GSK takes Tesaro in $5.1bn deal

BY Richard Summerfield

GlaxoSmithKline has agreed to acquire US cancer specialist Tesaro in a deal worth $5.1bn, including Tesaro’s outstanding debt.

Under the terms of the deal, GSK, the UK’s largest drug manufacturer, will pay around $75 a share to acquire Tesaor, a premium of 110 percent on the company’s 30 day average price and a premium of 60 percent on the stock’s closing price on Friday 30 November, the last day of trading before the deal was announced. The transaction is expected to complete in the first quarter of 2019, subject to the satisfaction of customary closing conditions.

The deal is a notable for GSK, granting the company access to Tesaro’s drug Zejula – a poly ADP ribose polymerase (PARP) inhibitor approved for treating ovarian cancer. PARP inhibitors block a family of DNA-repair proteins in cancer cells. Zejula is also being evaluated as a potential treatment for lung, breast and prostate cancer.

Zejula brought in $166m in revenue in the first nine months of 2018, with third-quarter sales growing more than 60 percent. According to Refinitiv data, industry analysts, on average, expect annual Zejula sales to reach $1bn by 2023. Tesaro expects sale of Zejula to be in the $233m to $238m range this year.

“The acquisition of Tesaro will strengthen our pharmaceuticals business by accelerating the build of our oncology pipeline and commercial footprint, along with providing access to new scientific capabilities”, said Emma Walmsley, chief executive of GSK. “This combination will support our aim to deliver long-term sustainable growth and is consistent with our capital allocation priorities. We look forward to working with Tesaro talented team to bring valuable new medicines to patients.”

“This transaction marks the beginning of a new global partnership that will accelerate our oncology business and allow our mission of delivering transformative products to individuals living with cancer to endure,” said Lonnie Moulder, chief executive of Tesaro. “Our board and management team are very pleased to announce this transaction, and we are grateful to the management team at GSK for their tremendous vision and the opportunity to preserve and build upon the impact we have had in the cancer community to date.”

News: GSK slides after buying cancer firm Tesaro for hefty $5.1 billion

Nexstar acquires Tribune Media in $6.4bn deal

BY Fraser Tennant

In a deal which makes it one of the largest regional TV station operators in the US, Nexstar Media Group, Inc is to acquire Tribune Media Company in a transaction valued at $6.4bn.

The definitive merger agreement will see Nexstar acquire all outstanding shares of Tribune Media for $46.50 per share in a cash transaction, including the assumption of Tribune Media’s outstanding debt.

The combination of two leading companies with complementary national coverage will reach approximately 39 percent of US television households. Furthermore, the combined entity will be among the leading providers of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms.

“We have long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies,” said Perry Sook, chairman, president and chief executive of Nexstar. “We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today’s rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate.” 

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

“We are delighted to have reached this agreement with Nexstar as it provides Tribune shareholders with substantial value and a well-defined path to closing,” said Peter Kern, chief executive of Tribune Media. “Together with Nexstar we can better compete by delivering a nationally integrated, comprehensive and competitive offering across all our markets. We believe this combination will produce an even stronger broadcast and digital platform that builds on the accomplishments of both companies and benefits our viewers and advertisers.”

The transaction is not subject to any financing condition and Nexstar has received committed financing for the transaction from BofA Merrill Lynch, Credit Suisse and Deutsche Bank.

Expected to close late in the third quarter of 2019, the Nexstar/Tribune Media transaction is subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.

Mr Kern concluded: “I look forward to working closely with the Nexstar team to deliver on the value of this compelling combination and to ensure a smooth transition and integration of our companies.”

News: Nexstar clinches deal to acquire Tribune Media

PayChex takes Oasis Outsourcing to the bank

BY Richard Summerfield

Payroll processor PayChex Inc has agreed to acquire Oasis Outsourcing Acquisition Corp for $1.2bn in cash.

The deal is expected to be financed through a combination of cash on PayChex’s balance sheet and borrowings under existing credit facilities or new debt.

“This acquisition reinforces PayChex’s commitment to meet the HR technology and advisory needs of our clients and their employees in ways that are transforming their experience, and accelerates top-line growth,” said Martin Mucci, president and chief executive of PayChex.

He continued: “We know there’s a growing need today among small and mid-sized businesses for HR technology and outsourcing services, especially given the ever-increasing number of regulations around issues like paid family leave, health care, and anti-harassment training requirements. Those businesses need the integrated technology and expert support PayChex offers, expertise that grows with the addition of Oasis. This acquisition will strengthen our PEO growth strategy, gain scale for new products with our insurance carrier partners, provide a new client base to offer PayChex retirement and time and attendance products, and augment our experienced management team. This is a great time for our two companies to come together.”

