Dominion Energy to sell gas assets for $4bn

BY Richard Summerfield

Berkshire Hathaway’s energy unit has agreed to acquire Dominion Energy Inc’s natural gas transmission and storage network for $4bn.

The deal gives Berkshire Hathaway Energy, a unit of the parent company Berkshire Hathaway, that already runs a $100bn energy portfolio, ownership of almost 8000 miles of natural gas transmission lines, and transport capacity of almost 21 billion cubic feet a day.

The deal, which is subject to regulatory approvals, is expected to close in the fourth quarter of 2020. The Berkshire unit will also assume $5.7bn of debt, giving the transaction a $9.7bn enterprise value.

“Today’s announcement further reflects Dominion Energy’s focus on its premier state-regulated, sustainability-focused utilities that operate in some of the most attractive regions in the country,” said Thomas F. Farrell, II, chairman, president and chief executive of Dominion Energy.

“Over the past several years the company has taken a series of steps – including mergers with Questar Corporation and SCANA Corporation, and the divestiture of Blue Racer Midstream and merchant generation assets – to increase materially the state-regulated nature of our profile, enhance the customer experience, strengthen our balance sheet, and improve transparency and predictability,” he added. “Our mission over that period has remained the same: providing round-the-clock affordable and sustainable energy, world-class customer service, and meaningful community engagement.”

“I admire Tom Farrell for his exceptional leadership across the energy industry as well as within Dominion Energy,” said Warren Buffett, chairman of Berkshire Hathaway. “We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business.”

The acquisition is Berkshire’s biggest since 2015, yet it is small by the company’s usual standards. Berkshire Hathaway had $137bn in cash at the end of the first quarter 2020. Mr Buffett has been criticised by some for missing the stock market rally from the March lows.

Dominion and Duke Energy Inc separately announced on Sunday they would be abandoning their $8bn Atlantic Coast Pipeline, running under the Appalachian Trail and through West Virginia, Virginia and North Carolina.

News: Buffett's Berkshire to buy Dominion Energy gas assets for $4 billion

BP sells petrochemical business in $5bn deal

BY Richard Summerfield

BP has agreed to sell its petrochemicals business for $5bn to INEOS in a deal that will boost the oil company’s under-pressure balance sheet.

Under the terms of the deal, INEOS will pay BP a deposit of $400m, followed by $3.6bn when the deal completes and another $1bn in three instalments by June 2021.

The sale will aid BP’s shift in direction. The company announced in February that it planned to sharply cut carbon emissions by 2050, and it intends to announce further plans for this change in September.

The petrochemical business includes stakes in manufacturing plants in the UK, the US, Trinidad and Tobago, Belgium, China, Malaysia and Indonesia, however the petrochemical plants attached to BP’s oil refineries in Gelsenkirchen and Mulheim in Germany will not be sold.

“This is another significant step as we steadily work to reinvent BP,” said Bernard Looney, chief executive of BP, in a statement. “These businesses are leaders in their sectors, with world-class technologies, plants and people. In recent years they have improved performance to produce highly competitive returns and now have the potential for growth and expansion into the circular economy. I am very grateful to our petrochemicals team for what they have achieved over the years and their commitment to BP.”

He continued: “I recognise this decision will come as a surprise and we will do our best to minimise uncertainty. I am confident however that the businesses will thrive as part of INEOS, a global leader in petrochemicals.”

“We are delighted to acquire these top-class businesses from BP, extending the INEOS position in global petrochemicals and providing great scope for expansion and integration with our existing business,” said Sir Jim Ratcliffe, founder and chairman of INEOS. “This acquisition is a logical development of our existing petrochemicals business extending our interest in acetyls and adding a world leading aromatics business supporting the global polyester industry.”

The COVID-19 pandemic has had a significant impact on the finances of oil producers around the world, accelerating BP’s need to cut costs and restructure. BP said the crisis would take as much as £14bn off the value of its assets and is cutting 10,000 jobs worldwide.

News: BP sells petchems arm for $5 billion in energy transition revamp

Amazon acquires self-driving start-up Zoox for $1.2bn

BY Fraser Tennant

In a transaction that it believes “will help bring the vision of autonomous ride-hailing to reality”, online retailer Amazon is to acquire self-driving start-up Zoox for a reported $1.2bn.

The acquisition represents further investment by Amazon in the autonomous car industry, following its participation in a $530m funding round by Aurora Innovation – also a self-drive start-up – in 2019.

At the same time, Amazon has been working on its own autonomous vehicle technology projects, including its last-mile delivery robots – six-wheeled sidewalk-treading bots designed to carry small packages to the homes of customers.

Zoox, however, is Amazon's first acquisition in the autonomous vehicle industry.

“Zoox is working to imagine, invent and design a world-class autonomous ride-hailing experience,” said Jeff Wilke, chief executive worldwide consumer at Amazon. “Like Amazon, Zoox is passionate about innovation and about its customers, and we’re excited to help the talented Zoox team to bring their vision to reality in the years ahead.”

Founded in 2014 with the vision of purpose-built, zero-emissions vehicles designed for autonomous ride-hailing, Zoox's ground-up vehicle focuses on the ride-hailing customer, with tightly integrated features designed to provide a revolutionary passenger experience. The California-based firm’s  approach to invention provides flexibility and the means to iterate rapidly to continuously deliver a superior experience for its customers.

