Axis Capital & PartnerRe Ltd agree $11bn merger

BY Richard Summerfield

Axis Capital Holdings Ltd and PartnerRe Ltd announced on 25 January that the two firms had agreed to an $11bn merger which will reshape the reinsurance market by creating the world’s fifth largest global reinsurer.

As a result of the deal, the amalgamation of the two firms will create a speciality insurer and reinsurer with more than $7bn in combined gross premiums written and over $14bn in available capital. The firm will also have a speciality insurance arm with around $2.5bn in gross premiums.

The transaction, which is being treated as a merger of equals, has been unanimously approved by the boards of both Axis and PartnerRe, and is expected to close in the second half of 2015, pending the approval of the two company’s shareholders. In a statement announcing the deal, it was confirmed that PartnerRe and Axis Capital’s shareholders will own approximately 51.6 percent and 48.4 percent of the combined company, respectively.

The combined firm will be headquartered in Bermuda, where Axis and ParterRe are already based. The new firm will maintain a presence across five continents, including offices across 39 different locations employing around 2300. As a result of the merger, the newly combined firm expects to achieve considerable annual cost savings of around $200m in the first 18 months of operations. With duplicate offices in various locations including New York, Bermuda and Ireland, there will likely be a number of job losses, though how many are at risk has not been disclosed.

Axis’ incumbent chief executive Albert Benchimol will take up the same post with the newly combined company. PartnerRe’s chairman Jean-Paul L. Montupet will serve as non-executive chairman, while current Axis chairman Michael Butt will serve as the new company’s chairman emeritus.

In a statement, Mr Benchimol expressed his pleasure at having agreed the considerable merger. “This transformational combination will leverage the complementary strengths of both companies and create an organisation with the size and breadth to enhance product and service offerings, maximise growth opportunities, optimize portfolios, and deliver both economies of scale and capital efficiencies” said Mr Benchimol. “The combined company will have three strongly positioned businesses – a top-five global reinsurer, a $2.5bn speciality insurance underwriting business, and a highly successful and growing life, accident and health franchise – all with increased strategic flexibility.  As a top five global reinsurer with leading positions in a number of specialty lines, we will be strongly positioned to turn the challenges presented by the structural changes in the reinsurance market into opportunities.”

News: Two Big Reinsurers, PartnerRe and Axis Capital, Merge in $11 Billion Deal

$3.6bn M&A deal sees Thoma Bravo and TPC acquire Riverbed

BY Fraser Tennant

Private investors Thoma Bravo LLC and Canada’s Teachers' Private Capital (TPC) have announced the acquisition of Riverbed Technologies for $3.6bn.

The definitive agreement between leading private equity investment firm Thoma Bravo, network performance specialist Riverbed, and the pension administrator Teachers' Private Capital is expected to close in the first half of 2015.

The deal represents the largest undertaken in Thoma Bravo’s 30-year history.

"Riverbed’s strong product portfolio provides unmatched optimisation, visibility and control across the hybrid enterprise, which has positioned the Company extremely well in a rapidly-changing landscape,” said Orlando Bravo, a managing partner at Thoma Bravo. 

“We look forward to working with the talented team at Riverbed to strengthen their leadership position and the value they deliver to customers. All of us at Thoma Bravo are excited to help Riverbed reach its full potential."

According to Riverbed’s management team, the change in ownership will not have an overly noticeable impact on the company’s product range nor its relationship with its customers.

An enthused Jerry Kennelly, chairman and chief executive of Riverbed, who will remain with the company in the same capacity post-transaction, said “Having undertaken a thorough strategic review, during which we assessed a wide variety of options to maximise value, the Board unanimously concluded that partnering with Thoma Bravo was the best choice for Riverbed, as this transaction will provide our stockholders with significant and immediate cash value."

"We are extremely pleased with this transaction, which we believe will be a winning proposition for all of our stakeholders."

The transaction, which is subject to approval by Riverbed stockholders, regulatory approvals, including antitrust review in the US, Germany and Taiwan, and review and clearance by the Committee on Foreign Investment in the US, will, upon completion, see Riverbed stockholders receive $21 per share in cash.

Commenting on the deal, a forward-looking Karl Campbell, Riverbed’s recently appointed vice president for the UK and South Africa, said “I think it’s a very good thing for Riverbed, it gives us an opportunity to reset our strategy for the next ten years."

News: Riverbed sold to investors for $3.6bn

$6.1bn M&A deal sees LabCorp buy Covance

BY Richard Summerfield

A $6.1bn M&A deal which has seen Laboratory Corporation of America Holdings (LabCorp) agree to buy Covance Inc  will result in a major new company providing services to physicians, pharmaceutical companies and patients.

The deal will see LabCorp’s current chief executive officer, David King, lead the newly combined company, while Covance’s chairman and chief executive , Joe Herring, will continue to operate Covance as a division of LabCorp.

LabCorp and Covance are headquartered in North Carolina and Princeton respectively.

