Prologis to merge with Duke Realty in $26bn deal

BY Fraser Tennant

In a combination that brings together two rivals, warehouse giant Prologis and real estate agency Duke Realty Corporation are to merge in an all-stock transaction valued at approximately $26bn, including the assumption of debt.

Under the terms of the definitive agreement, Duke Realty shareholders will receive 0.475x of a Prologis share for each Duke Realty share they own. The respective board of directors for Prologis and Duke Realty have unanimously approved the transaction.

“We have admired the disciplined repositioning strategy the Duke Realty team has completed over the last decade,” said Hamid R. Moghadam, co-founder and chief executive of Prologis. “They have built an exceptional portfolio in the US located in geographies we believe will outperform in the future. That will be fuelled by Prologis' proven track record as a value creator in the logistics space. We have a diverse model that allows us to deliver even more value to customers.”

With the transaction, Prologis is gaining high-quality properties for its portfolio in key geographies, including Southern California, New Jersey, South Florida, Chicago, Dallas and Atlanta. The portfolio comprises: (i) 153 million square feet of operating properties in 19 major US logistics geographies; (ii) 11 million square feet of development in progress; and (iii) 1228 acres of land owned and under option with a build-out of approximately 21 million square feet.

"This transaction is a testament to Duke Realty's world-class portfolio of industrial properties, long-proven success and sustainable value creation we’ve delivered over the years," said Jim Connor, chairman and chief executive of Duke Realty. “We have always respected Prologis, and after a deliberate and comprehensive evaluation of the transaction and the improved offer, we are excited to bring together our two complementary businesses.

“Together, we will be able to accelerate the potential of our business and better serve tenants and partners,” continued Mr Connor. “We are confident that this transaction – including the meaningful opportunity it provides for shareholders to participate in the growth and upside from the combined portfolio — is in the best long-term interest of Duke Realty shareholders."

The transaction, which is currently expected to close in the fourth quarter of 2022, is subject to the approval of Prologis and Duke Realty shareholders and other customary closing conditions.

“This transaction increases the strength, size and diversification of our balance sheet while expanding the opportunity for Prologis to apply innovation to drive long-term growth,” concluded Tim Arndt, chief financial officer at Prologis. “In addition to generating significant synergies, the combination of these portfolios will help us deliver more services to our customers and drive incremental long-term earnings growth.”

News: Warehouse giant Prologis agrees $26 bln merger with Duke Realty

Turning Point for Bristol Myers Squibb

BY Richard Summerfield

US pharmaceutical giant Bristol Myers Squibb has agreed to acquire Turning Point Therapeutics in a $4.1bn deal which will boost the company’s oncology drug pipeline.

Under the terms of the deal, Bristol Myers Squibb has agreed to pay $76 per share for each Turning Point share held. The transaction has been unanimously approved by the boards of directors of both companies and is anticipated to close during the third quarter of 2022.

Turning Point is a leader in oncology treatments and its lead asset, repotrectinib, a next-generation, potential best-in-class tyrosine kinase inhibitor (TKI) targeting the ROS1 and NTRK oncogenic drivers of non-small cell lung cancer (NSCLC) and other advanced solid tumours, has helped drive the transaction. In the US, repotrectinib has been granted three breakthrough therapy designations from the Food and Drug Administration (FDA). Bristol Myers Squibb expects repotrectinib to be approved in the US in the second half of 2023. The company also plans to continue to explore the potential of Turning Point Therapeutics’ promising pipeline of novel compounds. Sales of Bristol Myers’ own oncology drug, Opdivo, have fallen below those of rival Merck’s blockbuster treatment in a very crowded oncology market.

“The acquisition of Turning Point Therapeutics further broadens our leading oncology franchise by adding a best-in-class, late-stage precision oncology asset,” said Giovanni Caforio, board chair and chief executive of Bristol Myers Squibb. “With this transaction, we are continuing our strong track record of strategic business development to further enhance our growth profile.”

