Earthstone Energy sold for $4.5bn

BY Richard Summerfield

In an all-stock transaction valued at around $4.5bn, including debt, Permian Resources has agreed to acquire Earthstone Energy.

The deal consists of 1.446 shares of Permian Resources common stock for each share of Earthstone common stock, giving it a per share value of $18.64 and a premium of 14.8 percent based on Earthstone’s close on Friday, the last day of trading before the deal was announced.

The deal has been unanimously approved by the boards of directors of both Permian Resources and Earthstone and is expected to close by the end of 2023, subject to customary closing conditions, regulatory approvals and shareholder approvals.

Once the transaction is complete, Permian Resources’ board of directors will be expanded to consist of 11 directors, including the addition of two representatives from Earthstone. Permian Resources’ executive management team will lead the combined company with the headquarters remaining in Midland, Texas. Permian Resources shareholders will own approximately 73 percent of the combined company and existing Earthstone shareholders will own approximately 27 percent.

“We believe the acquisition of Earthstone represents a compelling value proposition for our shareholders and strengthens our position as a premier Delaware Basin independent E&P,” said Will Hickey, co-chief executive of Permian Resources. “Earthstone’s Northern Delaware position brings high-quality acreage with core inventory that immediately competes for capital within our portfolio. Additionally, we have identified numerous ways to leverage our deep Delaware Basin experience and incremental scale to improve upon these assets across the board, including approximately $175 million of annual synergies. Permian Resources has a proven integration track record, and we believe the successful execution of these cost savings will create incremental value for both Permian Resources and Earthstone stakeholders.”

“We are very pleased to announce this transaction with Permian Resources and believe the combination of the two companies’ top-tier assets and history of success will create an even stronger large-cap E&P company which is uniquely positioned to drive profitable growth and development in the world-class Permian Basin,” said Robert Anderson, president and chief executive of Earthstone. “We believe this all-stock transaction provides Earthstone’s shareholders with excellent value for their investment now and in the future. In less than three years, we have grown Earthstone from a small-cap E&P company producing approximately 15,000 Boe per day to one with a production base of over 130,000 Boe per day, delivering significant value enhancement for shareholders along the way. Our success directly reflects our outstanding employees’ dedication, hard work and perseverance. I personally thank each and every one of our employees. I could not be prouder of the Earthstone team and the company we have built together.”

“As significant owners of the business, our primary goal is to drive value for our investors, and the Earthstone transaction is another example of value creation for shareholders,” said James Walter, co-chief executive of Permian Resources. “We expect the transaction to be accretive across all key financial metrics before synergies and significantly accretive including synergies, both over the short and long-term. After evaluating over $20 billion of potential transactions during the past twelve months, we firmly believe the acquisition of Earthstone represented the best transaction for Permian Resources. It checks all the boxes, enhancing shareholder value while improving upon an already best-in-class company.”

Looking forward, Permian has identified $30m of annual general and administrative savings. The combined company is also expected to benefit from a lower overall cost of capital, leading to potential financial synergies of $30m annually.

News: Permian Resources to buy Earthstone Energy in $4.5 bln deal

Intel and Tower terminate $5.4bn deal

BY Richard Summerfield

Intel Corporation and Tower Semiconductor have announced the mutual termination of the previously announced $5.4bn deal which would have seen Intel acquire Tower. The termination is due to the companies’ inability to obtain the regulatory approvals required under the terms of the deal.

As per the terms of the previously agreed deal, Intel will now be required to pay a termination fee of $353m to Tower.

Intel announced its intentions to buy Tower – a contract chipmaker that manufactures semiconductors for other companies – in February 2022 for $5.4bn. However, the company was unable to secure approval for the deal from the Chinese antitrust authorities before the deadline passed. The deadline for the deal was midnight California time on 15 August.

“Tower was very excited to join Intel to enable Pat Gelsinger’s vision for Intel’s foundry business,” said Russell Ellwanger, chief executive of Tower. “We appreciate the efforts by all parties. During the past 18 months, we’ve made significant technological, operational, and business advancements. We are well positioned to continue to drive our strategic priorities and short-, mid- and long-term tactics with a continued focus on top and bottom-line growth.”

“Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy,” said Pat Gelsinger, chief executive of Intel. “We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs. Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future.”

“Since its launch in 2021, Intel Foundry Services has gained traction with customers and partners, and we have made significant advancements toward our goal of becoming the second-largest global external foundry by the end of the decade,” said Stuart Pann, senior vice president and general manager of Intel Foundry Services. “We are building a differentiated customer value proposition as the world’s first open system foundry, with the technology portfolio and manufacturing expertise that includes packaging, chiplet standards and software, going beyond traditional wafer manufacturing.”​

Intel’s acquisition of Tower was a move designed to bolster its own contract chip-making business with enhanced manufacturing capacity and intellectual property, while also giving it a wider global reach. And while there was a possibility that the deal could have been completed without Chinese approval, since China represents a major part of Intel’s business and strategy, regulatory approval in China was deemed essential. The deal was approved by antitrust bodies in the US and Europe, however it ran into significant delays and obstacles in China, which is indicative of the challenges faced by US companies with ties to China in the current geopolitical climate. It is becoming increasingly difficult for companies to conduct business amid tensions between the two countries.

News: Intel scraps $5.4 bln Tower deal after China review delay

Tapestry acquires fellow fashion group Capri for $8.5bn

BY Fraser Tennant

In a deal that establishes a powerful global house of iconic luxury and fashion brands, multinational luxury fashion holding company Tapestry, Inc. is to acquire fellow luxury fashion company Capri Holdings.

