Carrier to acquire Viessman unit in €12bn transaction

BY Fraser Tennant

In a deal envisaged to create a global leader in intelligent climate and energy solutions, air conditioner maker Carrier Global Corporation is to acquire a unit of German industrial manufacturer Viessmann.

Under the terms of the acquisition agreement, Carrier will acquire Viessmann Climate Solutions, the largest segment of Viessmann Group, in a cash and stock transaction – 80 percent cash and 20 percent in Carrier common stock – valued at €12bn.

A privately held company with a 106-year legacy of innovation, Viessmann Climate Solutions provides Carrier with an iconic, premium brand in the highest growth segment of the global heat pump and energy transition markets.

Moreover, with 70 percent of its business consisting of heat pumps and related accessories, solar PV, batteries and services, Viessmann Climate Solutions is a critical leader in Europe's energy transition.

“The acquisition of Viessmann Climate Solutions is a game-changing opportunity,” said David Gitlin, chairman and chief executive of Carrier. “Climate change, sustainability requirements and geopolitical factors are driving an unprecedented energy transition in Europe. Accelerated by government regulations and incentives, the transition creates a significant, long-term growth opportunity.”

As part of the transaction, Max Viessmann, chief executive of Viessmann, will join Carrier’s board of directors.

“Our purpose is to create living spaces for generations to come,” said Mr Viessmann. “Carrier's global reach, broad product portfolio, financial strength and shared commitment to sustainability will enable our climate solutions business to fully capitalise on our innovative, integrated solution offering and maximise our impact on Europe's independent energy transition.”

The transaction has been approved by the boards of directors of Carrier and Viessman and is expected to close around the end of 2023, subject to customary closing conditions and regulatory approvals.

Mr Gitlin concluded: “We are positioning ourselves to be the global climate solutions champion, poised to deliver higher growth and superior shareowner value.”

News: Carrier nears over $12 bln deal for German manufacturer Viessmann

Silver Lake to acquire Software AG

BY Richard Summerfield

Private equity firm Silver Lake has agreed to acquire German software developer Software AG in a deal worth $2.42bn.

Under the terms of the deal, Silver Lake will pay €30 per share in cash to acquire the company, an offer which represents a premium of 53 percent to Software AG’s closing price of €19.59 on Thursday, the last day of trading before rumours of a deal emerged, and a premium of 48 percent to the company’s three-month volume-weighted average share price.

The deal is subject to an acceptance threshold of 50 percent plus one share and further customary conditions, including regulatory clearances. The transaction is fully funded with equity and debt financing in place.

“The Management Board welcomes the opportunity of a deepened strategic partnership with Silver Lake, following a thorough analysis of the Offer,” said Sanjay Brahmawar, chief executive of Software AG. “Silver Lake has already demonstrated strong support for our strategic vision and values.

“With deep expertise in the integration market, experience in transitioning businesses to SaaS-first models and extensive M&A capabilities, Silver Lake is a valuable long-term partner for Software AG and our customers,” he continued. “A successful transaction would enable us to accelerate the execution of our strategy, double down on innovation in integration for customers, and provide greater opportunities to attract and develop talent.”

In February 2022, Silver Lake invested €344m in Software AG’s convertible bond, which upon conversion would represent nearly 9 percent of issued Software AG shares, the company said in a statement.

“The offer of €30.00 per share represents an attractive premium for our shareholders,” said Daniela Bünger, chief financial officer of Software AG. “The commitment of the Software AG Foundation as the company’s largest investor to sell 25.1 percent is testament to the attractiveness of the cash offer. Ahead of our full financial results announcement next Thursday, I can confirm that all guidance metrics in the first quarter are in line with market expectations and reconfirm our full year guidance for 2023.”

“We welcome the proposed acquisition of Software AG by Silver Lake,” said Peter Schnell, chief executive of the Software AG Foundation, the company’s largest investor, and co-founder and former chief executive of Software AG. “Silver Lake have been great partners to Software AG and to us since their initial investment, and through working together on the future of the company we have developed a deep and trusted relationship.”

The Software AG Foundation will continue to hold a 5 percent stake in the company, post-close, according to Silver Lake.

News: Silver Lake to buy Germany's Software AG in $2.42 billion deal

Merck to pay around $11bn for Prometheus

BY Richard Summerfield

Pharma giant Merck has agreed to acquire biotech company Prometheus Biosciences in a deal worth $10.8bn.

Under the terms of the deal, Merck will pay $200 per share for Prometheus, representing a 75.4 percent premium to Prometheus’ last closing price before the deal was announced.

Prometheus is a clinical-stage biotechnology company developing and commercialising novel therapeutic and companion diagnostic products for the treatment of immune-mediated diseases.

The acquisition of Prometheus will go some way toward replacing the huge revenue stream generated by Keytruda, which is likely to start fading early next decade as it loses its patents. Keytruda is used in cancer immunotherapy that treats melanoma, lung cancer, head and neck cancer, Hodgkin lymphoma, stomach cancer, cervical cancer, and certain types of breast cancer.