“Today’s news builds upon our long legacy of pioneering next-generation medicines for patients with cancer,” said Samit Hirawat, chief medical officer, global drug development, at Bristol Myers Squibb. “With repotrectinib, we have the opportunity to change the standard of care and address a significant unmet medical need for ROS1-positive non-small cell lung cancer patients.”

“Through this transaction, we will be able to harness the full potential of our precision oncology platform to advance the standard of care for cancer patients. Since our founding, we have leveraged our deep scientific expertise to develop a pipeline of promising precision oncology assets,” said Athena Countouriotis, president and chief executive of Turning Point Therapeutics. “With Bristol Myers Squibb’s leadership in oncology, strong commercial capabilities and manufacturing footprint, we will be able to further accelerate the pace at which we can bring our novel medicines to benefit people diagnosed with cancer around the world.”

News: Bristol Myers boosts cancer drug portfolio with $4.1 billion Turning Point deal

Broadcom strikes $61bn VMware deal

BY Richard Summerfield

Broadcom Inc, a global leader in semiconductor production, has agreed to acquire cloud computing company VMware Inc in a $61bn cash-and stock deal.

Under the terms of the deal, Broadcom will pay $142.50 in cash or 0.2520 of a Broadcom share for each VMware share – a price which represents a premium of nearly 49 percent to the stock’s last close before talks of the deal were first reported on 22 May. Broadcom will also assume $8bn of VMware’s net debt.

Broadcom has already got commitments from a consortium of banks for $32bn in debt funding for the deal. VMware will be allowed to solicit offers from rival bidders for 40 days as part of the agreement. Should VMware opt for an alternative bidder during this period it will be required to pay a termination fee of $750m.

The transaction, which is expected to complete in Broadcom’s fiscal year 2023, is subject to the receipt of regulatory approvals and other customary closing conditions, including approval by VMware shareholders.

“Building upon our proven track record of successful M&A, this transaction combines our leading semiconductor and infrastructure software businesses with an iconic pioneer and innovator in enterprise software as we reimagine what we can deliver to customers as a leading infrastructure technology company,” said Hock Tan, president and chief executive of Broadcom. “We look forward to VMware’s talented team joining Broadcom, further cultivating a shared culture of innovation and driving even greater value for our combined stakeholders, including both sets of shareholders.”

“VMware has been reshaping the IT landscape for the past 24 years, helping our customers become digital businesses,” said Raghu Raghuram, chief executive of VMware. “We stand for innovation and unwavering support of our customers and their most important business operations and now we are extending our commitment to exceptional service and innovation by becoming the new software platform for Broadcom. Combining our assets and talented team with Broadcom’s existing enterprise software portfolio, all housed under the VMware brand, creates a remarkable enterprise software player. Collectively, we will deliver even more choice, value and innovation to customers, enabling them to thrive in this increasingly complex multi-cloud era.”

“VMware has long been recognized for its enterprise software leadership, and through this transaction we will provide customers worldwide with the next generation of infrastructure software,” said Tom Krause, president of the Broadcom Software Group. “VMware’s platform and Broadcom’s infrastructure software solutions address different but important enterprise needs, and the combined company will be able to serve them more effectively and securely. We have deep respect for VMware’s customer focus and innovation track record, and look forward to bringing together our two organizations.”

News: Chipmaker Broadcom to buy VMware in $61 bln deal

Centennial and Colgate Energy to combine in $7bn deal

BY Fraser Tennant

In a major merger of equals transaction, US oil and gas company Centennial Resource Development, Inc. and oil exploration and production company Colgate Energy Partners III, LLC are to combine in a deal valued at $7bn.

The merger values Colgate at approximately $3.9bn and is comprised of 269.3 million shares of Centennial stock, $525m of cash and the assumption of approximately $1.4bn of Colgate’s outstanding net debt.