“As a combined company, we will be well positioned to respond to and benefit from the fundamental forces of change in our business, including payment for outcomes, pharmaceutical outsourcing, global trial support, trends in pharmaceutical R&D spending, personalised medicine, and big data and informatics,” said Mr King.

Mr King believes that the acquisition of Covance will result in cost reductions of around $100m annually within three years of closure, positioning LabCorp as the world’s leading healthcare diagnostics company.

Covance’s Joe Herring is equally sure as to the solidity of the deal. He said “Covance generates more safety and efficacy data for the approval of innovative medicines than any other company in the world, and LabCorp has longitudinal diagnostic data from more than 75 million patients.

“This combination leads the way to more cost-effective healthcare by improving the safety and efficacy of drug therapies, enabling accurate patient diagnostics, and advancing evidence-based medicines which will enable our clients to substantiate the value of their products and services to patients and payors.”

The deal, however, has attracted criticism from some analysts with the apparent incompatibility of the two firm’s businesses being a bone of contention: LabCorp’s core business entails the processing of patient samples for doctors and hospitals while Covance assists drug manufacturers with the running of clinical trials for their new products.

Although still subject to various approvals, the transaction is expected to close in the first quarter of 2015.

Perrigo to acquire Omega in $4.5bn M&A deal

BY Fraser Tennant

A major new pharmaceutical M&A deal will see Perrigo acquire Belgian firm Omega Pharma for $4.5bn – a deal which will transform the US consumer healthcare company into a top five global OTC company.

The deal between Perrigo, a leading global provider of quality affordable healthcare products, and Omega Pharma, one of the largest OTC healthcare companies in Europe, is being funded through a combination of cash, debt and equity. It is expected to significantly expand Perrigo’s international presence and provide the Dublin-based manufacturer with a much larger slice of the European over-the-counter healthcare sector.

No stranger to M&A, Perrigo bought the biotechnology company Elan in July 2013 for $8.6bn.

"The combination of these two great companies accelerates Perrigo's international growth strategy, substantially diversifies our business streams and establishes a durable leadership position in the European OTC marketplace," said Perrigo chairman, president and chief executive, Joseph C. Papa.

The Perrigo boss is confident that the deal will: (i) accelerate Perrigo's strategy to expand internationally; (ii) combine Perrigo's supply chain and operational excellence with Omega's OTC branding and regulatory expertise; (iii) create multiple opportunities to cross-sell Perrigo products in diverse new channels; (iv) position Perrigo to capture additional share of the $30bn European OTC market; (v) add approximately 2500 employees, including a large sales team of approximately 1100 individuals; and (vi) provide leadership position in a durable, European OTC cash pay market.

Mr Papa continued "Our strong financial performance and operational structure have enabled the continued growth and globalisation of our business model with Ireland as our gateway for this expansion. Together, our combined company will have an even larger product portfolio, broader geographic reach, and enhanced scale.”

“This is an exciting time in the history of our company,” added Omega Pharma founder and chief executive Marc Coucke. “My continued ownership investment demonstrates my confidence in the potential for the combined company. Together, we will have a substantially broader product portfolio with established global platforms and commercial channels to better serve our customers and patients."

The Perrigo/Omega Pharma deal is expected to close in the first quarter of next year.

Oil & gas M&A market awash with ‘cautious optimism’

BY Fraser Tennant

The oil and gas M&A market is awash with ‘cautious optimism’ according to EY’s new Capital Confidence Barometer. 

The Barometer, EY’s 11th, paints a picture of an increasingly stable global economy which, although still recovering and relatively modest in scale, will lead to an increase in oil & gas M&A activity.

“The issues surrounding the oil & gas M&A landscape are primarily uncertainty and volatility,” said Andy Brogan, global oil & gas transaction Leader at EY. “While the broader economy is increasingly seen as stable, growth is anemic, and has notably slowed oil demand growth.

EY’s survey found that the number of oil & gas executives who believe that the global economy is more secure has doubled in the last 12 months. Executives are now positioning themselves to respond to a market which, although still sluggish, is once again beginning to stir.

“This means more oil & gas assets on the market now than in many past years, but in the buyer’s market, deals are taking longer to close,” believes Mr Brogan. “But as oil prices adjust to a slower global economy, we do see some cautious optimism for deal-making, which is supported by the resilience the market has historically shown.”

Key findings in the Capital Confidence Barometer include:  (i) 94 percent (of oil & gas executives) expect the global economy to improve or at least be stable over the next 12 months; (ii) 53 percent are expecting the oil and gas deal market to improve over the next 12 months; (iii) 68 percent expect that their deal pipeline will increase over the next 12 months, almost double compared to expectations six months ago; and (iv) 53 percent see increased geopolitical instability as the greatest economic risk over the next 12 months, up sharply from six months ago.

Sluggish and uncertain the market may be, but for many oil & gas companies, dealmaking prospects are firmly on an upward trajectory.

Report: Cautious optimism to fuel M&A rebound