ExxonMobil acquires shale rival Pioneer in $60bn deal

BY Fraser Tennant

In what is the largest acquisition announced in 2023 so far, US multinational oil and gas company Exxon Mobil Corporation is to acquire independent oil and gas exploration and production firm Pioneer Natural Resources in a transaction valued at $59.5bn.

Under the terms of the definitive agreement, Pioneer shareholders will receive 2.3234 shares of ExxonMobil for each Pioneer share at closing. The transaction is expected to close in the first half of 2024.

The merger combines Pioneer’s more than 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland Basins, creating the industry’s leading high-quality undeveloped US unconventional inventory position. Together, the companies will have an estimated 16 billion barrels of oil equivalent resource in the Permian.

“Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge,” said Darren Woods, chairman and chief executive of ExxonMobil. “The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis.”

Additionally, the merger represents the opportunity for even greater US energy security by bringing the best technology, operational excellence, environmental best practices and financial capability to an important source of domestic supply, benefitting the American economy and its consumers.

“The combination of ExxonMobil and Pioneer creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin,” said Scott Sheffield, chief executive of Pioneer. “As part of a global enterprise, Pioneer, our shareholders and our employees will be better positioned for long-term success through a size and scale that spans the globe and offers diversity through product and exposure to the full energy value chain.”

The transaction has been unanimously approved by the boards of directors of both companies, which is subject to customary regulatory reviews and approvals. It is also subject to approval by Pioneer shareholders.

Mr Sheffield concluded: “The consolidated company will maintain its leadership position, driving further efficiencies through the combination of our adjacent, contiguous acreage in the Midland Basin and our highly talented employee base, with the improved ability to deliver durable returns, creating tangible value for shareholders for decades to come.”

News: Exxon secures lead in top US oilfield with $60 billion buy of shale rival Pioneer

Bristol Myers Squibb agrees $4.8bn Mirati deal

BY Richard Summerfield

Bristol Myers Squibb has agreed to acquire cancer drug manufacturer Mirati Therapeutics in a deal worth $4.8bn. The acquisition will see Bristol Myers Squibb diversify its oncology business with lung cancer drug Krazati, which was approved by the US Food and Drug Administration (FDA) in December. A second compound – MRTX1719 – which could be used in some types of lung cancer was also attractive to the company.

Under the terms of the deal, Bristol Myers Squibb will pay $58 per share in cash, for a total equity value of $4.8bn. Mirati stockholders will also receive one non-tradeable contingent value right (CVR) for each Mirati share held, potentially worth $12 per share in cash, representing an additional $1bn of value opportunity. The transaction was unanimously approved by both the Bristol Myers Squibb and the Mirati boards of directors.

According to a statement announcing the deal, Bristol Myers Squibb expects to finance the acquisition with a combination of cash and debt. The deal is expected to be dilutive to the company’s non-generally accepted accounting principles (GAAP) earnings per share by approximately 35 cents per share in the first 12 months after the transaction closes, the statement added.

“We are excited to add these assets to our portfolio and to accelerate their development as we seek to deliver more treatments for cancer patients,” said Giovanni Caforio, chief executive and board chair of Bristol Myers Squibb. “With a strong strategic fit, great science and clear value creation opportunities for our shareholders, the Mirati transaction is aligned with our business development goals. Importantly, by leveraging our skills and capabilities, including our global commercial infrastructure, we will ensure patients globally can benefit from Mirati’s portfolio of innovative medicines.”

“Since our founding 10 years ago, Mirati has made significant strides in transforming the lives of patients living with cancer through the development of innovative therapies,” said Charles Baum, founder, president and chief executive of Mirati Therapeutics, Inc. “Through our discovery and development of next-generation targeted cancer therapeutics, we have built a robust pipeline of potentially best-in-class treatments that offer renewed hope for patients. This transaction is a testament to the potential of our platform and to our team’s hard work and dedication to changing lives.

“Bristol Myers Squibb’s global scale, resources and commitment to innovation will enable Mirati’s therapeutics to benefit more patients, faster, and deliver on our vision of unlocking the science behind the promise of a life beyond cancer. We believe that this transaction is the best way to benefit patients and maximize value for shareholders,” he added.

“Mirati strengthens and complements our current portfolio by adding assets focused on intrinsic tumor targets in the MTAP and MAPK pathways,” said Samit Hirawat, chief medical officer and head of global drug development at Bristol Myers Squibb. “We believe Mirati’s assets have the potential to change the standard of care in multiple cancers, both as standalone therapies and in combination with Bristol Myers Squibb’s existing pipeline. We are excited about the significant potential that this transaction creates to transform patients’ lives through science around the world.”

News: Bristol-Myers Squibb to acquire Mirati in up to $5.8 billion deal

Eli Lilly agrees $1.4bn Point Biopharma Global deal

BY Richard Summerfield

In a deal which will strengthen the company’s oncology pipeline, Eli Lilly has announced it is acquiring Point Biopharma for $1.4bn.

Under the terms of the deal, Eli Lilly will pay $12.50 per outstanding share of Point, representing a 67 percent premium to the company’s 30-day volume-weighted average price and a premium of approximately 87 percent to Point’s closing stock price on 2 October 2023, the last trading day before the announcement of the transaction. The board of directors of both companies have approved the transaction, and Lilly and Point expect to close the deal toward the end of 2023, subject to customary closing conditions.

