Bristol-Myers and Celgene agree record deal

BY Richard Summerfield

Bristol-Myer Squibb is to acquire Celgene Corp for $74bn in a cash and stock deal which combines two of the biggest pharmaceutical companies in the world.

The deal will see Celgene shareholders receive one Bristol-Myers Squibb share and $50 in cash for each share held, or $102.43 per share, a premium of 53.7 percent to Celgene’s closing price on the day before the deal was announced. The boards of directors of both companies have approved the deal, which is expected to close in the third quarter of 2019.

“Together with Celgene, we are creating an innovative biopharma leader, with leading franchises and a deep and broad pipeline that will drive sustainable growth and deliver new options for patients across a range of serious diseases,” said Giovanni Caforio, chairman and chief executive of Bristol-Myers Squibb. “As a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation. We will also benefit from an expanded early- and late-stage pipeline that includes six expected near-term product launches. Our new company will continue the strong patient focus that is core to both companies’ missions, creating a shared organisation with a goal of discovering, developing and delivering innovative medicines for patients with serious diseases. We are confident we will drive value for shareholders and create opportunities for employees.”

“For more than 30 years, Celgene’s commitment to leading innovation has allowed us to deliver life-changing treatments to patients in areas of high unmet need,” said Mark J. Alles, chairman and chief executive of Celgene. “Combining with Bristol-Myers Squibb, we are delivering immediate and substantial value to Celgene shareholders and providing them meaningful participation in the long-term growth opportunities created by the combined company. Our employees should be incredibly proud of what we have accomplished together and excited for the opportunities ahead of us as we join with Bristol-Myers Squibb, where we can further advance our mission for patients. We look forward to working with the Bristol-Myers Squibb team as we bring our two companies together.”

The Celgene/Bristol-Meyer deal is the second notable merger to be announced in the pharmaceutical sector recently, following news of the $8bn merger between Eli Lilly & Co and Loxo Oncology announced on Monday.

News: Bristol-Myers to buy Celgene for $74 billion in largest biopharma deal

Vinci gets Gatwick

BY Richard Summerfield

Vinci Airports has agreed to acquire a majority stake in Gatwick Airport Limited, the UK’s second-busiest airport, for $3.7bn.

By acquiring a 50.01 percent stake in Gatwick, Vinci now operates 46 airports across 12 countries. Gatwick will be the largest airport in the French company’s portfolio, having handled nearly 46 million passengers in 2018, up from 32 million at the time of its previous sale a decade ago. The airport expects passenger numbers to grow to 60 million in the coming years.

The remaining 49.99 percent share in the company will be held by private equity firm Global Infrastructure Partners (GIP). The deal is expected to complete in the first half of 2019.

“Creating synergies and sharing best practices being at the core of our values, the whole Vinci Airports network will benefit from Gatwick Airport’s world-class management and operational excellence, which has allowed it to deliver strong and steady growth in a very constrained environment,” said Nicolas Notebaert, president of Vinci Airports, in a statement. “As Gatwick’s new industrial partner, Vinci Airports will support and encourage growth of traffic, operational efficiency and leverage its international expertise in the development of commercial activities to further improve passenger satisfaction and experience.”

Adebayo Ogunlesi, GIP chairman and managing partner, said: “We welcome Vinci Airports, one of the world’s most respected airport operators, as a partner in Gatwick airport. We look forward to building on the Gatwick success story together.”

“This partnership is focused on continuing the transformation at the airport over the last decade,” said Michael McGhee, a partner at GIP. “We are pleased Vinci Airports shares our vision of Gatwick’s future. We expect the transaction to be completed by the middle of next year, with the senior leadership team remaining in place. Their focus, along with everyone at Gatwick, obviously remains on doing their very best for customers over the busy holiday period after the challenges of recent days.”

Announcement of the deal was delayed by the chaos caused by three days of drone sightings at Gatwick in the run-up to Christmas. The drone sightings closed the airport’s runway, disrupting flights for 140,000 passengers. In response to the disruption, Gatwick has invested £5m in anti-drone technology.