Under the terms of the definitive agreement, which is expected to close by the end of 2024, Capri shareholders will receive $57 per share in cash for a total enterprise value of approximately $8.5bn.

The acquisition brings together six highly complementary brands with global reach – Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo and Michael Kors – powered by Tapestry’s data-rich customer engagement platform and diversified, direct-to-consumer operating model.

The boards of directors of Tapestry and Capri have unanimously approved the transaction, subject to approval by Capri shareholders, as well as the receipt of required regulatory approvals, and other customary closing conditions.

“We are excited to announce the acquisition of Capri Holdings – uniting six iconic brands and exceptional global teams,” said Joanne Crevoiserat, chief executive of Tapestry. “Tapestry is an organisation with a passion for building enduring brands through superior design and craftsmanship and an unwavering focus on our customers.

To that end, the acquisition of Capri builds on Tapestry’s core tenets as consumer-centric brand-builders and disciplined operators, accelerating its strategic and financial growth agenda.

“We are confident this combination will deliver immediate value to our shareholders,” said John D. Idol, chairman and chief executive of Capri. “It will also provide new opportunities for our dedicated employees around the world as Capri becomes part of a larger and more diversified company. By joining with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands.”

The combined company is also well-positioned to advance a comprehensive and impactful environmental, social and governance (ESG) strategy focused on a shared mission to drive progress toward a more sustainable, equitable and inclusive future.

Ms Crevoiserat concluded: “This combination of iconic brands creates a new powerful global luxury house, unlocking a unique opportunity to drive enhanced value for our consumers, employees, communities and shareholders around the world.”

News: Coach owner's Michael Kors deal creates US giant to take on European luxury rivals

Public Storage to acquire rival Simply Self Storage for $2.2bn

BY Richard Summerfield

Storage operator Public Storage has agreed to acquire Simply Self Storage from Blackstone Real Estate Income Trust (BREIT) in a deal worth $2.2bn.

The deal, which is expected to close in the third quarter of 2023, subject to customary closing conditions, will generate over $600m in profit, Blackstone said. The firm acquired Simply in October 2020 from Brookfield Asset Management for approximately $1.2bn.

“We are pleased to welcome Simply’s team, customers, and third-party management partners to Public Storage’s industry-leading brand and platform,” said Joe Russell, chief executive of Public Storage. “This acquisition reflects the continued execution of our multi-factor external growth platform, which includes acquisitions, development, redevelopment, expansion, and third-party management. We are pleased to complete this important transaction with Blackstone, which further demonstrates our position as an acquirer of choice in the industry. Blackstone has done a tremendous job of growing and improving the quality and operations of the Simply portfolio over the past few years.”

“Where you invest matters, and this transaction demonstrates the strong investor demand for the high-quality assets and platforms we have assembled within BREIT,” said Nadeem Meghji, head of Blackstone Real Estate Americas. “This sale is a terrific outcome for BREIT stockholders and enables us to further concentrate BREIT’s portfolio in its highest growth sectors. Public Storage is a leader in its space and will be a terrific steward of this portfolio.”

Simply Storage’s portfolio comprises 127 wholly-owned properties and 9 million net rentable square feet that are geographically diversified across 18 states and located in markets with population growth that has been approximately double the national average since 2018. During BREIT’s ownership period, Blackstone made investments into the Simply platform that enabled the company to enhance the quality of the portfolio and management team, and ultimately significantly increased its net operating income.

Public Storage has been in a state of growth over the last few years. Since 2019, the company has expanded its portfolio by approximately 55 million net rentable square feet, or 34 percent, through $10.6bn worth of acquisitions, development and redevelopment, including Simply and additional properties previously announced as under contract.

News: Public Storage to acquire rival Simply Self Storage for $2.2bn

Eli Lilly to acquire Versanis for $1.925bn

BY Fraser Tennant

In a deal designed to strengthen its position in the fast-growing market for weight-loss treatments, US pharmaceutical company Eli Lilly is to acquire biopharmaceutical firm Versanis.

Under the terms of the definitive agreement, Versanis shareholders will receive $1.925bn in cash, inclusive of an upfront payment and subsequent payments upon achievement of certain development and sales milestones.

“Eli Lilly is committed to investigating potential new medicines to fight cardiometabolic diseases, including obesity, a chronic disease that affects over 100 million Americans,” said Ruth Gimeno, group vice president, diabetes, obesity and cardiometabolic research at Eli Lilly. “By unifying the knowledge and expertise in incretin biology at Lilly with the deep understanding of activin biology at Versanis, we aim to harness the potential benefits of such combinations for patients.”

A private clinical-stage biopharmaceutical company focused on the development of new medicines for the treatment of cardiometabolic diseases, Versanis’ lead asset, bimagrumab, is being advanced in the BELIEVE Phase 2b study as a novel treatment to help adults achieve and maintain both fat loss and a healthy body composition.

Analysts expect the market for weight-loss drugs to reach up to $100bn within a decade, with early movers such as Eli Lilly and Novo Nordisk acquiring a large portion of the market.

“It has been a privilege for our team to advance bimagrumab to address one of the greatest health crises of our time,” said Mark Pruzanski, chairman and chief executive of Versanis. “As a global leader developing life-changing medicines, Eli Lilly is ideally positioned to realise the potential of bimagrumab in combination with its incretin therapies to benefit people living with cardiometabolic diseases.”

The transaction between Eli Lilly and Versanis is subject to customary closing conditions.

News: Eli Lilly to buy Versanis for up to $1.93 billion in obesity drugs push