Primavera acquires child nutrition business from Reckitt in $2.2bn deal

BY Fraser Tennant

Further enhancing its positioning and growth prospects in China's large infant nutrition market, investment firm Primavera Capital Group is to acquire consumer health, nutrition and hygiene company Reckitt Benckiser’s Mead Johnson business in a transaction valued at $2.2bn.

Under the terms of the definitive agreement, Reckitt will retain a shareholding in Mead Johnson of 8 percent and anticipates net cash proceeds to be approximately $1.3bn. The transaction follows Reckitt’s comprehensive review of its infant formula and child nutrition business in China announced in February 2021.

The deal is another milestone for Primavera in the consumer industry. Going forward, the investment firm intends to support Mead Johnson's growth in China through innovation, operational improvement, channel optimisation and digital transformation, to further enhance its positioning and growth prospects in China’s RMB150bn infant nutrition market.

"We are pleased to acquire the Greater China business of Mead Johnson, a long-established and renowned multinational infant and children nutrition brand,” said Dr Fred Hu, founder and chairman of Primavera Capital Group. “As the controlling shareholder, Primavera is committed to serve tens of millions of Chinese mothers and babies and safeguard their wellbeing.”

Following the completion of the transaction, Primavera will have a royalty-free perpetual and exclusive license of the Mead Johnson brand in Greater China.

“After a thorough review of our infant formula and nutrition business in China, we have found an excellent home for the business under the ownership of Primavera,” said Laxman Narasimhan, chief executive of Reckitt. “As a result of this transaction, Reckitt's Nutrition business going forward will have a better and more consistent growth and margin profile.”

Founded in 1905 in the US, Mead Johnson is a world-renowned premium infant milk formula brand. In 2009, the company successfully listed on the New York Stock Exchange, and in 2017 was acquired by Reckitt .

The transaction is expected to close in the second half of 2021, subject to customary regulatory approvals.  

Mr Hu concluded: “We look forward to collaborating with Reckitt management, and to continuing to provide customers the highest-quality nutritional products through world-class scientific innovation and R&D capabilities, as well as the strictest safety and quality control.”

News: Reckitt to sell China baby formula business for $2.2 bln

Avadim Health files for Chapter 11 and agrees ‘stalking horse’ sale

BY Fraser Tennant

Over $100m in debt and unable to turn a profit for years, health products company Avadim Health has filed for Chapter 11 bankruptcy in order to sell its assets and position itself for a “long and prosperous future”.

To facilitate the sale and restructuring, Avadim’s existing lender, Hayfin Capital Management, has entered into a binding stalking horse purchase agreement and committed to provide certain debtor-in-possession (DIP) financing, subject to court approval, to allow Avadim to meet its obligations during the process.

Furthermore, the financing that Hayfin has committed to provide in connection with the Chapter 11 filing, along with Avadim’s cash flow from operations, will provide ample liquidity to operate the business and meet ongoing obligations to customers, vendors and employees through the completion of the sale process.

Avadim has also announced it has retained investment bank SSG Capital Advisors, LLC to initiate a comprehensive marketing of its assets to other potential buyers to ensure it receives the highest and best price.

"Our goal is to pursue a transaction that maximises the value of the company and ensures we have the necessary resources and flexibility to invest in, and grow the business," said Keith Daniels, chief restructuring officer at Avadim. "We will continue to create and market world-class products, including our Theraworx line, that our customers have come to love."

"We are confident this action provides us with the most efficient and effective way to pursue a transaction while at the same time allowing us to address financial challenges and best position the company going forward," he continued. "To be clear, the action has no impact on our day-to-day business or our ability to continue serving our customers."

Based in North Carolina, Avadim Health develops and sells topical products to improve immune health, neuromuscular health and skin barrier health – products that target the institutional care and self-care markets.

Mr Daniels concluded: “We are proud of the important and meaningful work Avadim has done over the years and are committed to ensuring the company has the right resources in place to continue its mission. We are excited about our future."

News: Avadim Health Files Chapter 11 to Put Lenders in Control

A new era for Cloudera as the firm is taken private

BY Richard Summerfield

Data analytics firm Cloudera Inc. is to be taken private by private equity firms KKR & Co and Clayton Dubilier & Rice LLC (CD&R) in a $4.7bn deal.

According to a regulatory filing announcing the deal, Cloudera shareholders will receive $16 per share in cash, a premium of over 24 percent to Cloudera’s last close on Friday and a 30 percent premium to the company’s 30-day volume weighted average share price.

The deal is expected to close in the second half of 2021, subject to shareholder and regulatory approval. The board of directors of Cloudera has unanimously approved the transaction and recommends that the Cloudera shareholders approve the transaction and adopt the merger agreement.

Cloudera, which has activist investor Carl Icahn as its largest shareholder, has been exploring a potential sale since mid-2020 after receiving takeover interest from several parties.

“This transaction provides substantial and certain value to our shareholders while also accelerating Cloudera’s long-term path to hybrid cloud leadership for analytics that span the complete data lifecycle - from the Edge to AI,” said Rob Bearden, chief executive of Cloudera. “We believe that as a private company with the expertise and support of experienced investors such as CD&R and KKR, Cloudera will have the resources and flexibility to drive product-led growth and expand our addressable market opportunity.”

