Cognizant makes $1.3bn Belcan acquisition

BY Richard Summerfield

In a move that will expand its presence in the aerospace, defence, space and automotive sectors, Cognizant Technologies has agreed to acquire digital engineering firm Belcan for nearly $1.3bn in cash and stock.

The transaction is expected to close in Q3 2024, subject to the receipt of required regulatory approvals and other closing conditions. The total purchase price of approximately $1.29bn comprises $1.19bn in cash consideration and a fixed 1.47 million Cognizant shares, with a current value of $97m based on Cognizant’s closing share price on Friday 7 June 2024. The cash consideration is expected to be funded through a mix of cash on hand and debt.

Cognizant said it intends to increase its share repurchase plan to maintain current share count guidance of 497 million for the full year 2024.

“We believe that acquiring Belcan will strengthen Cognizant’s position in the sizable and fast-growing ER&D services market,” said Ravi Kumar, chief executive of Cognizant. “Belcan’s deep engineering capabilities and domain expertise across the aerospace & defense market will be complemented by Cognizant’s scale and own multi-decade digital engineering expertise, providing Belcan’s blue-chip client roster access to our advanced AI, Cloud and Data technologies. We see the opportunity to immediately accelerate revenue growth and create compelling shareholder value through our combined engineering capabilities. Belcan’s clients would gain access to Cognizant’s full suite of technology services, while Cognizant’s clients across the manufacturing, automotive, energy, and high-tech sectors we believe will benefit from Belcan’s engineering skills.”

Lance Kwasniewski, the current chief executive of Belcan, is expected to continue to lead the company, which will operate under the Belcan name as an operating unit of Cognizant.

“We are excited about this unique combination and the value creation it will bring to our customers, along with the opportunities it will provide for our employees” said Mr Kwasniewski. “Cognizant will better position our team to capitalize on compelling tailwinds, including increasing outsourced ER&D spend, the transformative impact of digital engineering adoption rates, robust commercial aerospace demand, and favorable long-term defense and space spending. Belcan’s experienced team has built a growth-oriented business delivering highly complex, mission-critical, scalable services to our long-standing customer base. I look forward to continuing to lead our team as we unite and leverage Belcan’s and Cognizant’s comprehensive services and cross-industry clientele to execute on our collective strategy, ultimately earning the role of our clients’ most trusted partner in intelligent engineering.”

Belcan has been owned by private equity firm AE Industrial Partners since 2015.

Cognizant expects the Belcan deal to deliver over $100m in annual revenue synergies within three years, with additional cost synergies expected over time.

News: Cognizant to acquire Belcan for $1.3 billion

WM to acquire Stericycle in $7.2bn medical waste deal

BY Fraser Tennant

In a transaction that expands its environmental solutions in a growing healthcare market, WM is to acquire fellow medical waste management company Stericycle for approximately $7.2bn.

Under the terms of the definitive agreement, WM will acquire all outstanding shares of Stericycle for $62 per share in cash, representing a premium of 24 percent to Stericycle’s 60-day volume weighted average price as of 23 May 2024.

The acquisition advances WM’s growth strategy, underscores the importance of executing its sustainability initiatives and aligns with its financial goals, including growth in operating earnings before interest, taxes, depreciation and amortisation and cash flow.

Previously known as Waste Management and based in Houston, Texas, WM is driven by commitments to put people first and achieve success with integrity. Through its subsidiaries, WM provides collection, recycling and disposal services to millions of residential, commercial, industrial and municipal customers throughout the US and Canada.

“We have a proven track record of integrating and optimising acquired businesses that benefit our customers and employees and deliver a strong return on investment for our shareholders,” said Jim Fish, president and chief executive of WM. “We look forward to working with the Stericycle team to capture the strategic, customer service, environmental and financial benefits of this acquisition.”

A US-based business to business services company and a leading provider of compliance-based solutions that protect people and brands, promote health and wellbeing and safeguard the environment, Stericycle provides customers in North America and Europe with solutions for regulated waste and compliance services and secure information destruction.

“Our sustained focus and commitment to transforming our business over the past five years has uniquely positioned Stericycle for this transaction,” said Cindy J. Miller, president and chief executive of Stericycle. “This deal creates significant value for shareholders, unlocks new opportunities to deliver diversified services to customers, and supports investment in the growth and development of our team members.”

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

Expected to close as early as the fourth quarter of 2024, the transaction is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by a majority of the holders of Stericycle’s outstanding common shares.

Mr Fish concluded: “The acquisition of Stericycle broadens the scope of our service offerings and brings together the leader in solid waste and a premier company in regulated medical waste services.”

News: Waste Management adds medical-waste portfolio with $7.2 bln Stericycle deal

ConocoPhillips strikes $22.5bn Marathon deal

BY Richard Summerfield

ConocoPhillips has agreed to acquire Marathon Oil in an all-stock transaction with an enterprise value of $22.5bn, including $5.4bn of net debt.

Under the terms of the deal, Marathon shareholders will receive 0.2550 shares of Conoco common stock for each share of Marathon common stock held, representing a 14.7 percent premium to Marathon’s closing share price on 28 May 2024, and a 16 percent premium to the prior 10-day volume-weighted average price.

The deal, which is expected to close in the fourth quarter of 2024, subject to the approval of Marathon’s stockholders, regulatory clearance and other customary closing conditions, is the latest in a spate of recent consolidation deals in the oil & gas industry. 2023 saw transactions worth a total of $250bn struck by companies in the space, and significant dealmaking has continued throughout the first half of 2024.

