Vodafone strikes €18.4bn deal for Liberty Global’s European operations

BY Fraser Tennant

In an €18.4bn deal which expands its mobile, TV and broadband services in Europe, multinational telecommunications conglomerate Vodafone has agreed to acquire US firm Liberty Global’s operations in Germany, the Czech Republic, Hungary and Romania.

The total enterprise value of the transaction is expected to comprise approximately €10.8bn of cash consideration paid to Liberty Global and €7.6bn of existing Liberty debt, subject to completion adjustments. Once complete, Vodafone will become the leading next generation network (NGN) owner in Europe, with 54 million cable/fibre homes ‘on-net’ and a total NGN reach of 110 million homes and businesses.

In Germany, the combination of Vodafone and Unitymedia (which runs Liberty Global's operations in Germany as well as being the country’s second largest cable operator) will bring Gigabit connections to around 25 million German households by 2022. In Central and Eastern European (CEE) markets, the transaction will accelerate the availability of converged fixed, mobile and TV services.

“This transaction will create the first truly converged pan-European champion of competition,” said Vodafone Group chief executive Vittorio Colao. “It represents a step change in Europe’s transition to a Gigabit Society and a transformative combination for Vodafone. We are committed to accelerating and deepening investment in next generation mobile and fixed networks, building on Vodafone’s track record of ensuring that customers benefit from the choice of a strong and sustainable challenger to dominant incumbent operators.”

Vodafone has also said that management and employees of the acquired Liberty Global businesses will have the opportunity to play an integral role within the combined company in each country and across the wider Vodafone Group.

“We have a rich history at Liberty Global of successfully developing and reshaping our business to drive innovation, advance customer services and create significant value for shareholders,” said Mike Fries, chief executive of Liberty Global. “This is one of those moments. Now more than ever, Europe needs strong competition from scaled national challengers willing and able to invest in next-generation wireless, video and broadband services.”

The Vodafone/Liberty Global transaction is subject to regulatory approval by the European Commission and is anticipated to be completed in mid-2019.

Mr Fries added: “This is also an important and exciting transaction for our customers and employees. In each of these markets, the combination of Liberty Global and Vodafone’s businesses will transform the competitive landscape and bring a new level of convergence to customers.”

News: Vodafone makes €18bn swoop on Liberty Global cable networks

Takeda and Shire agree $62bn merger

BY Richard Summerfield

Following four unsuccessful offers, Takeda Pharmaceuticals is to acquire drug manufacturer Shire for $61.5bn after raising the amount of cash it offered for the company.

The agreement came on the last day Takeda was able to make a firm bid for Shire. The Japanese firm’s previous offers were rebuffed due to price concerns and the fact that Takeda was proposing to pay too much of the acquisition in stock. However, the transaction has now been approved by both companies’ boards of directors, and is expected to close in the first half of 2019.

Under the terms of the agreement, Shire investors will receive $30.33 in cash and either 0.839 new Takeda shares or 1.678 Takeda American depositary shares for each share, the companies said, valuing the offer at £48.17 a share.

While the firms had been due to conclude their merger in April, Shire conditionally agreed to Takeda’s fifth offer as the deadline approached, but managed to get an extension to today in order to finalise some other details of the deal. Takeda and Shire have agreed that up to three Shire directors will join the board of the newly-combined business.

“Over the last 30 years, Shire has become the global leader in treating rare diseases, delivering innovative products that transform patients’ lives,” said Shire's chairman, Susan Kilsby, in a statement. “We firmly believe that this combination recognises the strong growth potential of our leading products and innovative pipeline and is in the best interests of our shareholders, our patients and the communities we serve.”

To help fund the cash portion of the deal, Takeda has secured a bridge loan facility of $31bn with JPMorgan Chase Bank NA, Sumitomo Mitsui Banking Corp. and MUFG Bank Ltd., among others.

Takeda expects the deal to save around $600m in research and development costs. Overall, the merger is expected to generate savings of around $1.4bn by the third year.

“Since its inception, Takeda has transformed into an agile, R&D-driven global pharmaceutical company that is well-positioned to deliver innovative and transformative care to patients around the world,” said Christophe Weber, president and chief executive officer of Takeda.

He added: “Shire’s highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda. Together, we will be a leader in providing targeted treatments in gastroenterology, neuroscience, oncology, rare diseases and plasma-derived therapies. We are looking forward to the benefits this combination will bring to patients worldwide, the opportunities it will bring for our employees and the returns it will deliver for our shareholders.”

The deal, once completed, will be the biggest in the pharmaceuticals sector since 2000.

News: Japan's Takeda clinches $62 billion deal to buy drugmaker Shire

Sainsbury’s shops at ASDA

BY Richard Summerfield

The UK’s second biggest food retailer, J Sainsbury’s, has agreed to acquire Walmart subsidiary Asda in a deal valued at £7.3bn.

The deal, which came as a shock to many, will likely generate a number of competition concerns, since it would create a new grocery superpower accounting for nearly £1 in every £3 spent on groceries on the UK high street.

The deal for Asda, the number three ranked UK supermarket chain, will see Walmart get nearly £3bn in cash and 42 percent of the newly-combined business. Walmart paid £6.7bn for Asda in 1999.

