CD&R agrees $4.7bn Epicor deal

BY Richard Summerfield

Four years after it acquired the company, private equity giant KKR & Co has agreed to sell Epicor Software Corp to Clayton, Dubilier & Rice, in a deal valued at $4.7bn.

KKR, which bought Epicor from Apax Partners in 2016 for $3.3bn, including debt, had been exploring a sale of the business since 2019. The deal is expected to close later this year.

“This is an exciting day for the entire Epicor family – employees, customers, and partners alike – and validates the company’s leadership position across markets we serve,” said Steve Murphy, chief executive of Epicor. “We welcome this new partnership with CD&R, which shares our vision for growing the company, and I thank KKR for a highly successful partnership these past few years. We are excited to work with CD&R to increase investment in our market-leading product portfolio and to enhance our ability to support an ever-increasing range of customer needs.”

“Epicor’s reputation for quality and performance, and its impressive portfolio of next-generation cloud products, position the company well to accelerate growth in the coming years,” said Jeff Hawn, operating partner at CD&R. “We look forward to partnering with the Epicor management team to further expand Epicor’s product portfolio as well as make strategic acquisitions to meet customers’ evolving digital transformation needs.”

“Four years ago, we embarked on an ambitious product modernization journey together with Epicor and are incredibly proud of the successes that the company has achieved to date, particularly with its recent cloud releases,” said John Park, chairman of the Epicor board and head of Americas technology private equity at KKR. “We are confident that CD&R will provide valuable support as the company continues these product- and customer-centric investments to accelerate growth in the cloud.”

News: CD&R to buy KKR’s Epicor Software for $4.7 billion

Aveva agrees to acquire OSIsoft for $5bn

BY Richard Summerfield

Aveva has agreed to acquire OSIsoft, its SoftBank-backed US rival, for $5bn. The deal is expected to close by the end of 2020.

Aveva intends to fund the acquisition through a combination of a $3.5bn rights issue (to be launched in the autumn), cash and new debt facilities.

The OSIsoft acquisition is one of the largest deals ever attempted by a listed UK technology company. The combined company is expected to have annual revenue of £1.2bn, with adjusted earnings before interest and taxes predicted to be about £330m.

“Combining Aveva and OSIsoft is yet another significant milestone in our journey to achieving the ambitious growth goals that we have set,” said Craig Hayman, chief executive of Aveva. “This will not only help us serve existing customers better but also open the flood gates to new opportunities which will accelerate the delivery of our digitisation vision.

“Data has been enabling organisations to more effectively determine the cause of problems by allowing them to visualise what is happening in different locations, departments and systems,” he continued. “This agreement will enable our customers to improve business processes as well as eliminate inefficiencies. We are extremely proud to be moving into the next chapter with an even stronger solutions portfolio as well as an ever-increasing and robust customer base which continues to make us leaders in our sector.”

“Joining forces with Aveva enhances and extends our ability to deliver on our key commitments to our customers, partners and employees,” said Dr. J. Patrick Kennedy, chief executive and founder of OSIsoft. “Together we will be better able to service the largest digital transformation projects in history, including across industry 4.0+ and IIoT. Aveva’s interest in OSIsoft is a testament to our talented team, and the extraordinary value of the PI System as the real-time streaming data infrastructure that powers the industrial world.”

He added: “Today’s announcement is the culmination of a thoughtful search for a respected organisation that would mesh with our own strong mission- and customer-driven culture.  The next chapter in PI’s fifth decade will be exciting for our employees and customers, and I look forward to my continued involvement in my new role as the largest individual shareholder in the combined company and as Chairman Emeritus to ensure we realise the full benefits of this transaction.”

Osisoft is jointly owned by SoftBank’s Vision Fund and founder and Mr Kennedy’s family. SoftBank acquired a holding in Osisoft in 2017 and owns a 44.7 percent stake in the company.

News: UK software provider Aveva buys OSIsoft for $5 billion as Softbank cashes out

Blackstone to acquire Takeda Pharma’s consumer unit for £2.3bn

BY Fraser Tennant

In a deal valued at $2.3bn, Japanese multinational Takeda Pharmaceutical Company Limited has sold its consumer healthcare business – Takeda Consumer Healthcare Company Limited (TCHC) – to US investment firm Blackstone.

Under the terms of the definitive agreement, Blackstone and its affiliates will acquire a variety of over-the-counter medicines and health products from TCHC – products which generated total revenues of more than $566m in 2019.

Following the divestment of TCHC, Takeda Pharmaceutical Company Limited has said it will focus on developing drugs for unmet medical needs and rare diseases.

“Throughout the decades, TCHC’s brands including Alinamin have earned the trust and confidence of consumers in Japan,” said Milano Furuta, chairman of the board at TCHC. “We believe the active and strategic investment by Blackstone will enable TCHC to maximise its potential. Blackstone is one of the world’s leading investment firms and has rich experience in the healthcare sector, and we are confident this will help TCHC further develop its products and brands and strengthen the business overall.”

TCHC’s flagship vitamin drug Alinamin has been a staple product in Japanese households for Almost 70 years. In addition to Alinamin vitamin tablets and drinks, TCHC offers a platform of other over-the-counter products, including Benza Block, a leading symptom based cold remedy.

