ConocoPhillips buys remaining Surmont stake for $4bn

BY Fraser Tennant

Exercising its first right of refusal, Alaska's largest crude oil producer ConocoPhillips is to acquire TotalEnergies SE’s 50 percent stake in the Surmont oilsands field in Alberta for $4bn.

Currently holding a 50 percent interest as operator of Surmont, ConocoPhillips will own 100 percent upon closing. The acquisition thwarts efforts by Suncor Energy Inc. to buy into the Alberta site.

The transaction will be funded from either cash, short- and medium-term financing or a combination of both. The deal is also subject to contingent payments for a five-year term of up to approximately $325m representing $2m for every dollar that Western Canada Select pricing exceeds $52 per barrel during the month, subject to certain production targets being achieved.

Additionally, the transaction is structured as an asset purchase and the tax pools will be commensurate with the purchase price of the asset, including associated contingent payments.

“The acquisition reflects our ongoing commitment to enhance our returns-focused value proposition, improving our return on capital employed, lowering our free cash flow breakeven and further supporting our $11bn planned return of capital in 2023,” said Ryan Lance, chairman and chief executive officer of ConocoPhillips. “Long-life, low sustaining capital assets like Surmont play an important role in our deep, durable and diverse low cost of supply portfolio.

“Upon close, we look forward to leveraging our position as 100 percent owner and operator of Surmont to further optimise the asset while progressing toward our overall interim and long-term emissions intensity objectives,” he continued. “We will remain on track to achieve our previously announced accelerated greenhouse gas (GHG) intensity reduction target of 50 to 60 percent by 2030, using a 2016 baseline.”

Headquartered in Houston, Texas, ConocoPhillips is one of the world’s leading exploration and production companies based on both production and reserves, with a globally diversified asset portfolio. The company has operations and activities in 13 countries and approximately 9600 employees.

Expected to close in the second half of 2023, the transaction is subject to regulatory approvals and other customary closing conditions.

News: ConocoPhillips to buy rest of Canada's Surmont oil site, bumping Suncor

Chevron to acquire PDC Energy for $7.6bn

BY Richard Summerfield

Chevron Corp has agreed to acquire oil & gas producer PDC Energy in a deal worth $7.6bn.

Under the terms of the deal, Chevron will acquire all of the outstanding shares of PDC in an all-stock transaction valued at $6.3bn, or $72 per share. Based on Chevron’s closing price on 19 May 2023, PDC shareholders will receive 0.4638 shares of Chevron for each PDC share. The total enterprise value of the transaction is $7.6bn.

The deal has been unanimously approved by the boards of directors of both companies and is expected to close by year-end 2023. The acquisition is subject to PDC shareholder approval, as well as regulatory approvals and other customary closing conditions.

“PDC’s attractive and complementary assets strengthen Chevron’s position in key U.S. production basins,” said Mike Wirth, chairman and chief executive of Chevron. “This transaction is accretive to all important financial measures and enhances Chevron’s objective to safely deliver higher returns and lower carbon. We look forward to welcoming PDC’s team and shareholders to Chevron and continuing both companies’ focus on safe and reliable operations.”

“The combination with Chevron is a great opportunity for PDC to maximize value for our shareholders. It provides a global portfolio of best-in-class assets,” said Bart Brookman, president and chief executive of PDC. “I look forward to blending our highly complementary organizations, and I’m excited that PDC’s assets will help propel Chevron toward our shared goal for a lower carbon energy future.”

The deal for PDC will increase Chevron’s oil & gas footprint in the US, adding around 10 percent to the company’s reserves, giving it future production in the US, as well as adding about $1bn to both its capital expenditures and free cash flow as soon as 2024, or within a year of the deal closing. According to Mr Wirth, the acquisition will add 260,000 barrels of oil and gas production per day to Chevron’s output in 2024. The deal will also increase Chevron’s capital spending by about $1bn per year, raising its range to $14bn to $16bn through 2027.

Chevron has been increasingly active in recent years, completing deals to grow its operations in Colorado and Wyoming. The company, the second largest US oil producer, is one of the top producers in the Denver-Julesburg Basin after its $13bn acquisition of Noble Energy in 2020.

News: Chevron to boost US presence with $7.6 bln PDC Energy buy

Baxter divests biopharma business to PE group for $4.25bn

BY Fraser Tennant

In a deal designed to accelerate its clinical development pipeline and drive product innovation, global medical technology company Baxter International Inc. is to divest its biopharma solutions (BPS) unit to a private equity consortium comprising Warburg Pincus and Advent International.

