UnitedHealth Group to acquire Amedisys in $3.3bn deal

BY Richard Summerfield

UnitedHealth Group has agreed to acquire home health and hospice caregiver Amedisys in a deal worth $3.3bn.

Under terms of the deal, Optum, the diversified health care services arm of UnitedHealth Group, will acquire Amedisys in an all-cash transaction for $101 per share. Optum previously made a bid to buy Amedisys for $100 per share. The agreed price represents a 10.7 percent premium to Friday’s closing price of $91.21.

“The combination of Amedisys with Optum unites two organizations dedicated to providing compassionate, value-based comprehensive care to patients and their families”, Amedisys wrote in a statement announcing the deal.

Once the deal closes Amedisys will become a wholly-owned subsidiary of UnitedHealth.

“Amedisys’ commitment to quality and care innovation within the home, and the patient-first culture of its people, combined with Optum’s deep value-based care expertise can drive meaningful improvement in the health outcomes and experiences of more patients at lower costs, leading to continued growth,” said Patrick Conway, chief executive of Optum Care Solutions.

The deal for Amedisys also led to the cancellation of an all-stock deal between Amedisys and Option Care Health. As part of the mutual termination agreement, Option Care Health will receive a $106m termination fee. Consistent with Option Care Health’s commitment to creating shareholder value, the company will incorporate the termination fee into its established capital allocation strategy, it noted in a statement.

“While we are disappointed in this outcome, Option Care Health has a long track record of delivering value for our shareholders,” said John C. Rademacher, president and chief executive of Option Care Health. “We take a disciplined approach to acquisitions and, as we evaluated our options, we applied this discipline to ensure we continue to create value for all of our key stakeholders.

“Option Care Health benefits from a leading platform in home and alternate site infusion services and a proven track record of execution,” he continued. “We remain confident in our growth trajectory, which is underpinned by current industry trends and market forces as well as our strong financial position. Our team is committed to serving all our stakeholders by providing unsurpassed care and superior clinical outcomes in the home or ambulatory setting, and we will continue to identify ways to increase the value we can deliver.”

In-home medical services are becoming an area of focus for healthcare companies, with several notable deal occurring in the space in the US. Earlier this year, CVS Health spent $8bn on Signify Health as part of its effort to add a home care provider and boost its healthcare and technology platform.

News: Amedisys agrees to $3.3 bln UnitedHealth offer, scraps Option Care deal

Civitas strikes $4.7bn Permian basin deals

BY Richard Summerfield

Civitas Resources has agreed to acquire oil & gas operations in the Permian Basin managed by private equity firm NGP Energy Capital Management for $4.7bn.

The deals will see Civitas acquire oil producing assets in the Midland and Delaware Basins of west Texas and New Mexico. The agreements were signed with affiliates of Hibernia Energy III, LLC and Tap Rock Resources, LLC. Under the terms of the deal, Civitas has agreed to acquire a portion of Tap Rock Resources’ assets and all of Hibernia Energy III’s operations. The company will pay cash, using a mix of existing reserves and debt, and issue 13.5 million shares to NGP.

The deals are expected to close in the third quarter of 2023. The two definitive agreements will see Civitas acquire oil producing assets from Hibernia Energy’s Midlands area of west Texas for $2.25bn in cash, and from Tap Rock Resources for Delaware area assets in New Mexico for $2.45bn, which includes $1.5bin in cash.

“These accretive and transformative transactions will immediately create a stronger, more balanced and sustainable Civitas,” said Chris Doyle, president and chief executive of Civitas. “By acquiring attractively priced, scaled assets in the heart of the Permian Basin, we advance our strategic pillars through increased free cash flow and enhanced shareholder returns. We will soon have nearly a decade of price-resilient, high-return drilling inventory. Our strong capital structure allowed us to capture these transformational assets, and, importantly, behind the strength of the pro forma business, we have a clear path to reduce leverage and maintain long-term balance sheet strength.”

The combined transactions will add 68,000 net acres in the Midland and Delaware basins and will add combined proved reserves of 335 million barrels of oil equivalent (boe), as at the end of 2022. The assets will increase Civitas’ existing production by 60 percent, adding 100,000 boe per day of current production. At present, Denver-based Civitas currently operates on more than 500,000 net acres and produces roughly 160,000 boe per day.

Civitas said the cash flow generated by the assets was a significant factor in its pursuit of a deal. The assets will allow Civitas’ dividend payments in 2024 to be boosted by around 20 percent. To help the company repay the debt it will be using to fund the acquisitions, Civitas also announced that it would have to halve its $1bn share buyback target, which was initially announced in February and was set to run to the end of 2024.

NGP provided Tap Rock with capital in 2016 and backed Hibernia with $250m of equity in 2017.

News: Civitas Resources enters Permian basin in $4.7 billion deals

Merger of equals: Patterson-UTI and NexTier combine in $5.4bn deal

BY Fraser Tennant

In a merger that creates an industry-leading drilling and completions services provider, Patterson-UTI Energy, Inc. is to combine with NexTier Oilfield Solutions Inc. in an all-stock transaction valued at approximately $5.4bn.

Under the terms of the definitive agreement, NexTier shareholders will receive 0.7520 shares of Patterson-UTI common stock for each share of NexTier common stock owned.

Moreover, upon closing of the transaction, Patterson-UTI shareholders will own approximately 55 percent and NexTier shareholders will own approximately 45 percent of the combined company on a fully diluted basis. The merger is expected to be tax-free to shareholders of both companies.

Patterson-UTI is a leading provider of oilfield services and products to oil and natural gas exploration and production companies in the US and other select countries. NexTier is an industry-leading US land oilfield service company, with a diverse set of well completion and production services across active and demanding basins.