“This acquisition of Marathon Oil further deepens our portfolio and fits within our financial framework, adding high-quality, low cost of supply inventory adjacent to our leading US unconventional position,” said Ryan Lance, chairman and chief executive of ConocoPhillips. “Importantly, we share similar values and cultures with a focus on operating safely and responsibly to create long-term value for our shareholders. The transaction is immediately accretive to earnings, cash flows and distributions per share, and we see significant synergy potential.”

“Powered by our dedicated employees and contractors, we built a top performing portfolio with a multi-year track record of peer-leading operational execution, strong financial results and compelling return of capital to our shareholders - all while holding true to our core values of safety and environmental excellence,” said Lee Tillman, chairman, president and chief executive of Marathon Oil. “ConocoPhillips is the right home to build on that legacy, offering a truly unique combination of added scale, resilience and long-term durability.”

According to a statement announcing the deal, Conoco expects to achieve at least $500m of run rate cost and capital savings within the first full year following the closing of the transaction. Furthermore, independent of the transaction, Conoco expects to increase its ordinary base dividend by 34 percent to 78 cents per share starting in the fourth quarter of 2024.

Upon closing of the transaction, Conoco expects share buybacks to be over $20bn in the first three years, with over $7bn in the first full year, at recent commodity prices.

News: ConocoPhillips to buy Marathon Oil for $22.5 billion in latest energy merger

Biogen acquires HI-Bio in $1.8bn deal

BY Fraser Tennant

In a deal that bolsters its late-stage pipeline, US multinational biopharmaceutical company Biogen Inc. is to acquire privately-held clinical-stage biotechnology firm Human Immunology Biosciences (HI-Bio) for $1.8bn.

Under the terms of the definitive agreement, Biogen will make an upfront payment to HI-Bio of $1.15bn, with HI-Bio’s stockholders eligible for payments of up to an additional $650m. 

Biogen also plans to leverage its existing global development and commercialisation capabilities in rare diseases and its strong scientific expertise in immunology to support the advancement of felzartamab and the HI-Bio pipeline.

Felzartamab, HI-Bio’s lead asset, is a fully human anti-CD38 monoclonal antibody that has been shown in clinical studies to selectively deplete CD38-plus cells including plasma cells and natural killer, or NK, cells which may allow for additional applications that improve clinical outcomes in a broad range of immune-mediated diseases.

“This late-stage asset has demonstrated its impact on key biomarkers and clinical endpoints in three renal diseases with serious unmet needs,” said Priya Singhal, head of development at Biogen. “It is a strategic addition to the Biogen portfolio as we continue to augment our pipeline and build on our expertise in immunology.”

Founded in 1978, Biogen is a leading biotechnology company that pioneers innovative science to deliver new medicines to transform patients’ lives and to create value for shareholders and our communities.

“With its deep development and commercialisation capabilities, Biogen is in a position to accelerate the development of new medicines, including felzartamab, for patients with severe immune-mediated diseases,” said Travis Murdoch, chief executive of HI-Bio. “We are excited to combine the HI-Bio team’s expertise with Biogen’s global footprint.”

In addition to lead programme felzartamab, the HI-Bio pipeline includes izastobart/HIB210, an anti-C5aR1 antibody currently in a phase 1 trial and with potential for continued development in a range of complement-mediated diseases. HI-Bio also has discovery stage mast cell programmes with potential in a range of immune-mediated diseases.

The transaction is subject to customary closing conditions, including receipt of necessary regulatory approvals, and is currently anticipated to close in the third quarter of 2024.

News: Biogen in up to $1.8 bln deal as rare diseases take center stage

SouthState to acquire Independent Bank Group in $2bn deal

BY Richard Summerfield

SouthState Corporation and Independent Bank Group, Inc. have entered into a definitive agreement under which SouthState will acquire Independent Bank Group, in an all-stock transaction valued at approximately $2bn.

Under the terms of the deal, which is expected to close by the end of Q1 2025, Independent Bank shareholders will receive 0.60 shares of SouthState for each stock they own. The deal values Independent Bank at $48.51 per share, which represents a 10.4 percent premium to the stock’s last close before the deal was announced.

According to a statement announcing the deal, the combined bank will have total assets of $65bn and a market capitalisation of around $8.2bn. The transaction will also help deepen SouthState’s presence in the Dallas-Fort Worth, Austin and Houston areas in Texas, as well as the Colorado Front Range.

“With a local, geographic management model, an industry-leading track record on credit and a presence in some of the best markets in the country, Independent Bank Group is a great fit with SouthState,” said John C. Corbett, chief executive of SouthState.”

“We are excited about the opportunity to join SouthState, a company whose culture, business model and credit discipline matches well with ours,” said David R. Brooks, chairman and chief executive of Independent Bank Group. “The combination of these two companies operating in growing markets provides a great opportunity for our Independent Bank Group teammates, clients and communities to flourish.”

The transaction has been approved by the boards of directors of SouthState and Independent Bank Group by the unanimous vote of directors present at their respective meetings. Completion of the transaction is subject to customary closing conditions, including receipt of required regulatory approvals and approval from shareholders of Independent Bank Group and SouthState. Upon completion of the deal, three Independent Bank directors will join SouthState’s board.

The deal is the most recent in a number of consolidation deals in the US regional banking space. Last month, UMB Financial agreed to buy Heartland Financial in a deal worth around $2bn.

News: Regional lender SouthState to buy Texas-based Independent Bank for about $2 bln