“We very much look forward to working with Cloudera as it continues to execute its long-term transformation strategy,” said Jeff Hawn, operating partner at CD&R, who will also serve as chairman of the company upon close of the transaction. “The company has made significant progress establishing the Cloudera Data Platform (CDP) as a leader in hybrid and multi-cloud analytics, and we believe that our experience and capabilities can offer valuable support to accelerate expansion into new products and markets.”

“We have followed the Cloudera story closely for a number of years and are pleased to be supporting its mission of helping companies make better use of their data in the ever-evolving hybrid IT environment,” said John Park, partner and head of Americas technology private equity at KKR. “We are excited to contribute to Cloudera’s accelerated innovation efforts as a private company.”

Cloudera provides cloud-based software and a platform to enterprises for data management and insights generation. The firm caters to several industries including finance, healthcare and government agencies.

News: KKR, CD&R take data analytics firm Cloudera private for $4.7 bln

Ramsay Health Care to snap up Spire

BY Richard Summerfield

Independent hospital group Spire Healthcare Group is to be acquired by Australian hospital operator Ramsay Health in a deal worth $1.42bn.

Under the terms of the deal, Spire shareholders will receive 240p per share, which represents a 24.4 percent premium to Tuesday’s closing price, the day before the deal was announced. The deal will be funded through Ramsay’s existing debt facilities and the company expects to retain its 2021 dividend payout ratio in line with historical levels.

Spire operates 39 hospitals and eight clinics in the UK and posted an adjusted pre-tax loss of $326.80m in 2020, largely due to the COVID-19 pandemic. The company, which treated around 750,000 patients last year, has major contracts with the UK’s NHS network, and was dramatically impacted by the decline in routine patient visits to hospitals during the pandemic. The company expects profit to return to pre-pandemic levels this year.

According to Ramsay, the combination with Spire builds a broader platform to take advantage of the opportunity for sustained growth in the £5.8bn UK private hospital sector.

“Ramsay will work closely with the Department of Health & Social Care to ensure all shared objectives are closely aligned and we stand ready to support the NHS in tackling the significant increase in waiting lists and the return of elective procedures in the UK,” said Craig McNally, chief executive and managing director of Ramsay.

“Spire’s track record of serving self-pay and insured patients will increase patient choice at Ramsay,” he continued. “It will enhance our capacity to work closely with our consultant partners and clinicians to ensure further investment in clinical excellence in all our specialties through the provision of multi-disciplinary care to better service both self-pay and insured patients.”

“The acquisition of Spire will transform our UK business from a financial perspective, with the combination of Spire with Ramsay’s UK business delivering a powerful foundation for further growth by diversifying our payer sources and case mix through Spire’s expertise in acute care and significant exposure to the self-pay and insured patient market,” said Andy Jones, UK chief executive of Ramsay.

Ramsey said it would engage with the UK Competition and Markets Authority (CMA), which may require it to divest certain hospitals and clinics for the deal to go through.

Mediclinic PLC, which holds a 29.9 percent interest in Spire, has indicated it will vote in favour of the offer. The company will receive £287.8m from the sale, which would provide “additional financial flexibility to deliver Mediclinic’s strategic goals including the pursuit of further growth opportunities”.

News: Australia’s Ramsay Health Care to buy UK’s Spire for $1.4 billion

Canadian National and Kansas City Southern to combine in $33.6bn deal

BY Fraser Tennant

In a merger intended to create a premier railway for the 21st century, railway company Canadian National and transportation holding company Kansas City Southern are to combine in a deal valued at $33.6bn.

Under the terms of the definitive agreement, Kansas City Southern shareholders will receive $200 in cash and 1.129 shares of Canadian National common stock for each Kansas City Southern common share, with Kansas City Southern shareholders expected to own 12.6 percent of the combined company.

The combination will further accelerate Canadian National’s industry-leading growth profile by connecting North America’s industrial corridor to create new options for shippers. The combined company will substantially help realise the many benefits of the United States-Mexico-Canada Agreement (USMCA), bringing it to life in a meaningful way.

Although Canadian National's offer to buy Kansas City Southern upended a $29bn deal with its competitor Canadian Pacific, the rival bidder has stated that it is willing to re-engage with Kansas City Southern should the deal run into regulatory difficulties with the US Surface Transportation Board (STB), the regulator that oversees railroad companies.

“We are thrilled that Kansas City Southern has agreed to combine with Canadian National to create the premier railway for the 21st century,” said Jean-Jacques Ruest, president and chief executive of Canadian National. “I would like to thank the numerous stakeholders of both companies who have demonstrated overwhelming support for this compelling combination, and we look forward to delivering the many benefits of this pro-competitive transaction to them.”

The transaction has been unanimously approved by the board of directors of each company.

“As North America’s most customer-focused transportation provider, we are excited about this combination, which will provide customers access to new single-line transportation services at the best value for their transportation dollar and increase competition,” said Patrick J. Ottensmeyer, president and chief executive of Kansas City Southern. “Our companies’ cultures are strongly aligned, and we share a commitment to environmental stewardship, safe operations, reliable service and outstanding performance.”

Both companies are confident that they will obtain all necessary regulatory approvals, including from the STB, as well as the Federal Economic Competition Commission and Federal Telecommunications Institute in Mexico.

Robert Pace, chair of the board of Canadian National, concluded: “We are confident in our ability to gain the necessary regulatory approvals and complete the combination with Kansas City Southern, and we look forward to combining to create new opportunities, more choice and a stronger company.”

News: Kansas City Southern sticks to Canadian National after Canadian Pacific fails to raise bid