Nippon Steel Corporation acquires US Steel in $14.1bn deal

BY Fraser Tennant

In a deal that creates the world’s second-biggest steel producer, Japan’s largest steelmaker Nippon Steel Corporation (NSC) is to acquire United States Steel Corporation for approximately $14.1bn.

Under the terms of the definitive agreement, NSC will acquire US Steel for $55 per share in an all-cash transaction representing 40 percent premium, providing certain and immediate value to US Steel shareholders.

The transaction will further diversify NSC’s global footprint by significantly expanding its current production in the US, adding to its primary geographies of Japan, Association of Southeast Asian Nations (ASEAN) and India.

As a result of the acquisition, it is expected that NSC’s total annual crude steel capacity will reach 86 million tonnes – accelerating progress toward its strategic goal of 100 million tonnes of global crude steel capacity annually.

“This transaction brings together two companies with world-leading technologies and manufacturing capabilities,” said Eiji Hashimoto, president of NSC. “It also demonstrates our mission to serve customers worldwide, as well as our commitment to building a more environmentally friendly society through the decarbonisation of steel.”

The transaction has been unanimously approved by the board of directors of both NSC and US Steel.

“NSC has a proven track record of acquiring, operating and investing in steel mill facilities globally,” said David B. Burritt, president and chief executive of US Steel. “The transaction also benefits the US – ensuring a competitive, domestic steel industry, while strengthening our presence globally.”

The transaction is expected to close in the second or third quarter of 2024, subject to approval by US Steel’s shareholders, receipt of customary regulatory approvals and other customary closing conditions.

Mr Hashimoto concluded: “NSC has long admired US Steel with deep respect for its advanced technologies, rich history and talented workforce and we believe we can jointly take on the challenge of raising our aspirations to even greater heights.”

News: Japan's Nippon Steel to acquire U.S. Steel for $14.9 billion

Steady start for M&A in Q1 2024, forecasts new report

BY Fraser Tennant

Global M&A in Q1 2024 will see an uptick in activity with acquisitions in the technology, media and telecommunications (TMT), consumer, healthcare and energy sectors set to rise, according to a new report by Datasite.

In the ‘Datasite Forecaster Special Report: The Year of the Buy-Side’, the virtual data room provider suggests that while tighter financing costs, a volatile market and the long-term impact of the coronavirus (COVID-19) pandemic have curbed M&A deal activity in 2023, there will be opportunities in 2024.

According to the report: (i) buyers are taking advantage of softening market conditions and lowered seller expectations to pursue one-on-one acquisitions with vigour; (ii) with sell-side M&A finally cooling in the real estate and industrials industries, acquirers are scouring the landscape for pickups; and (iii) more advisers are being hired for one-on-one acquisitions as buyers decide to take no chances during this rare window of opportunity.

“Fewer sell-side auction processes in top industries this year have opened the door to more one on one deals,” said Merlin Piscitelli, chief revenue officer for Europe, Middle East and Africa (EMEA) at Datasite. “Buyers are taking full advantage, scouring the real estate, industrials, TMT, and consumer industries for pickups.

“The exception to this is energy & power, which is seeing a resurgence on both sides of the M&A equation,” he continued. “Meanwhile, life science and healthcare M&A continues to slowly recover from its COVID-19 induced feeding frenzy.”

The report also suggests that artificial intelligence (AI)-powered technologies will continue to impact not only the kinds of deals being done but also how deals are managed.

“From its ability to streamline several aspects of dealmaking, including powering data analysis and automating repetitive tasks, the momentum behind AI is set to grow,” added Mr Piscitelli. “In fact, in a recent Datasite survey, 42 percent of global dealmakers said productivity was the biggest benefit of using generative AI in their business and most expect that AI will help speed up deals by 50 percent.”

Another sign, according to Datasite, of a steady start to M&A activity in Q1 2024 is the willingness of acquirers to bring in financial advisers – buy-side deals being one-on-one acquisitions in which advisers have traditionally played a smaller role.

Mr Piscitelli concluded: “For years, strategic buyers have struggled to acquire in a market rife with private equity competition and inflated valuations. Without knowing how long their window of opportunity will last, buyers are leaving nothing on the table.”

Report: Datasite Forecaster Special Report: The Year of the Buy-Side

Macy’s receives $5.8bn takeover bid

BY Richard Summerfield

US department store Macy’s has received a $5.8bn takeover bid from an investor group consisting of Arkhouse Management and Brigade Capital Management.

Arkhouse, a real-estate focused investing firm, and Brigade, a global asset manager, submitted a proposal to acquire the Macy’s stock they do not already own for $21 a share on 1 December, a premium of 20.76 percent premium from its closing at $17.39 on Friday 8 December. Both investors own a stake in Macy’s through Arkhouse-managed funds.

The 165-year-old Macy’s operates almost 500 stores across the US under its own brand as well as Bloomingdale’s (a more upscale chain with 30-plus locations) and beauty retailer Blue Mercury.

The potential deal, first reported by The Wall Street Journal, would see Arkhouse and Brigade take control of Macy’s in an increasingly troubled sector. The US department store space has struggled in recent years, with JCPenney, Neiman Marcus and Lord & Taylor all declaring bankruptcy in 2020. Department stores have been confronting a broader shift in consumer habits as shoppers gravitate toward specialty retailers and online shopping.