“Over the past few years, we have seen how well-designed radiopharmaceuticals can demonstrate meaningful results for patients with cancer and rapidly integrate into standards of care, yet the field remains in the early days of the impact it may ultimately deliver,” said Jacob Van Naarden, president of Loxo@Lilly, the oncology unit of Eli Lilly and Company. “We are excited by the potential of this emerging modality and see the acquisition of POINT as the beginning of our investment in developing multiple meaningful radioligand medicines for hard-to-treat cancers, as we have done in small molecule and biologic oncology drug discovery and development. We look forward to welcoming POINT colleagues to Lilly and working together to build upon their achievements as we develop a pipeline of meaningful new radioligand treatments for patients.”

“The combination of POINT’s team, infrastructure and capabilities with Lilly’s global resources and experience could significantly accelerate the discovery, development and global access to radiopharmaceuticals,” said Joe McCann, chief executive of Point. “I look forward to a future where patients all over the world can benefit from the new cancer treatment options made possible by the joining of our two companies today.”

Eli Lilly has agreed to a string of deals this year, including the $2.4bn buyout of Dice Therapeutics, the $1.93bn purchase of privately held Versanis, and Siglon for around $310m. These deals have been oncology focused, and the deal for Point will grant Eli Lilly access to experimental therapies that enable precise targeting of cancer. Point Biopharma is currently testing radioligand therapy candidates, PNT2002 and PNT2003, in late-stage studies. Topline data from these studies are expected in the fourth quarter of 2023.

News: Lilly eyes targeted cancer therapies with $1.4 billion Point Biopharma deal

Cisco strikes $28bn Splunk deal

BY Richard Summerfield

In a deal which represents the biggest technology transaction of the year to date, Cisco Systems has agreed to acquire cyber security firm Splunk in a $28bn deal. The deal will create one of the world’s largest software companies upon completion.

Cisco offered $157 in cash for each share of Splunk, a 31 percent premium to the company’s last closing price before the deal was announced.

The acquisition has been unanimously approved by the boards of directors of both Cisco and Splunk, and it is expected to close by the end of the third quarter of 2024, subject to regulatory approval and other customary closing conditions, including approval by Splunk shareholders. The deal is expected to improve Cisco’s gross margins in the first year and non-generally accepted accounting principles (GAAP) earnings in year two.

“We’re excited to bring Cisco and Splunk together,” said Chuck Robbins, chair and chief executive of Cisco. “Our combined capabilities will drive the next generation of AI-enabled security and observability. From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient.”

“Uniting with Cisco represents the next phase of Splunk’s growth journey, accelerating our mission to help organizations worldwide become more resilient, while delivering immediate and compelling value to our shareholders,” said Gary Steele, president and chief executive of Splunk. “Together, we will form a global security and observability leader that harnesses the power of data and AI to deliver excellent customer outcomes and transform the industry. We’re thrilled to join forces with a long-time and trusted partner that shares our passion for innovation and world-class customer experience, and we expect our community of Splunk employees will benefit from even greater opportunities as we bring together two respected and purpose-driven organizations.”

Splunk’s technology helps businesses monitor and analyse their data to minimise the risk of hacks and resolve technical issues faster. Cisco will utilise Splunk’s technology to strengthen its software business, which relies heavily on AI and provides a variety of cyber security services, such as building tools to protect users and digital businesses from data breaches.

In the quarter ended 31 July 2023, Splunk’s annual recurring revenue was $3.9bn, up 16 percent on the same period last year. Its revenue for the quarter was $910m, beating analysts’ expectations.

The deal for Splunk will dwarf Cisco’s previous largest deal, the 2006 acquisition of cable set-top box maker Scientific Atlanta for $6.9bn.

News: Cisco to buy cybersecurity firm Splunk for $28 billion

Smurfit Kappa to acquire rival WestRock

BY Richard Summerfield

In a deal that will create the world’s biggest paper and packaging company, Smurfit Kappa has agreed to acquire its rival WestRock for $11bn.

The newly combined company will be known as Smurfit WestRock and will be run through a holding company incorporated and domiciled in Ireland. Subject to the satisfaction of closing conditions, the transaction is expected to complete in the second quarter of 2024.

Under the terms of the deal, WestRock shareholders will receive one Smurfit WestRock share and $5 cash, equivalent to $43.51 per share, while Smurfit Kappa shareholders will receive one new share. Existing Smurfit Kappa shareholders are expected to own approximately 50.4 percent of Smurfit WestRock and WestRock stockholders the remaining 49.6 percent.

According to a statement announcing the deal, the combined company will opt for a New York primary listing as around 65 percent of its revenues are set to be in the US and Latin America, and because “multiples and the pool of capital over there is bigger for companies like ours”.

The companies had a combined revenue of roughly $34bn in the year to July, which would make Smurfit WestRock the largest listed global packaging firm by that metric. At present, Smurfit, which operates in 22 European countries and 13 in South, Central and North America, is Europe’s largest paper and packaging producer. WestRock is the second-largest packaging company in the US.

“This incredibly exciting coming together of our two great companies is a defining moment within the global packaging industry,” said Tony Smurfit, chief executive of Smurfit Kappa. “Smurfit WestRock will be the ‘Go-To’ packaging partner of choice for customers, employees and shareholders. We will have the leading assets, a unique global footprint in both paper and corrugated, a superb consumer and specialty packaging business, significant synergies, and enhanced scale to deliver value in the short, medium and long term.”

“We look forward to working with Smurfit Kappa to build a leading global platform that harnesses the strength of WestRock’s consumer portfolio, presents a truly comprehensive offering of packaging solutions for customers and delivers meaningful value to our shareholders today and into the future,” said David Sewell, chief executive of WestRock. “Smurfit Kappa shares our deep commitment to innovation across the packaging lifecycle, and we are confident that Smurfit WestRock will continue to lead the industry forward.”

News: Smurfit Kappa strikes $11 bln WestRock deal to create packaging leader