The combined company will operate under the name Patterson-UTI Energy, Inc.

"This merger unites two top-tier and technology-driven drilling and well completions businesses, creating a leading platform at the forefront of innovation,” said Andy Hendricks, chief executive of Patterson-UTI. “As one company, we will have a significantly expanded, comprehensive portfolio of oilfield services offerings across the most active producing basins in the United States, along with operations in Latin America.”

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

“We believe offering a comprehensive suite of solutions on one integrated platform will position the combined company as the partner of choice for a greater number of customers across geographies and throughout the full well lifecycle,” said Robert Drummond, president and chief executive of NexTier. “We are confident that together, we will be able to drive efficiencies across the portfolio and unlock more value for shareholders and customers than either organisation could achieve on its own.”

The merger is expected to close in the fourth quarter of 2023, following Patterson-UTI and NexTier shareholder approval, regulatory approvals and satisfaction of other customary closing conditions.

“Together, we will better serve our employees, shareholders, customers, suppliers and the communities in which we operate,” concluded Mr Hendricks. “We look forward to working with the NexTier team to successfully bring our two companies together.”

News: Patterson-UTI, NexTier merge to form $5.4 billion oilfield services firm

Novartis to acquire Chinook for $3.2bn

BY Richard Summerfield

Pharmaceutical firm Novartis has agreed to buy clinical stage biopharmaceutical company Chinook Therapeutics in a deal worth up to $3.5bn.

The transaction values Seattle-based Chinook at $40 a share, compared to Friday’s closing price of under $24, a premium of 67 percent. The agreement includes another $300m if certain regulatory milestones are reached. The deal is subject to approval from the stockholders of Chinook and regulatory clearances and will conclude in the second half of 2023. The transaction has been unanimously approved by the boards of directors of both companies.

The deal is a merger of a newly formed subsidiary of Novartis with Chinook, which has two late-stage medicines currently under development to treat IgA nephropathy (IgAN), a rare, progressive chronic kidney disease.

Novartis is pursuing Chinook to take control of two late-stage drug candidates. The most advanced of the assets is atrasentan, an oral endothelin A receptor antagonist that Chinook picked up from AbbVie in 2019 in a deal worth up to $135m in milestones.

“IgA Nephropathy is a devastating disease mostly affecting young adults and potentially leading to dialysis or kidney transplantation,” said Vas Narasimhan, chief executive of Novartis. “We are excited by this unique opportunity to address one of society’s most challenging healthcare issues, with the potential to bring additional much-needed treatment options to patients. We look forward to closing the deal, to a smooth transition for Chinook employees and to welcoming them to Novartis.”

“We are pleased that Novartis recognizes the significant value that the Chinook team has built with our pipeline of clinical and preclinical programs for patients with rare, severe chronic kidney diseases,” said Eric Dobmeier, president and chief executive of Chinook Therapeutics. “We believe this transaction is great news for kidney disease patients and the programs we have built at Chinook. Through this merger, Novartis can apply its substantial resources to pursue broader development efforts and commercialization of atrasentan, zigakibart (BION-1301) and other programs in our pipeline to build its global renal therapeutic area.”

News: Novartis to buy Chinook for up to $3.5 bln in boost to late-stage pipeline

Asda to acquire EG Group

BY Richard Summerfield

British supermarket chain Asda has agreed to acquire the UK operations of petrol station giant EG Group, which is also owned by the Issa brothers and TDR Capital, in a £2.27bn deal.

Under the terms of the deal, Asda will acquire 350 petrol stations and more than 1000 food-to-go sites. The company plans to roll out the Asda Express convenience format across the EG UK and Ireland estate.

Asda intends to invest more than £150m within the next three years to “fully integrate the combined business” with shareholders, providing £45m of additional equity to fund the transaction. Upon completion, the merged business will have almost £30bn sales with EG UK and Ireland contributing £195m earnings before interest, taxes, depreciation and amortisation (EBITDA) to the group after rents. Going forward, Asda expects to realise synergies of £100m over the next three years. The company also expects to find more than £100m of working capital benefits due to its larger scale.

“Asda’s acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen,” said Stuart Rose, chair of Asda. “Throughout my career in retail – one thing has always been true, that meeting the evolving needs of customers is the route to growth. This transaction is all about driving growth by bringing Asda’s heritage in value to even more communities and accelerating the growth of its convenience retail business.”

“This transaction with Asda represents an important strategic step for EG Group,” said Zuber Issa co-founder and co-chief executive of EG Group. “Following this sale, EG Group will benefit from a significantly strengthened balance sheet, supporting the continued roll out of its successful convenience retail, fuel and foodservice strategy and drive innovation to transform the consumer experience. This includes the ongoing investment and expansion of our EV charging business, evpoint, as well as hydrogen and other sustainable fuel retail infrastructure, which we continue to see as a significant future opportunity.”

“The sale of the EG UK&I business to Asda makes strategic sense for both parties and will enable EG Group to accelerate its growth in key markets including Europe, the US and Australia,” said Gary Lindsay, managing partner at TDR Capital. “The Group has developed a successful blueprint in the UK for developing one-stop shop sites which combine convenience retail, fuel and foodservice and there are significant value creation opportunities from rolling out this model, across the global estate. The Group remains at the leading edge of developing the forecourts of the future, and its ongoing development of alternative fuels and EV charging infrastructure.”

The deal, which is expected to close in Q4 2023, will be funded by £450m of equity from Asda’s shareholders, including its former owner, US retail giant Walmart, £770m of term loan debt and around £1.1bn from property-related transactions, including the sale and leaseback of some of its stores.

News: UK's Asda to buy EG petrol stations unit in $2.9-bln deal