For PayChex, the deal represents an opportunity to significantly advance its position in HR outsourcing, leveraging the scope of its technology platform and providing new clients access to PayChex’s products and technology-enabled services. As a result of the deal, PayChex will now serve more than 1.4 million worksite employees through its HR outsourcing service. PayChex believes that the deal will generate a number of revenue and cost synergies.

Oasis serves more than 8400 clients across all 50 states of the US with HR solutions, employee benefits, payroll administration and risk management services.

“We are delighted to announce our agreement to join forces with PayChex,” said Mark Perlberg, president and chief executive of Oasis. “Our combined company will have enhanced capacity to develop and deliver critical human resources and payroll solutions for the clients and employees we have the privilege to serve.”

News: Paychex to buy outsourcing firm Oasis for $1.2 billion

Boston Scientific buys BTG in $4.2bn deal

BY Richard Summerfield

Boston Scientific Corp is to acquire British rival BTG Corp in an all-cash $4.2bn deal which will improve the US firm’s offering in the field of interventional medicine.

The deal will see Boston Scientific pay 840 pence in cash per share for BTG, a 37 percent premium over the company’s closing price on Monday and a 50 percent premium to BTG’s 90-day trading average. Completion of the deal is expected in mid-2019, subject to regulatory approval and customary closing conditions.

“The acquisition of BTG and its rapidly growing peripheral interventional portfolio is an exciting extension of our category leadership strategy that will augment our capabilities in important areas of unmet need such as cancer and pulmonary embolism,” said Michael F. Mahoney, chairman and chief executive of Boston Scientific. “We are confident that the addition of these therapies to our portfolio will ultimately advance patient care in ways that could not be realised by either company alone, while also allowing us to realise substantial synergies and provide a strong return for investors.”

Boston Scientific expects the acquisition to deliver short- and long-term benefits, including strengthening the company’s offerings in the area of cancer treatment through the addition of BTG’s interventional oncology division.

The acquisition is Boston Scientific’s biggest since 2005, when it acquired device maker Guidant for $25.2bn. The company will finance the deal through a combination of cash on hand and proceeds from debt financing. Boston Scientific said that the acquisition of BTG would boost adjusted earnings by two to three cents a share in 2019 and would be increasingly accretive thereafter.

“We believe Boston Scientific’s offer represents an attractive proposition for BTG Shareholders with a significant premium in cash and recognises the value created by the support of our long term large shareholders,” said Garry Watts, chairman of BTG. “We are proud of what BTG has become and of all BTG employees for their contributions.”

“I would like to thank and acknowledge all BTG colleagues for building a leading global healthcare company,” said Louise Makin, chief executive of BTG. “Our interventional medicine portfolio delivers value to patients and is a significant growth driver for the business, and we’re also proud of our highly profitable pharmaceuticals business focused on critical care products.”

News: Boston Scientific builds medical technology with $4.2 billion BTG deal

Global M&A deals to increase over next six months despite regional imbalances, claims new report

BY Fraser Tennant

Global mergers and acquisitions (M&A) activity over the next six months is expected to increase by around 6 percent year-over-year (YOY) compared to the same period in 2018, according to Intralinks’ ‘Deal Flow Predictor’.

However, while the short-term outlook for M&A activity is positive, particularly in the Asia-Pacific (APAC) region, regional imbalances and signs of stress underpin the market’s recent growth.

Drilling down, in APAC, the number of announced M&A deals is predicted to increase by around 14 percent YOY over the next six months, within a range of 7 to 20 percent, led by the technology, media, and telecom (TMT), energy and power, and materials sectors. Furthermore, all APAC regions are showing double-digit increases in their volumes of early-stage M&A activity.

In contrast, the number of announced M&A deals in Europe, the Middle East & Africa is forecast to remain flat YOY during the six months ending Q1 2019. Among the five largest European economies, over the next six months, France, Italy and the UK are expected to show the highest growth in M&A announcements, whereas levels of M&A announcements are expected to be flat in Germany and to decline in Spain.

“Structurally, YOY growth in M&A activity in the first nine months of 2018 has exclusively been driven by the Asia Pacific region,” said Philip Whitchelo, Intralinks’ vice president of strategic business & corporate development. “The number of announced deals increased by 6 percent compared to a 7 percent decline in the rest of the world.”

In terms of North America, the number of announced M&A deals is predicted to increase by around 3 percent YOY over the next six months, led by the real estate, industrial, and materials sectors. However, in Latin America (LATAM), the number of M&A deals is predicted to decrease by around 5 percent YOY over the next six months, with Argentina highest, Brazil declining and Mexico flat.

“There are also warning signs of market stress such as rising US interest rates, declining global equity markets, overstretched M&A valuation levels and increasing protectionism against cross-border M&A deals and global trade flows,” adds Mr Whitchelo. “Taken together, these suggest that the current M&A up-cycle may be nearing its peak.”

Intralinks forecasts the number of future M&A announcements by tracking early-stage M&A activity – deals that are, on average, six months away from being publicly announced.

Report: Deal Flow Predictor