News

Bain buys 60 percent stake in Kantar

BY Richard Summerfield

Bain Capital is to acquire a 60 percent stake in data analytics firm Kantar from debt-laden British multinational advertising and public relations company WPP.

The deal values Kantar at about $4bn. The sale will give WPP agencies, including Ogilvy and Wunderman Thompson, an infusion of funds to reduce their debt and rebuild. WPP said it will use about 60 percent of the proceeds of the sale to cut its net debt to the low end of a targeted range of 1.5-1.75 times core earnings for 2020. The rest of the money will be returned to shareholders. The deal is expected to close in early 2020, subjected to approval from WPP shareholder and regulatory approval.

Private equity giant Bain was engaged in an auction for Kantar and is believed to have overcome Apollo Global Management, Platinum Equity and Vista Equity Partners in the final round of bidding.

“Kantar is a great business and we look forward to working with Bain Capital to unlock its full potential,” said Mark Read, chief executive of WPP. “As a strategic partner and shareholder in Kantar, WPP will continue to benefit from its future growth while our clients continue to benefit from its services and capabilities. I would like to thank Eric Salama, his team and everyone at Kantar for their tremendous contribution to WPP – a contribution that will continue as we develop the business together. This transaction creates value for WPP shareholders and further simplifies our company. With a much stronger balance sheet and a return of approximately 8 percent of our current market value to shareholders planned, we are making good progress with our transformation.”

“Kantar is a market leader in many areas and we are excited to be partnering with its management team and WPP to build on this remarkable platform for growth,” said Luca Bassi, a managing director at Bain Capital Private Equity. “We see many opportunities for expansion and will invest in technology to expand the company’s capabilities and reinforce its global leading position.”

“Our new ownership structure presents a great opportunity for Kantar, our employees and our clients,” said Eric Salama, chief executive of Kantar. “In Bain Capital we have a partner who shares our ambition, brings relevant expertise and – with WPP – can help us accelerate our growth and impact for clients. We are focused on delivering ‘human understanding at scale and speed’ and the ‘best of Kantar’ more consistently. We will do so by investing more in talent and by becoming a more technology-driven solutions provider.”

News: Bain Buys Huge Stake in Market Research Business for $4 Billion

Oil and natural gas firm Exco emerges from Chapter 11

BY Fraser Tennant

With enhanced financial flexibility to support long-term growth, US oil and natural gas exploration firm Exco Resources has successfully completed its financial restructuring and emerged from Chapter 11.

As a result of the Chapter 11 process, the company has reduced its leverage by more than $1.1bn and is moving forward with approximately $325m in committed exit financing from a new credit facility.

Exco originally filed for Chapter 11 in January 2018 due to a sustained downturn in commodity prices and uncertainty in the energy market.

“This is an exciting day for Exco and marks the beginning of the next chapter as an even stronger, more competitive company,” said Hal Hickey, chief executive and president of Exco. “Through the restructuring process, we have significantly improved our capital structure and reduced our debt, and our operations have progressed uninterrupted.”

Headquartered in Dallas, Exco’s principal operations are located in Texas, North Louisiana and the Appalachia region. Following its emergence from Chapter 11, the firm has stated that it will now continue to engage in the exploration, acquisition, development and production of onshore US oil and natural gas properties.

“Our successful emergence from this process is a testament to our former board and talented employees, whose continued focus on our operational initiatives enabled us to execute on our drilling and completion activities while maintaining an exemplary safety record throughout this process,” added Mr Hickey. “I also want to thank our customers, business partners and lenders for their ongoing support. I am honoured to be part of this team and confident our new board will be an asset to Exco as we enter our next stage of business development.”

Now privately-owned, Exco’s shares are no longer available for trading on a public exchange. In accordance with the restructuring plan, Exco’s new five-member board includes representatives from the holders of the firm’s newly issued common stock. The current management team remains in place.

Serving as Exco’s legal adviser during the Chapter 11 process was Kirkland & Ellis LLP. Alvarez & Marsal North America, LLC served as restructuring adviser, with PJT Partners LP serving as financial adviser.

Mr Hickey concluded: “Exco is now better positioned to capitalise on our strong asset base and operational expertise, as we continue enhancing our business and serving our customers, partners and other stakeholders.”

News: US firm Exco Resources emerges from Chapter 11 bankruptcy

AbbVie acquires Allergan

BY Richard Summerfield

In a deal that is likely to be one of the largest healthcare mergers of the year, US drug manufacturer AbbVie has agreed to buy Irish Botox producer Allergan in a deal worth $63bn. The company will pay $120.30 in cash and a portion of AbbVie stock for each Allergan share held. This amounts to $188.24 per share, around a 45 percent premium on Allergan’s closing stock price on Monday.

AbbVie shareholders will own 83 percent of the merged company, while Allergan shareholders will own the remaining 17 percent. The company will be headquartered in Chicago and will be led by Richard Gonzalez, chairman and chief executive of AbbVie.

The deal, which is expected to close in early 2020, is forecast to add 10 percent to AbbVie’s adjusted earnings per share over the first full year following the close, the companies said in a statement. Furthermore, AbbVie expects annual pre-tax savings and other cost reductions of at least $2bn in the third year after the deal closes. Abbvie remains committed to paying down its debts by $15bn to $18bn by the end of 2021.

