gas as the dependable back-up fuel,” said Mark Carney, chair of Brookfield Asset Management and head of transition investing. “Brookfield is determined that the new Origin Energy Markets will lead the way in all respects at this critical moment for the Australian economy.”

“LNG will be critical in delivering energy transition targets, and this transaction is a compelling opportunity to accelerate EIG’s strategy of gaining exposure to high quality LNG assets around the globe,” said Blair Thomas, chief executive of EIG. “We have long been attracted to the Australian market, with an established presence in Australia since 2000, and look forward to playing a pivotal role in meeting Australia’s transition targets by enabling broader decarbonization efforts at APLNG.”

News: Origin Energy agrees $10.2 bln takeover deal with Brookfield consortium

STB approves $31bn railways acquisition

BY Fraser Tennant

Giving the green light to the first major railroad merger in 20 years, the US Surface Transportation Board (STB) has approved the $31bn merger of Canadian Pacific (CP) and Kansas City Southern (KCS).

The STB’s decision is effective as of 14 April 2023, at or after which point the two railways combine to create the new CPKC – the first single-line railway connecting the US, Mexico and Canada.

Among the core conclusions reached by the STB regarding the public and pro-competitive benefits of the CP-KCS combination are that the combination should ultimately enhance safety and benefit the environment.

The regulator also stated that the transaction will make possible improved single-line service for many shippers and will result in merger synergies that are likely to allow CPKC to be a vigorous competitor to other Class I carriers by providing improved service at lower cost.

“The STB’s decision clearly recognises the many benefits of this historic combination,” said Keith Creel, president and chief executive of CP. “As the regulator found, it will stimulate new competition, create jobs, lead to new investment in our rail network and drive economic growth.

“These benefits are unparalleled for our employees, rail customers, communities and the North American economy at a time when the supply chains of these three great nations have never needed it more,” he continued. “A combined CPKC will connect North America through a unique rail network able to enhance competition, provide improved reliable rail service, take trucks off public roads and improve rail safety by expanding CP’s industry-leading safety practices.”

Headquartered in Calgary, Canada, CPKC will operate approximately 20,000 miles of rail, employing close to 20,000 people. Once combined, full integration of CP and KCS is expected to happen over the next three years, unlocking the benefits of the combination.

“This important milestone is the catalyst for realising the benefits of a North American railroad for all of our stakeholders,” said Patrick J. Ottensmeyer, president and chief executive of KCS. “The KCS board of directors and management team are very proud of the many contributions and achievements of the people who have made KCS what it is today.”

Mr Ottensmeyer concluded: “We are excited for the boundless possibilities as we move forward into the next chapter as CPKC.”

News: US regulator approves Canadian Pacific purchase of Kansas City Southern

Pfizer agrees $43bn Seagen acquisition

BY Richard Summerfield

In a transaction that will boost its cancer treatments portfolio, Pfizer Inc has agreed to acquire biotech firm Seagen Inc in a $43bn deal.

Under the terms of the deal, Pfizer will pay $229 in cash per share to buy Seagen, funding the transaction through $31bn of new long-term debt, as well as short-term financing and cash. The company is paying a premium of about 35 percent to Seagen’s closing price on Friday, the last day of trading before the deal was announced. The deal is expected to complete in late 2023 or early 2024.

The move for Seagen comes as Pfizer looks to refill its drugs pipeline and pivot away from its coronavirus (COVID-19) products, which have experienced a sharp fall in sales of late. Pfizer already has 24 approved cancer medicines, and 33 programmes in clinical development, and the acquisition of Seagen will see it add an additional four approved cancer therapies which had combined sales of nearly $2bn in 2022.

“Pfizer is deploying its financial resources to advance the battle against cancer, a leading cause of death worldwide with a significant impact on public health,” said Albert Bourla, chairman and chief executive of Pfizer. “Together, Pfizer and Seagen seek to accelerate the next generation of cancer breakthroughs and bring new solutions to patients by combining the power of Seagen’s antibody-drug conjugate (ADC) technology with the scale and strength of Pfizer’s capabilities and expertise. Oncology continues to be the largest growth driver in global medicine, and this acquisition will enhance Pfizer’s position in this important space and contribute meaningfully to the achievement of Pfizer’s near- and long-term financial goals.”

“Pfizer shares our steadfast commitment to patients, and this combination is a testament to the passion, dedication and talent of the Seagen team to achieve our mission to discover, develop, and commercialize transformative cancer medicines that make a meaningful difference in people’s lives,” said David Epstein, chief executive of Seagen. “The proposed combination with Pfizer is the right next step for Seagen to further its strategy, and this compelling transaction will deliver significant and immediate value to our stockholders and provide new opportunities for our colleagues as part of a larger science-driven, patient-centric, global company.”

Many of the world’s largest pharmaceutical companies, including Pfizer, are sitting on significant cash piles and need to invigorate their pipelines of medicines, as key drugs go off patent before the end of the decade. Pfizer has been under pressure to do a big deal, after the company forecast that revenues would slump by a third to between $67bn to $71bn in 2023 owing to steep falls in sales of COVID-19 vaccines and treatments. In 2023, Seagen expects revenue of about $2.2bn, a 12 percent rise year on year. Pfizer believes that in 2030 Seagen could contribute more than $10bn in risk-adjusted revenues.

News: Pfizer signs $43 bln Seagen deal in cancer drug push

Failed battery firm gets a Recharge

BY Richard Summerfield

Recharge Industries, an Australian portfolio company of privately owned US firm Scale Facilitation, has been successful in its bid for ownership of Britishvolt, the battery manufacturer which collapsed into administration in January.

Under plans presented by Recharge Industries, the Britishvolt project will make the UK’s first gigafactory a reality, creating a strategic economic and security asset which will play a critical role in the UK’s industrial and net-zero strategies. The newly acquired Britishvolt will provide thousands of green, skilled and local jobs that will drive local and national benefits, according to a statement announcing the deal.

“We are thrilled to have been successful in our bid for ownership of Britishvolt; our plans are the right ones for the local community and the UK economy,” said David A. Collard, founder and chief executive of Scale Facilitation. “Our proposal combined our financial, commercial, technology and manufacturing capabilities, with a highly credible plan to put boots and equipment on the ground quickly. Our technology – including an exclusive license for the intellectual property and battery technology – has been developed and validated over the last decade through C4V in the US and will be the backbone of both gigafactories in Geelong and Cambois. Backed by our global supply chain, strategic delivery partners and a number of significant customer agreements in place, we’re confident of making the Cambois Gigafactory a success and growing it into an advanced green energy project.”

The original Britishvolt was intended to create a home-grown EV battery industry that can support domestic car production, but the company collapsed in January after failing to raise enough funding for the factory in northern England. The company was a much-heralded part of the UK government’s ‘levelling up’ agenda, however Britishvolt had only raised around £200m by summer 2022 and had pushed back its production timeline. The government had offered £100m to the former Britishvolt owners if they hit certain construction milestones, but they were not met.

The company was planning to build its 30GWh factory in phases to take advantage of rising EV demand ahead of the UK’s 2030 ban of new petrol and diesel cars. The plant, located near Blyth in Northumberland, was expected to employ about 3000 people when operating at full capacity.

Going forward, the new owners will keep the Britishvolt brand name but will focus on batteries for energy storage and hope to have those products available by the end of 2025. Recharge also plans to build a battery factory in Geelong, a former car manufacturing hub in Australia, free from Chinese and Russian materials.

News: Australia's Recharge Industries buys failed battery firm Britishvolt