The cash consideration and the repayment of Colgate’s outstanding credit facility borrowings at closing are expected to be funded with cash on hand and borrowings under an upsized revolving credit facility.

“This transformative combination significantly increases scale and drives accretion across all our key financial and operating metrics,” said Sean Smith, chief executive of Centennial. “Importantly, the combined company is expected to provide shareholders with an accelerated capital return programme through a fixed dividend coupled with a share repurchase plan.”

Moreover, the combined company will be the largest pure-play exploration and production (E&P) company in the Delaware Basin with approximately 180,000 net leasehold acres, 40,000 net royalty acres and total current production of approximately 135,000 barrels of oil per day.

“The merger of Colgate and Centennial is compelling from a financial, operational and strategic standpoint, establishing a leading Permian Basin independent,” said James Walter, co-chief executive of Colgate. “We believe the pro forma company is positioned to maximise returns for our new investor base, with our combined management team bringing a track record of operational excellence and strategic value creation.”

The transaction has been unanimously approved by the boards of directors of both companies and is expected to close in the second half of 2022.

Upon closing, Sean Smith will serve as executive chair of the board of directors of the newly combined business, and James Walter and Will Hickey, co-chief executives of Colgate, will lead the company as co-chief executives and serve on the board of directors.

The combined company will operate under a new name which is expected to be announced prior to closing.

Mr Hickey concluded: “We expect the combined company will be a top-tier, low-cost operator that is able to deliver better margins and shareholder returns.”

News: Centennial, Colgate Energy combine to create $7-bln Permian basin producer

Philip Morris agrees $16bn Swedish Match takeover

BY Richard Summerfield

Philip Morris International has agreed to acquire Swedish Match AB, a maker of nicotine pouches, for $16bn.

The deal, which has been recommended by Swedish Match’s board of directors, is expected to close in Q4 2022, subject to acceptance by Swedish Match shareholders, regulatory approvals and other customary conditions.

Philip Morris has made a cash offer for the Stockholm-based group at 106 crowns per share, valuing it at 161.2 billion crowns - $16bn. However, according to hedge fund Bronte Capital, which owns about 1 percent of Swedish Match, the offer price is “unacceptable”. Bronte has reiterated its opposition to the takeover. Under Swedish law, 90 percent of shareholders need to agree to the deal for it to proceed.         

The deal, should it be completed, is a significant bet on cigarette alternatives, an area in which Philip Morris is already a major player. The company has been at the forefront of the tobacco industry’s push to diversify beyond cigarettes as regulations become ever more restrictive globally. The company developed the IQOS heated-tobacco system and last year agreed to take over Vectura Group Plc, a developer of asthma drugs. It also acquired Fertin Pharma, which produces a smoking-cessation aid.

Swedish Match’s products include Zyn nicotine pouches, which are tobacco-free and rapidly growing in popularity in both the US and Scandinavia. Swedish Match makes most of its profit from Swedish-style snuff called ‘snus’, which is banned in the European Union, outside of Sweden. In the US, the Food and Drug Administration (FDA) approved the marketing of snus as less harmful than cigarettes in 2019. In the US, Swedish Match is the market leader in the nicotine pouch and chewing tobacco markets, according to its website, and number three in moist snuff. In Scandinavia, it is market leader for snus products and number two for nicotine pouches.

“This is not a cost synergy case,” said Lars Dahlgren, chief executive of Swedish Match. “This is rather a textbook example of perfect industrial logic – two companies that share the same vision and that also are very complementary in their commercial setups.”

The deal for Swedish Match raises some questions regarding Philip Morris’s future relationship with former parent company Altria, which has a range of oral nicotine products. Philip Morris was split off from Altria in 2008 because of shareholder demands for better returns. The spinning off of Philip Morris saw the companies agree to a complex non-compete arrangement.

News: Philip Morris bets on cigarette alternatives with $16 bln Swedish Match bid