News: France's Vinci in $3.7 billion swoop on UK's Gatwick airport

GSK to split as Pfizer deal struck

BY Richard Summerfield

Following years of investor pressure, and despite repeated refusals, GlaxoSmithKline (GSK) has announced plans to split its existing businesses in half, while forming a new joint venture with rival Pfizer’s consumer health division.

The joint venture will have a market share of 7.3 percent, well ahead of its nearest rivals Johnson & Johnson, Bayer and Sanofi, all of which have around a 4 percent share, and combined sales of approximately $12.7bn. The new venture will combine GSK’s Sensodyne, Voltaren and Panadol brands with Pfizer’s Advil, Centrum and Caltrate. GSK has confirmed that the Horlicks brand will not be included in the joint venture as it is being sold to Unilever.

GSK will have a majority controlling equity interest of 68 percent and Pfizer will have an equity interest of 32 percent, the firms confirmed in a statement. The merger will generate cost savings of £500m by 2022, according to GSK.

“Through the combination of GSK and Pfizer’s consumer healthcare businesses we will create substantial further value for shareholders,” said Emma Walmsley, chief executive of GSK. “At the same time, incremental cashflows and visibility of the intended separation will help support GSK’s future capital planning and further investment in our pharmaceuticals pipeline. With our future intention to separate, the transaction also presents a clear pathway forward for GSK to create a new global Pharmaceuticals/Vaccines company, with an R&D approach focused on science related to the immune system, use of genetics and advanced technologies, and a new world-leading Consumer Healthcare company.

“Ultimately, our goal is to create two exceptional, UK-based global companies, with appropriate capital structures, that are each well positioned to deliver improving returns to shareholders and significant benefits to patients and consumers,” she added.

Within three years of the joint venture closing, GSK has committed to demerging and floating its consumer health business, splitting the company into two distinct businesses: one focused on consumer, the other on pharmaceuticals and vaccines.

“We are pleased to announce this new joint venture for Pfizer Consumer Healthcare, delivering on our commitment to complete the strategic review for this business in 2018,” said Ian Read, chairman and current chief executive of Pfizer. “Pfizer and GSK have an excellent track record of creating successful collaborations, and we look forward to working together again to unlock the potential of our combined consumer healthcare businesses.”

News: Drugmaker GSK to split after striking Pfizer consumer health deal

Cyber security M&A climbs as attacks increase

BY Richard Summerfield

Cyber security M&A is on the rise, as a result of the increasing number of successful, high-profile cyber attacks, the continued digitalisation of businesses and the proliferation of new regulations, such as the European Union’s General Data Protection Regulation (GDPR), according to Hampleton Partners’ 2018 Cybersecurity M&A Market Report.

“Hacking is the newest form of warfare against businesses as well as nation states. The average cost of a single data breach is now € 3 million, up by six percent in a year, plus the reputational damage which can be catastrophic,” said Henrik Jeberg, a director at Hampleton Partners. “Given the increasing market demand for cybersecurity solutions due to regulation, digitisation, high profile hacks and new technologies requiring security, we are not surprised to see a highly active M&A market for cybersecurity assets at high valuations. I expect cybersecurity to remain a hot topic in M&A, even if we go into a period of more volatile financial markets.”

There have been a number of notable M&A deals in the tech space this year, particularly in H2. The report identifies the identity and access management subsector as one of the most notable areas of activity. The space saw a number of large deals, including acquisitions by Verimatrix and Cisco.

The private equity (PE) industry has also become an active participant in the cyber security market. Indeed, PE investors have become top bidders for a number of large cyber security assets. Thoma Bravo, TPG Capital, Francesco Partners and Vista Equity Partners have all increased their investments in the cyber security space this year.

The importance of cyber security is becoming increasingly evident, particularly as the average cost of a cyber breach continues to rise. In 2017, the average cost of a single data breach rose 6 percent to €3m per breach. Moving forward, it seems likely that the cyber security space will remain a key target for acquirers in the months ahead.

Report: 2018 Cybersecurity M&A Market Report

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