Under the terms of the definitive agreement, Baxter will receive $4.25bn in cash, subject to certain closing adjustments, with net after-tax proceeds currently estimated to be approximately $3.4bn.

As a standalone company and in partnership with Advent and Warburg Pincus, BPS – a provider of sterile contract manufacturing solutions, parenteral delivery systems and customised support services to the pharma and biotech industries for decades – will operate as a premier, independent end-to-end contract development manufacturing organisation providing a range of services for clients, from clinical research to commercial deployment.

The transaction includes BPS manufacturing facilities and approximately 1700 employees in Bloomington, Indiana and Halle, Germany. The deal is also expected to generate revenues of approximately $600m for 2023.

“This transaction represents an important step in Baxter’s ongoing transformation journey as we continue to execute against our strategic priorities, enhance our focus and create additional value for all our stakeholders,” said José E. Almeida, chairman, president and chief executive of Baxter. “BPS has long been recognised worldwide as a trusted and preferred partner of contract manufacturing services for the pharmaceutical and biotech industries.”

Following completion of the transaction, Baxter expects BPS to be well-positioned to accelerate its go-to-market strategy and clinical development pipeline, execute on throughput expansion and drive further product innovation.

“BPS is a premier asset at the forefront of the biopharma industry, and one we have been closely following for a number of years,” said John Maldonado, a managing partner at Advent. “Leveraging our deep sector expertise and significant strategic resources, we believe this partnership can unlock multiple opportunities for growth and help the business realise its full potential.”

TJ Carella, managing director and head of healthcare at Warburg Pincus, added: “We are excited to partner with Advent and the impressive team at BPS who have developed differentiated technical capabilities and established an industry-leading reputation for quality and reliability in the supply chain for parenteral drugs.”

The transaction is expected to close in the second half of 2023, subject to receipt of customary regulatory approvals and satisfaction of other customary closing conditions.

Mr Almeida concluded: “I am confident that under the stewardship of Advent and Warburg Pincus, BPS will continue to build on its leadership position, foster world-class talent, invest in new capabilities and capacity, and provide leading-edge, high-quality solutions for its clients.”

News: Baxter to divest biopharma business for $4.25 billion

Eli Lilly to divest diabetes drug to Amphastar in $1bn deal

BY Fraser Tennant

In an effort to continue expanding the availability of diabetes drug Baqsimi to patients, US pharmaceutical company Eli Lilly and Company is to divest the drug to Amphastar Pharmaceuticals, Inc. in a transaction worth up to $1.08bn.

Under the terms of the definitive agreement, Amphastar will pay Lilly $500m in cash at closing and an additional $125m in cash upon the one-year anniversary of closing. Eli Lilly is also eligible to receive sales-based milestone payments of up to $450m in aggregate.

Launched by Eli Lilly in 2019 as an option to quickly render aid in rescue situations for people with diabetes who take insulin, Baqsimi is currently available in 27 international markets, with worldwide sales totalling $139.3m in 2022. It is the first and only nasally administered glucagon for the treatment of severe hypoglycaemia in people with diabetes.

“Our portfolio of therapies continues to make life better for people with diabetes, and we will continue this important mission while also increasing our focus on advancing our pipeline of potential breakthrough treatments,” said Mike Mason, executive vice president of Eli Lilly & Company. “Baqsimi’s positive impact has been felt by people with diabetes around the globe and we are working closely with Amphastar to facilitate a successful transition and consistent patient experience.”

The transaction has been approved by the boards of directors of both companies.

“The acquisition of Baqsimi will integrate our core strategic vision of strengthening our proprietary products profile in addition to enhancing our diabetes portfolio offering,” said Jack Zhang, president and chief executive of Amphastar. “We are optimistic about Baqsimi’s growth potential as it is the first and only commercial intra-nasal glucagon demonstrated to treat low blood sugar emergencies.”

A global pharmaceutical company focused on developing, manufacturing and marketing injectable, intranasal and inhalation products, including experience with a glucagon product, Amphastar expects to provide dedicated commercial investment for Baqsimi with the goal of enabling more people on insulin to be prepared with a glucagon rescue treatment for severe hypoglycaemia.

The transaction is not subject to any financing conditions and is expected to close in the second or third quarter of 2023, subject to the satisfaction of customary closing conditions.

News: Eli Lilly to sell low blood sugar drug to Amphastar for around $1 billion

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