“At Merck, we are committed to delivering on our purpose to save and improve lives and continue to identify and secure opportunities where compelling science and value creation align,” said Robert M. Davis, chairman and chief executive of Merck. “The agreement with Prometheus will accelerate our growing presence in immunology where there remains substantial unmet patient need. This transaction adds diversity to our overall portfolio and is an important building block as we strengthen the sustainable innovation engine that will drive our growth well into the next decade.”

“Prometheus was established to revolutionize the treatment of immune-mediated diseases through the application of a powerful precision medicine approach,” said Mark McKenna, chairman and chief executive of Prometheus Biosciences. “This agreement with Merck, a leader in biopharmaceutical research and development, allows Prometheus to maximize the potential for PRA023, while continuing to apply our technology and expertise to fuel further discoveries to address the needs of patients with immune disorders.”

“By applying a portfolio of powerful analytic tools to a comprehensive collection of IBD samples, Prometheus identified important disease insights that have now yielded a promising late-stage candidate,” said Dean Y. Li, president of Merck Research Laboratories. “I look forward to working with the talented Prometheus team to establish a new paradigm of precision treatment for immune diseases.” 

News: Merck to buy Prometheus Biosciences for about $11 billion

Global M&A activity to resurge in 2023, claims new report

BY Fraser Tennant

A stronger period for private equity (PE) and M&A deal activity is on the horizon following months of macroeconomic turmoil, according to a new report by BMS.

In its ‘Private Equity, M&A and Tax 2023’ report, which provides a comprehensive analysis of trends in the European, North American and Asian M&A markets, BMS suggests that while deal volumes have fallen compared to the high levels achieved in 2021 and early 2022, activity will bounce back toward the latter half of 2023,  

This optimism comes despite an M&A landscape impacted by various macro developments, including the coronavirus (COVID-19) pandemic, war in Ukraine, concerns around recession, higher interest rates to curb inflation and risks associated with the recent banking crisis.

“2023 has gotten off to a subdued start compared the deal activity levels seen over the past two years,” said Tan Pawar, head of private equity and M&A at BMS. “However, momentum is growing, and we have not seen a decrease in enquiries from companies eager to obtain M&A insurance.”

Among a number of key findings, the BMS report found that: (i) a growing appetite remains in the M&A insurance market, with a 40 percent growth in insurance products purchased over the past 24 months; (ii) there has been an uptick in claims from policies underwritten during the pre-2022 M&A boom, resulting in reinsurers looking to manage risk to a much greater degree; (iii) although European M&A activity tailed off in the latter half of 2022, the tax insurance market saw a record number of enquiries; and (iv) the secondaries market remained active in 2022, with total transaction volume exceeding $100bn for the second year running.

The report also suggests that against the backdrop of an increasingly challenging macroeconomic environment and a  potential global recession in 2023, distressed sales could increase.  

Mr Pawar concluded: “With market conditions expected to stabilise, we should see a resurgence in deal activity by the end of the second quarter and into the second half of 2023.”

Report: Private Equity, M&A and Tax 2023

Enel sells Peruvian assets to CSGI in $2.9bn deal

BY Fraser Tennant

In a deal valued at $2.9bn, Italian multinational manufacturer and distributor of electricity and gas Enel Group is to sell its equity stakes in two Peruvian assets to power grid company China Southern Power Grid International (CSGI).

Under the terms of the agreement, CSGI will acquire Enel Perú’s equity stakes in Enel Distribución Perú S.A.A. (equal to around 83.15 percent of the share capital) and Enel X Perú S.A.C. (equal to 100 percent of the share capital).

The overall transaction is expected to generate a reduction of Enel Group’s consolidated net debt of approximately €3.1bn in 2023 and a positive impact for 2023 on reported group net income amounting to approximately €500m.

The transaction is in line with the group’s current strategic plan, which envisages the completion of group repositioning on six core countries, namely Italy, Spain, the US, Brazil, Chile and Colombia, in order to enhance value creation.

“With this transaction, we are able to maximise the value of the investments carried out so far in grid digitalisation and advanced energy services in Peru,” said Francesco Starace, group chief executive and general manager of Enel Group. “It is thanks to the expertise and dedication of colleagues that we leave buyers with an excellent set of assets, which will continue to drive the sustainable development of the country through automated digital networks and innovative energy solutions.”

The closing of the sale is subject to certain conditions precedent customary for these kinds of transactions, including clearance from the competent antitrust authority in Peru and approvals of competent Chinese authorities for outbound direct investments (ODI).

A leading energy player in Peru since 2007, the Enel Group operates in power distribution and supply with around 1.5 million end users in northern Lima. The group in Peru also operates in the generation business, with more than 2GW of installed capacity, nearly half of which from renewables, in the distributed generation and energy efficiency segments and in the e-mobility segment.

Mr Starace concluded: “We continue to implement the asset disposal plan announced to the markets during the presentation of Enel’s strategic plan last November and aimed at finalising the Group’s streamlining process that has always been a cornerstone of our strategy.”

News: Enel agrees to sell two Peruvian assets to China's CSGI for $2.9 bln