“This is a transformational transaction for both companies and achieves unique and complementary strategic objectives,” said Mr Gonzalez. “The combination of AbbVie and Allergan increases our ability to continue to deliver on our mission to patients and shareholders. With our enhanced growth platform to fuel industry-leading growth, this strategy allows us to diversify AbbVie’s business while sustaining our focus on innovative science and the advancement of our industry-leading pipeline well into the future.”

“This acquisition creates compelling value for Allergan’s stakeholders, including our customers, patients and shareholders,” said Brent Saunders, chairman and chief executive of Allergan. “With 2019 annual combined revenue of approximately $48bn, scale in more than 175 countries, an industry-leading R&D pipeline and robust cash flows, our combined company will have the opportunity to make even bigger contributions to global health than either can alone. Our fast-growing therapeutic areas, including our world class medical aesthetics, eye care, CNS and gastrointestinal businesses, will enhance AbbVie’s strong growth platform and create substantial value for shareholders of both companies.”

News: AbbVie looks beyond Humira with $63 billion deal for Botox-maker Allergan

Legacy Reserves files for Chapter 11 to facilitate RSA

BY Fraser Tennant

In a move designed to significantly reduce its debt and realign its operations, energy company Legacy Reserves, together with its subsidiaries, has filed for Chapter 11 bankruptcy. The filing is to facilitate a global restructuring support agreement (RSA) with its lenders, announced just days previously.

Legacy’s bankruptcy woes are a direct result of uncertainty in the oil industry, with fluctuating oil prices doing much to saddle the company with massive debt as it attempted to continue operating through the market’s peaks and troughs.   

Moreover, Legacy has stated that it sought Chapter 11 bankruptcy protection in order to implement its RSA and cut more than $900m of its debt. The RSA will provide the company with liquidity and capital structure, while minimising operational disruptions.

“We explored a wide variety of alternatives to address our balance sheet and looming bank maturity during a sustained downturn in oil and gas prices,” said Dan Westcott, chief executive of Legacy. “After concluding this process, we felt that the financial restructuring negotiated with our creditors provides the best path forward for the company. Through the proposed terms of the plan of reorganisation, we believe our right-sized balance sheet will enable us to successfully compete in the current environment.”

The company has also stated that it intends to operate ‘in the ordinary course of business’ throughout the Chapter 11 process and has filed a number of first-day motions to this effect. Specifically, Legacy has requested authority to pay in full employee wages and honour existing employee benefit programmes, vendors and other operating expenses, joint interest billings for non-operated properties and royalties to mineral interest owners under terms of applicable agreements.

An independent energy company engaged in the development, production and acquisition of oil and natural gas properties in the US, Legacy’s current operations are focused on the cost-efficient management of shallow-decline oil and natural gas wells in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions.

Mr Westcott concluded: “Following the negotiated restructuring, we look forward to having substantially less debt and significantly enhanced prospects for our company, our employees and our future."

News: Oil and gas producer Legacy Reserves to seek Chapter 11 protection

Pfizer acquires Array in oncology focused deal

BY Richard Summerfield

Pfizer Inc is to acquire Array BioPharma Inc in a deal with a total enterprise value of $11.4bn, pending customary closing conditions, including regulatory approvals.

Pfizer has agreed to pay $48 per share in cash for each Array share held. The agreed price represents a 62 percent premium over Array’s closing price on Friday. The deal is expected to complete in the second half of 2019.

The deal will significantly improve Pfizer’s pipeline of drugs in the increasingly profitable oncology space. Array’s product portfolio includes two drugs in more than 30 clinical trials for different kinds of cancer, particularly colorectal cancer, which, the companies said, is the third most common form of cancer in the US.

“Today’s announcement reinforces our commitment to deploy our capital to bring breakthroughs that change patients’ lives while creating shareholder value,” said Albert Bourla, chief executive at Pfizer. “The proposed acquisition of Array strengthens our innovative biopharmaceutical business, is expected to enhance its long-term growth trajectory, and sets the stage to create a potentially industry-leading franchise for colorectal cancer alongside Pfizer’s existing expertise in breast and prostate cancers.”

“We are incredibly proud that Pfizer has recognised the value Array has brought to patients and our remarkable legacy discovering and advancing molecules with great potential to impact and extend the lives of patients in critical need,” said Ron Squarer, chief executive at Array . “Pfizer shares our commitment to patients and a passion for advancing science to develop even more options for individuals with unmet needs. We’re excited our team will have access to world-class resources and a broader research platform to continue this critical work.”

“We are very excited by Array’s impressive track record of successfully discovering and developing innovative small-molecules and targeted cancer therapies,” said Mikael Dolsten, chief scientific officer and president of worldwide research, development and medical at Pfizer. “With Array’s exceptional scientific talent and innovative pipeline, combined with Pfizer’s leading research and development capabilities, we reinforce our commitment to advancing the most promising science, regardless of whether it is found inside or outside of our labs.”

Array is expected to generate $274m in revenue this year, and that figure is expected to pass $1bn by 2022.

News: Pfizer makes $10.6 billion cancer bet in cash deal for Array Biopharma

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