“We believe that the combination of Sainsbury’s and Asda will create substantial value for our shareholders and will be excellent news for our customers and our colleagues,” said David Tyler, chairman of Sainsbury’s. “As one of the largest employers in the country, the combined business will become an even greater contributor to the British economy. The proposal will bring together two of the most experienced and talented management teams in retail at a time when the industry is undergoing rapid change. We welcome Walmart as a significant shareholder and look forward to working closely with them.”

The companies have confirmed that both the Sainsbury’s and Asda brands will be maintained and there are no planned store closures or disposals as a result of the combination. However, given that the combined company would have a workforce of around 360,000, there are significant concerns about an emerging duopoly in the sector. The UK’s Competition and Markets Authority has stated that it is likely to review the combination, which could have consequences for the workforce.

Joe Clarke, the acting national officer of the Unite union, noted that the deal could have implications for thousands of jobs. “Staff are already facing uncertainty through restructuring and changes to contracts at [Sainsbury’s]. Sainsbury’s bosses need to give workers clarity over what the future could hold and assurances over jobs as matter of urgency,” he said.

Roger Burnley, chief executive of Asda, said: “The combination of Asda and Sainsbury’s into a single retailing group will be great news for Asda customers, allowing us to deliver even lower prices in store and even greater choice. Asda will continue to be Asda, but by coming together with Sainsbury’s, supported by Walmart, we can further accelerate our existing strategy and make our offer even more compelling and competitive.”

News: Sainsbury's to top Britain's Tesco with £7.3 billion swoop on Walmart's Asda

T-Mobile and Sprint agree $26bn mega-merger

BY Fraser Tennant

In a combination set to create thousands of American jobs and boost US economic growth, mobile carrier rivals T-Mobile US and Sprint Corporation have agreed to merge in an all-stock transaction valued at $26bn. 

The deal, which follows months of negotiation between T-Mobile's parent, Deutsche Telekom, and Japan's SoftBank, parent of Sprint, is expected to create more competition and unmatched value for customers across the US, with existing T-Mobile and Sprint customers benefiting from increased speeds, coverage and performance.

The combined company will have a market value of $146bn and be named T-Mobile.

Moreover, the new company will have the network capacity to create a nationwide 5G network in the critical first years of the 5G innovation cycle – the years that will determine if US firms lead, as they did in 4G, or follow in the 5G digital economy.

“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation and a second-to-none network experience – and do it all so much faster than either company could on its own,” said John Legere, current president and chief executive of T-Mobile US. “As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf.”

Mr Legere will serve as chief executive of the new entity while Marcelo Claure, the current chief executive of Sprint, will serve on the board.

“The combination of these two dynamic companies can only benefit the US consumer," said Mr Claure. “Both Sprint and T-Mobile have similar DNA, and we intend to build the world’s best 5G network that will make the US a hotbed for innovation and redefine the way consumers live and work.”

The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close no later than the first half of 2019.

Mr Claure concluded: “I am confident this combination will spur job creation and ensure opportunities as part of a larger, stronger combined organisation. As we do this, we will force our competitors to follow suit, as they always do, which will benefit the entire country.”

News: T-Mobile agrees $26bn mega-merger with Sprint

Takeda proposes to acquire Shire in $65bn deal

BY Fraser Tennant

In a deal that could spark a new wave of big pharma deals, Japan’s Takeda Pharmaceutical Company Limited has made a $65bn offer to acquire Jersey-based rare disease drugmaker Shire Plc.

The deal, if completed, would be the biggest acquisition of a drug company this year.

Earlier this week, the board of Shire confirmed that it would recommend the offer to its shareholders, subject to satisfactory resolution of the other terms of the possible offer, including completion of reciprocal due diligence by Shire on Takeda.

With the deal in a preliminary phase, and Takeda having the right to make a lower offer or walk away should Shire receive a higher rival bid, the Japanese company, under UK takeover rules, is required to make its intentions known by 8 May 2018.

Long seen as a likely target for a takeover, Shire was almost acquired by US drugmaker AbbVie Inc in 2014, until reforms to US tax rules scuppered the deal. In addition, Shire was the subject of an aborted acquisition attempt by Botox-maker Allergan Plc last week.

A firm offer by Takeda for Shire is subject to the following conditions: (i) satisfactory completion of a confirmatory due diligence review by Takeda; (ii) the unanimous and unconditional recommendation of the board of Shire; and (iii) final approval by the board of Takeda.

If the deal gets the go-ahead, it would be the largest overseas acquisition by a Japanese company and make Takeda one of the world’s leading drugmakers. The offer to acquire Shire is the fifth to have been made by Takeda in recent months. This proposal is worth 49.01 pounds per share, comprised of 27.26 pounds per share in new Takeda shares and 21.75 pounds per share in cash.

At completion, Shire shareholders would own approximately 50 percent of the enlarged Takeda and the new Takeda shares will be listed in Japan and in the US through an American Depositary Receipt (ADR) programme.

A global leader in serving patients with rare diseases, Shire develops best-in-class therapies across a core of rare disease areas, including hematology, immunology, genetic diseases, neuroscience and internal medicine, with growing therapeutic areas in ophthalmics and oncology. The firm reaches patients in more than 100 countries.

However, the firm has been struggling with debt and sold its oncology business to a French drugmaker for $2.4bn earlier this month.

News: Shire willing to back $64 billion Takeda bid, market signals doubts