“This acquisition solidifies Zoox's impact on the autonomous driving industry,” said Aicha Evans, chief executive of Zoox. “We have made great strides with our purpose-built approach to safe, autonomous mobility, and our exceptionally talented team working every day to realise that vision. We now have an even greater opportunity to realise a fully autonomous future.”

Aicha Evans, along with Jesse Levinson, Zoox co-founder and CTO, will continue to lead the team post-acquisition, as they innovate – including the development of their robot taxi – and drive towards their mission: to create autonomous mobility from the ground up.

“Since Zoox's inception six years ago, we have been singularly focused on our ground-up approach to autonomous mobility,” concluded Mr Levinson. “Amazon's support will markedly accelerate our path to delivering safe, clean and enjoyable transportation to the world.”

News: Amazon agrees to buy self-driving technology startup Zoox

GNC to close 1200 stores as part of Chapter 11 bankruptcy

BY Fraser Tennant

Due to coronavirus (COVID-19)-related impacts on its business, global health and wellness brand GNC Holdings, Inc. is to pursue a dual-path process that will allow it to restructure its balance sheet and accelerate its business strategy through Chapter 11 bankruptcy.

The Chapter 11 filing allows the retailer to keep operating, although hundreds of underperforming stores – approximately 800 to 1200 – will be closed. GNC’s US and international franchise partners and all corporate operations in Ireland are separate legal entities and are not a part of the Chapter 11 process.

“The COVID-19 pandemic created a situation where we were unable to accomplish our refinancing and the abrupt change in the operating environment had a dramatic negative impact on our business,” said GNC in a statement.

With the support of its lenders and key stakeholders, GNC expects to confirm a standalone plan of reorganisation or consummate a sale that will enable the business to exit from this process later this year. To this end, the company has secured approximately $130m in additional liquidity – $100m debtor-in-possession (DIP) financing and $30m from modifications to an existing credit agreement.

GNC is confident that between financing and cash flow from normal operations, and with the continued support of the International Vitamin Corporation (IVC), its largest vendor, GNC will meet its go-forward financial commitments as it works to achieve its financial objectives.

Headquartered in Pittsburgh, PA, GNC is a leading global specialty retailer of health and wellness products, including vitamins, minerals and herbal supplement products, as well as sports nutrition products and diet products. The company has been led by chief executive Ken Martindale since September 2017.

Furthermore, GNC has a diversified, multichannel business model and derives revenue from product sales through company-owned retail stores, domestic and international franchise activities, third-party contract manufacturing, e-commerce and corporate partnerships.

However, like many retailers, the Pittsburgh-based company has struggled in recent years, clawing its way out of difficulty in February 2018 when it refinanced its loans and negotiated a $300m investment with Chinese health food group Harbin. Despite this, over the past 12 months, the company has reduced its store-count.

GNC concluded: “This reduction will allow GNC to invest in appropriate areas to evolve for the future, and better position the company to meet current and future consumer demand around the world.”

News: GNC parent company files for bankruptcy protection, plans to permanently close up to 1,200 stores

KKR to acquire Roompot Group for $1.1bn

BY Richard Summerfield

Private equity giant KKR has agreed to acquire Roompot Group, a provider of holiday parks in Western Europe and the number one holiday park operator in the Netherlands, from European private equity firm PAI Partners for $1.1bn.

PAI reportedly began looking for a buyer in October of last year. In March 2020, it planned to launch a formal sale process but that was postponed due to the ongoing COVID-19 pandemic. However, a deal for the company has now been reached.

Since being acquired by PAI for $673m in 2016, Roompot has invested significantly in upgrading and expanding its accommodations and opening new parks, and developed a strong digital marketing and distribution platform. It has also increased real estate ownership and grown revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA) at double digit growth rates.

“As we change to new ownership we would like to thank PAI, who have been a hugely supportive partner to our team since 2016, and welcome KKR for the next phase,” said Jurgen van Cutsem, chief executive of Roompot Group. “Our focus, as always, will be providing a great service for our leisure customers and third-party providers. We continue to see growing demand from our guests and from our corporate partners due to the leading platform we have put in place, providing a solid foundation to scale the business, also on an international level.”

“Roompot is already a leading player in the region with a best-in-class management team and a strong recent track record,” said Daan Knottenbelt, partner and head of the Benelux region at KKR. “We see significant further growth potential based on a very strong development pipeline, continued expansion of Roompot’s owned assets and new corporate partnerships. KKR is investing in Roompot through our Core Investments strategy, which is our pool of capital for longer-term investments, and we look forward to working with Jurgen and his team over the coming years.”

Joerg Metzner, a director at KKR, added: “We have been looking for a platform to invest behind in the fragmented European holiday parks market for some time. Our support for Roompot and its management team fits perfectly with our broader investment theme in the leisure space.”

Operating across its 33 parks in the Netherlands, Belgium and Germany, Roompot has over 2100 employees catering for approximately 3 million guests per year. The company generates around €400m in annual sales.

News: KKR buys vacation parks firm Roompot in $1.1 billion deal