“We are privileged to announce this partnership and invest in the company’s plans to become the leading consumer healthcare business in Japan,” said Atsuhiko Sakamoto, head of private equity at Blackstone Japan. “TCHC is well-positioned to grow its established brands in Japan and launch new and expanded product offerings.”

One of the world’s leading investment firms, Blackstone’s assets under management (AUM) total $564bn. The deal to buy TCHC is Blackstone’s second private equity transaction in Japan’s healthcare sector following the acquisition of AYUMI Pharmaceutical in 2019.

Acting as exclusive financial adviser to Blackstone is Mitsubishi UFJ Morgan Stanley Securities, while Simpson Thacher & Bartlett LLP and Anderson Mori & Tomotsune are acting as legal advisers.

Mr Sakamoto concluded: “We see tremendous potential for TCHC in Japan and throughout Asia, and we are confident that Blackstone’s global network and expertise in the sector can accelerate TCHC’s growth.”

News: Takeda to sell Japan consumer health unit valued at $2.3 billion to Blackstone

Second time around: Chaparral Energy files for Chapter 11

BY Fraser Tennant

In what is its second filing in four years, independent oil and natural gas exploration and production company Chaparral Energy, Inc. has filed for Chapter 11 bankruptcy protection.

Chaparral’s filing is the latest in a string of bankruptcies in the energy sector this year, a list which includes Gavilan Resources, Whiting Petroleum, Echo Energy Partners, Ultra Petroleum, Skylar Exploration, Diamond Offshore, Freedom Oil and Gas, and Templar Energy. Virtually all cited the devastating impact of the coronavirus (COVID-19) pandemic.

Through the Chapter 11 process – part of a restructuring support agreement (RSA) with certain of its funded debtholders to pursue a prepackaged plan of reorganisation – Chaparral expects to significantly restructure its balance sheet and strategically position itself for long-term growth.

Chaparral previously filed for bankruptcy protection during the oil price slump in 2014-16, emerging from Chapter 11 in March 2017.

“While we have taken carefully measured and decisive action to address the challenges of 2020, the overall impact to the energy industry, including Chaparral, has been severe,” said Chuck Duginski, chief executive of Chaparral. “Therefore, after thorough analysis of our strategic options, we determined that a voluntary Chapter 11 filing with broad creditor support provides the best course for Chaparral and its stakeholders.”

Chaparral intends to restructure its balance sheet by equitising all $300m of its existing unsecured bond obligations and substantially bolster its liquidity position through $175m in lending obligations under a reserves-based exit facility and a fully backstopped $35m new money convertible note rights offering.

“A swift restructuring will right-size our balance sheet, improve our cost structure and best position Chaparral for the future,” added Mr Duginski. “Importantly, we intend to maintain normal operations and meet all of our trade commitments timely and under their existing terms.”

Founded in 1988 and headquartered in Oklahoma City, Chaparral Energy is an independent oil and natural gas exploration and production company focused in the oil window of the Anadarko Basin in the heart of Oklahoma.

Mr Duginski concluded: “This restructuring will allow us to continue to efficiently operate without interruption and focus on delivering strong results. I would like to thank our employees, contractors, suppliers and customers for their unwavering commitment to Chaparral.”

News: Shale driller Chaparral Energy files for bankruptcy due to pandemic woes

Sanofi to acquire Principia for $3.7bn

BY Richard Summerfield

French healthcare company Sanofi SA has agreed to acquire Principia Biopharma Inc for around $3.7bn, the companies have confirmed.

The deal, which will strengthen Sanofi’s presence in research and development (R&D) areas, will see the company buy all the outstanding shares of Principia for $100 per share in cash, representing an aggregate equity value of approximately $3.68bn on a fully diluted basis, and a premium of 10 percent to Principia Biopharma’s closing price of $90.74 on 14 August.

“This acquisition advances our ongoing R&D transformation to accelerate development of the most promising medicines that will address significant patient needs,” said Paul Hudson, chief executive of Sanofi. “The addition of multiple BTK inhibitors to our pipeline demonstrates our commitment to strategic product acquisitions in our priority therapeutic areas. Full ownership of our brain-penetrant BTK inhibitor ‘168 removes complexities for this priority development program and simplifies future commercialisation.”

“The Phase 2b data in relapsing multiple sclerosis showed the strong potential of ‘168 to address disability and disease progression, and triggered the start of Phase 3 studies across the full spectrum of MS,” said John Reed, global head of R&D at Sanofi. “Through this acquisition, we will be able to expand and accelerate development of BTK inhibitors across multiple indications. Both ‘168 and rilzabrutinib have ‘pipeline in a product’ potential, and we look forward to unlocking their full treatment benefits across an array of diseases.”

“Principia’s successful design and development of a whole portfolio of BTK inhibitors for immunology is aimed to transform the treatment for patients with immune-mediated diseases,” said Martin Babler, president and chief executive of Principia Biopharma. “By combining with Sanofi, we will bring significant resources to expand and accelerate the potential benefits of these therapies. The benefit of developing several BTK inhibitors will allow us to target specific organ systems for optimal patient benefit. The merger will provide global resources to get these novel therapies to patients faster.”

Sanofi expects to complete the acquisition in the fourth quarter of 2020.

News: Sanofi in hunt for specialty drugs with $3.7 billion deal for U.S.-based Principia