FTC approves Amgen/Horizon deal

BY Richard Summerfield

The Federal Trade Commission (FTC) has approved Amgen’s $27.8bn takeover of Horizon Therapeutics, ending months of speculation and uncertainty over the viability of the proposed deal.

In May, the FTC filed a lawsuit to block the deal over concerns that Amgen would leverage its drugs to secure favourable insurance coverage terms for Horizon’s thyroid eye disease treatment Tepezza and gout drug Krystexxa. Tepezza received nearly $2bn in sales in 2022, while Krystexxa brought in $716m.

Under the terms of the deal, Amgen agreed to pay a premium of approximately 47.9 percent on the closing share price of $78.76 per Horizon share on 29 November 2022. The deal had originally been expected to close in the first half of 2023, prior to the FTC’s antitrust lawsuit.

However, a deal has now been reached which will allow the acquisition, Amgen’s largest ever, to close early in the fourth quarter of this year. Last week, the FTC temporarily suspended its suit against Amgen, which allowed it to consider whether to settle the case.

Under the terms of the agreement struck between the FTC and Amgen, there will be restrictions imposed on Amgen to address key concerns the FTC raised in its suit. Specifically, Amgen is prohibited from ‘bundling’ Tepezza and Krystexxa. Amgen will also have to get approval from the FTC to acquire any products that treat the same diseases as Tepezza and Krystexxa do. Amgen is required to seek those signoffs from the agency through 2032. All other requirements will be effective for 15 years after the agreement is finalised, including a requirement that Amgen submit annual compliance reports to the FTC and states. A monitor will be appointed to oversee Amgen’s compliance, and the monitor’s reports will likewise be submitted to the FTC and to the states.

Federal lawsuits to block the merger by six states - California, Illinois, Minnesota, New York, Washington and Wisconsin - have also been dismissed as part of the settlement.

“Consolidation in the pharmaceutical industry has given companies the power and incentive to engage in exclusionary rebating practices, which can lead to sky-rocketing prices on essential medications,” said Henry Liu, director of the FTC’s Bureau of Competition. “Today’s proposed resolution sends a clear signal that the FTC and its state partners will scrutinize pharmaceutical mergers that enable such practices, and defend patients and competition in this vital marketplace.”

Amgen first moved to buy Horizon in December 2022 to gain access to the company’s rare disease assets, beating other potential suitors, including Sanofi and Johnson & Johnson. But the buyout was quick to attract regulatory and political scrutiny for its potential antitrust issues. Senators including Elizabeth Warren were particularly critical of the deal and its potential impact on drug prices.

In a press release issued on Friday, Amgen said it “has consistently stated to the FTC, the courts and the public that it has no reason, ability or intention to bundle” Horizon’s drugs with any of its own medicines. This “narrow assurance, formalized in the consent order with the FTC, will have no impact on Amgen’s business”, the company added.

News: FTC approves Amgen/Horizon deal

Asterion acquires Steag in €2.6bn deal

BY Fraser Tennant

In a race which saw it outbid Czech billionaire Daniel Kretinsky, Spanish investment management firm Asterion Industrial Partners is to acquire German energy utility Steag in a transaction that values the business at €2.6bn.

Mr Kretinsky, who built his wealth in the energy industry, has recently embarked on an acquisition spree in Europe, attempting to buy Steag through his energy holding company EPH.

As well as developing Steag into a sustainable energy utility, the acquisition represents further growth of Asterion’s European energy presence into Germany beyond its existing footprint in Spain, France, Italy and the UK.

“Our firm is fully committed to the energy and heat transition,” said Jesús Olmos, chief executive of Asterion. “Steag is very well positioned to be a very relevant player in Germany and Europe in this process toward cleaner, more competitive and reliable energies such as solar and wind power, while offering an interesting energy mix that is also supported by coal and gas to guarantee the viability of this transition.”

For more than 85 years, Steag has stood for efficient and safe power generation both nationally and internationally, operating six coal power plants in western Germany. “It also has a team of experienced management and skilled employees with technical expertise in wind, solar, and district heating,” added Mr Olmos. “Its energy sites have excellent infrastructure and are optimally connected to the German energy grid.”

The transaction is expected to be completed by the close of 2023, subject to customary conditions and regulatory approvals.

“The sale decision is groundbreaking for the future of the group and its two divisions,” said Andreas Reichel, labour director and chairman of the management board of Steag. “After all, this decision provides greater economic room for manoeuvre for upcoming investments in the future and also helps to secure existing jobs in the long term. The best possible solution has thus been found for all parties involved, including our employees.”

Mr Olmos concluded: “With the experience of Asterion’s team in managing companies in green transformation, we are excited to work together to deliver on Steag’s decarbonisation plans and create new, green jobs.”

News: Spain's Asterion buys German utility Steag for $2.8 billion

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