Macy’s reported $1.2bn in profit on $24.4bn in revenue in the last fiscal year, down from $1.4bn in earnings on $24.5bn in revenue in 2021. In 2020, Macy’s announced the closure of 125 stores in a bid to exit weaker shopping malls and focus on smaller-format stores in strip malls. The company also announced it was cutting 2000 jobs at its headquarters in Cincinnati and offices in San Francisco.

The company is also experiencing some upheaval in the boardroom, after it was announced that Jeff Gennette, the chief executive who has spearheaded the company’s turnaround efforts, will be succeeded by Tony Spring, who now runs Bloomingdale’s. Mr Gennette will be retiring in February.

At present, Macy’s has a market capitalisation of about $4.77bn and its shares are down nearly 15.79 percent this year.

Despite the uncertainty surrounding Macy’s, the company surpassed analysts’ estimates for quarterly profit on lower inventories and strong demand for beauty products in November, signalling that attempts to trim inventory from 2022 highs were finally working ahead of the crucial Christmas shopping season.

Arkhouse and Brigade may be motivated to take control of Macy’s in order to acquire the company’s valuable real estate portfolio. According to JP Morgan, Macy’s total real estate value is estimated to be around $8.5bn, or $31 per share, including the iconic Herald Square property worth around $3bn.

News: Macy’s offered $5.8bn buyout that could take it off stock market

Roche to acquire obesity drug developer Carmot

BY Richard Summerfield

In a deal that will significantly boost its anti-obesity pipeline, Swiss pharmaceutical giant Roche has agreed to acquire Carmot Therapeutics. Under the terms of the deal, Carmot’s equity holders will receive $2.7bn in cash, and a further $400m if certain milestones are met.

The transaction, which is expected to close in the first quarter of 2024, will provide Roche with access to Carmot’s current research and development portfolio, including all clinical and preclinical assets. Carmot’s most promising obesity drug candidate, a once-weekly injection called CT-388, belongs to a class known as dual GLP-1/GIP receptor agonists and mimics a hormone typically released into the body after eating. Following encouraging phase one trial results, the Carmot drug is ready to be tested on humans in the second of three trial stages, with a possible market launch in the 2030s.

“Obesity is a heterogeneous disease, which contributes to many other diseases that together comprise a significant health burden worldwide,” said Thomas Schinecker, chief executive of Roche Group. “By combining Carmot’s portfolio with programs in our Pharmaceuticals pipeline and our Diagnostics expertise and portfolio of products across cardiovascular and metabolic diseases, we are aiming to improve the standard of care and positively impact patients’ lives.”

“We are encouraged by the clinical data for the lead asset CT-388, which demonstrated substantial weight loss in Phase 1b,” said Levi Garraway, chief medical officer and head of global product development at Roche. “These data suggest the potential for a differentiated profile to treat obesity and its associated diseases. The broad Carmot portfolio offers different routes of administration and opportunities to develop combination therapies that treat obesity and potentially other indications.”

“We are proud of the pipeline that we have built in obesity and diabetes and the strong data we have generated to date,” said Heather Turner, chief executive of Carmot. “With distinct routes of administration and the potential for combinations, we feel Carmot’s pipeline has the potential to meet patients where they are in their metabolic journey and have a significant impact on patients’ lives. We are confident that Roche will enable robust development of our programs and help us achieve our goal of delivering life-changing therapeutics for people living with metabolic and potentially other diseases.”

The announcement comes just over a month after Roche agreed to acquire Telavant from Roivant Sciences and Pfizer for an initial $7.1bn, granting the company the rights to an experimental treatment for inflammatory bowel disease.

News: Roche joins race for obesity drugs with $2.7 billion Carmot deal

KKR to acquire remaining stake in Global Atlantic for $2.7bn

BY Richard Summerfield

Private equity giant KKR & Co. has agreed to pay around $2.7bn to acquire the remaining 37 percent stake it does not own in insurance company Global Atlantic Financial Group.

The deal, which will see KKR’s ownership of the company increase to 100 percent, will be fully funded by its existing balance sheet, which had $23bn of cash and investments as of 30 September 2023. Upon closing, Global Atlantic will continue to be led by its management team and operate under the Global Atlantic brand.

KKR has served as Global Atlantic’s asset manager since 2021, offering access to its global investment and origination capabilities. According to the firm, Global Atlantic’s assets under management have grown significantly, up from $72bn in 2020 to $158bn today.

Under the terms of the deal, which is expected to close in the first quarter of 2024, KKR will pay Global Atlantic’s minority shareholders an amount in cash equal to Global Atlantic’s book value, with certain adjustments.

“The strategic partnership we envisioned three years ago has exceeded our expectations,” said Joe Bae and Scott Nuttall, co-chief executives of KKR. “It has been transformative for both businesses and a great cultural fit that has enabled us to contribute to Global Atlantic’s continued strong performance and success, while also being a key driver of growth for KKR. We expect the new ownership structure will foster even closer collaboration, allowing us to fully leverage our complementary strengths and grow faster together.”

“We are taking this step because we have demonstrated, over the last three years, that we are stronger together,” said Allan Levine, chief executive of Global Atlantic. “Being part of KKR has strengthened our position as a leading insurance company and enhanced our ability to deliver compelling solutions for our clients. Moving from a diverse group of shareholders to a single one with KKR clarifies our objectives and allows us to think – and invest – longer term.

“Although we hope to unlock further value by taking this step in our capital structure, neither our client-first approach nor our investment and risk management framework will change, and the day-to-day experience of our clients and colleagues will feel very much the same as it does today,” he added.

News: KKR to buy remaining stake in insurer Global Atlantic for $2.7 billion